Needing access to cash quickly can be tempting, but a traditional credit card advance comes with hefty fees and high interest rates. Learn about alternatives such as My Chase Loan, Citi Flex Loans, and more from startups like Upgrade that offer better APRs and shorter repayment terms. Find the best fit for your unique financial situation today to save money in the long run!

Questions Answered in this Article

Q: What is a cash advance on a credit card? A: A cash advance on a credit card is when you borrow money directly from your credit card issuer, typically with a higher interest rate than if you were to make purchases using the same card. Cash advances generally also come with additional fees and other costs.

Q: Are there alternatives to taking out a traditional cash advance? A: Yes! Two of the bigger players in this space are Chase and Citi, both offering loan programs where you can borrow against your existing credit limit. My Chase Loan and Citi Flex Loans don’t require a separate loan application or additional credit check, come with no extra fees beyond interest (or late payment charges), and offer fixed interest rates for the duration of the loan.

Q: What are the drawbacks of taking out an alternative loan? A: With My Chase Loan and Citi Flex Loans, access to funds may not be immediate – and these loans still come with their own payment plans, terms, APRs, and potential late payment fees. Other options like hybrid products from startups like Upgrade may also have their own unique set of pros and cons.

Q: How do I know which option is best for me? A: Before making any decisions it’s important to explore all available borrowing options so you can find the best fit for your unique financial situation. Make sure to consider what type of loan works best for your budget, how long it will take to get access to funds, and how much each option will cost each month in terms of both interest payments as well as any applicable fees or penalties.

Q: What should I do before taking out a traditional cash advance? A: Take time to research all possible sources – from banks to startups – that offer different types of borrowing options so that you can make an informed decision about which one is best for your needs. Doing some research now could save you money in the long run!

Exploring Your Options Before Opting for a Credit Card Advance

Benefits of Considering Alternatives

When you find yourself in a situation where your bank account doesn’t have the funds to cover an unexpected expense, taking out a cash advance on your credit card can seem like an ideal solution – a quick way to access the funds you need.

Unfortunately, there are some major downsides to consider before making this decision. You’ll be responsible for paying cash advance and ATM fees, plus interest on the money that starts accruing from the moment it hits your account.

The Federal Reserve of St. Louis reports that average APRs among cards that charge interest had reached 20.4% in November 2022. In many cases, interest rates for cash advances can be even higher than this – meaning your cash advance could end up costing significantly more than you initially anticipated.

However, there’s another option available that might be less expensive – borrowing against your existing credit limit through a credit card loan program instead of a traditional cash advance. This type of loan comes with several benefits:

A fixed interest rate for the duration of the loan;
No separate loan application or additional credit check is necessary;
Most don’t come with any extra fees, beyond what you’re paying in interest (or late payment charges if applicable); and
The process is transparent so you know exactly how much each option costs each month.

Before taking out a traditional cash advance, be sure to consider these loan programs and see if they’d be a better solution for your needs.

When you’re in a pinch and need funds quickly, using a cash advance on your credit card can seem like an appealing solution. However, there are some major drawbacks – hefty fees, high-interest rates that start accumulating from the moment you take out the advance, and more.

New Ways to Borrow Against Your Credit Limit

That’s why it’s important to also consider other options for borrowing against your credit limit. Two of the biggest players in this space are Chase and Citi. With My Chase Loan, you can borrow a minimum of $500 with various payment plans over different terms – often at a much lower APR than what you’d see for purchases (this rate will vary depending on your creditworthiness). You’ll be able to view the monthly payment for each loan option so you know exactly what to expect. Plus, if you decide to pay off your loan early, there are no penalties involved.

For Citi customers, Flex Loans operates similarly: A $500 minimum borrow at a fixed APR over an agreed-upon term period. Once again, you’ll be presented with different amounts and lengths of loans so you can find something that works best for your budget. Plus, there won’t be any extra fees beyond what you’re paying in interest or late payments (if applicable).

