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What should you know about Chase's New Policy on "Cash-Like Transactions"
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What you need to know about Chase's new Policy on "Cash-Like Transactions"
These transactions could result in fees and block the purchase from earning rewards.
Written by Gregory Karp Senior Writer | Personal finance, credit cards, score on credit Gregory Karp is a former NerdWallet author and an expert on personal finance and credit cards. A journalist for more than 30 years, he's been a newspaper reporter as well as an editor, authored two books on personal finance, and developed"Spending Smart," a "Spending Smart" syndicated newspaper column. His honors include national recognition many times by the Society for Advancing Business Editing and Writing.
Updated April 15, 2022 at 10:17AM PDT.
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Chase is using a new and more expansive description of "cash-like transaction," which for Chase credit card users refers to purchases that trigger the penalties of taking an . Cash advance regulations can differ by card however, they usually include expensive fees and interest as well as excluding the purchase from earning rewards like cash back, mileage or points.
A common example of cash-like transactions, often called "cash equivalents," could be to use a credit card to take out cash from an ATM.
In a way, Chase is just making the current definition of Chase clear. Changes will take effect at various times, but typically in early- to mid-April 2021.
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What's changed?
Chase in recent years has rejected some types of transactions, like opening an account for or through an exchange. This was the case even after Chase adopted its own definition of transactions that resemble cash.
But if Chase eventually allowed those transactions, they are now clearly identified as cash-like transactions and could be considered advances in cash.
In its notification of cardholders Chase said cash-like transactions are comprised of, but not restricted to four categories:
Exchange of currency and other types payments: travelers checks money orders, foreign currency bitcoin, wire transfer, other similar virtual or digital currency and other similar transactions.
gambling: Lottery tickets, casino gaming chips, bets on racetracks and similar offline and online betting transactions.
P2P transactions: person-to-person money transfers and account-funding transactions that transfer money.
Third-party bill-pay services: This includes transactions for bill-pay that are not by the vendor directly or through their provider.
Some of those things, such as lottery tickets, were already classified as cash-like transactions by Chase's previous cardholder agreements. The new definition is more expansive as well as clarifies the meaning of what Chase is referring to by cash-like transactions, it said.
The list does not contain explicit mention of certain prominent payment platforms including , Google Pay, Venmo, PayPal Key and . A Chase spokeswoman said all of those "could" be classified as an equivalent transaction to cash. However the purchase of goods and services by a company using an external payment provider are not cash-like transactions , and do not incur the fees, she said.
So, for example applying a Chase card to fund an in-person retail transaction via Apple Pay or an online purchase via PayPal at checkout would not be considered to be a transaction that is similar to cash.
Transactions made using transactions made with a Chase cards are treated as transactions and cannot be cash-like transactions, she said.
And Plastiq says it automatically declines transactions when the issuer views the transaction as a cash advance.
The definition of the word is important.
Generallyspeaking, a transaction that is based on cash may have disadvantages like:
Cash advance fees . This is a one-time fee payable when you receive your advance, typically 3% to five percent of the amount.
Higher interest rates. Many cards charge a higher annual percentage rate for cash advances than for regular purchases.
No grace period. If you settle your amount in full each month generally, you'll have a time frame of at least two weeks to settle off your purchases before you're charged for interest. Cash advances, however, start to accrue interest on Day One.
Lower credit limit. Certain credit cards come with an additional cash advance credit limit, which is less than the total credit limit.
No credit card rewards. The cash equivalent is probably not eligible to earn rewards, like cash back, travel points or miles. Also, it will not contribute to your spending requirement to earn a sign-up bonus.
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What can you do if you're nervous
If you're worried about getting socked with cash advance fees or other charges, call the number on the back of your credit card and request Chase . This way, if a purchase turns out to be a transaction that is akin to cash and is rejected when it exceeds the limit instead of being charged charges.
If you don't agree with Chase's recent changes to the nature of the cash-like transaction, you can reject them up until the day they take effect. But then Chase will cancel your account.
What Chase provides as alternatives
Cash advances can be a costly option to earn cash. But Chase provides a different way to get access to your credit card's line of credit besides making purchases, in case that's what you're looking for.
My Chase Loan
is like it's like a like a bank loan. When you are approved, you get a deposit directly to your bank account. You are given a specific amount of time to repay the loan, and you're being charged a variable rate of interest, depending of the Chase card you are applying for the loan.
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About the author: Greg Karp is a former NerdWallet writer and an expert in personal finance and credit cards. He previously worked at Chicago Tribune. Chicago Tribune and wrote two money books.
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