Beyond these large lender loan programs, other options may be available too – such as hybrid products from startups like Upgrade that let you make purchases and pay off your bill in fixed installments with a set APR – or even just borrowing against your credit limit by requesting that cash be deposited into your bank account (which will likely come with its own set of APRs and terms).

How Do I Know Which Option is Best?

Doing some research before taking out a traditional cash advance could save you money in the long run. Be sure to explore all available borrowing options so you can make an informed decision about which one is best for your unique financial situation.

Potential Drawbacks

With the current shortage of cash due to the pandemic, many of us have had to turn to alternate loan programs for our finances. My Chase Loan and Citi Flex Loans are two popular options. Both offer access to money relatively quickly for a lower cost than a cash advance, but there can be drawbacks — so let’s take a look at them in detail.

Firstly, most of us would assume that with any loan we’d get access to the funds instantly. This is not the case with My Chase Loan and Citi Flex Loans. While it’s true that these loans typically come with more affordable interest rates than a cash advance, with My Chase Loan it may take up to two business days for the borrowed money to be direct-deposited into your account. The same goes for Citi Flex Loans: the funds can be direct-deposited in as little as one business day but may also come in the form of a mailed check, which could take significantly longer depending on how long it takes for mail delivery.

Another potential drawback is that while both programs are advertised as offering competitive interest rates compared to personal loans, in some cases you may be eligible for even lower rates if you do shop around and apply for other types of loans (though you will need to go through credit checks). Furthermore, if you need money fast but cannot obtain it through either My Chase Loan or Citi Flex Loans, then there are other payment options that charge no interest – though usually subject to fees instead.

Ultimately, if you’re seeking financial help due to COVID-19 restrictions then My Chase Loan and Citi Flex Loans may be great alternatives — but make sure they are actually the best deal available before committing by researching other loan products available on the market.

Alternatives to Consider

If you have an expensive purchase coming up and are in need of a way to delay interest payments or break up payments, many major credit card issuers offer to buy now, pay later-like plans like Chase Plan and Citi Flex Pay. These plans allow the larger payment to be split into more manageable monthly installments that will be added to your total credit card bill each month.

With Chase Plan, you will pay a fixed fee each month while with Citi Flex Pay, you will be charged interest on the amount being paid back. It is important, however, to exercise caution when using either option as a September 2022 report from the Consumer Financial Protection Bureau points out several potential costs associated with such payment schemes, including the potential for spending too much and the risk of not being able to afford back payments if multiple loans are taken on at once.

Another alternative for delaying or splitting interest payments is through the use of a 0% interest promotion on new purchases available through certain credit cards. Such promotions can provide users with a period of 12 months or more whereby they can pay down their balance without accumulating any additional interest charges along the way. However, it must be remembered that any remaining debt still present after this promotional period ends will start accruing regular interest rates according to the terms of your credit card agreement.

These various POS plans and promotional packages provided by different issuers can offer attractive options for those who are looking for ways to delay or split their payments but it’s important not to forget potential risks associated with them such as high expenditure and ended unable to make future payment installments. Considering these risks carefully before entering into any scheme is essential so that one can stay safe from entering into problematic situations related to money management down the line.

Summary

Taking out a cash advance on your credit card can seem like an attractive solution, but comes with hefty fees and high-interest rates that start accumulating from the moment you take out the advance.
Alternatives such as My Chase Loan and Citi Flex Loans offer lower interest rates compared to a traditional cash advance, with no extra fees or additional credit checks required.
Hybrid products from startups such as Upgrade allow customers to make purchases and pay off their bills in fixed installments with a set APR.
Explore all available borrowing options so you can find the best fit for your unique financial situation – taking time to research now could save you money in the long run!

The post A Guide to Alternatives to Traditional Cash Advances appeared first on EdFed.

A Guide to Alternatives to Traditional Cash Advances