Cash advances still have value, but credit card loans? Perhaps Less so

A credit card cash advance can be a great way to quickly access funds when you don’t have the bank money to pay unexpected costs. However, there are major drawbacks. Cash advance fees and ATM fees will be charged to your card, as well as interest that starts accruing from the time you receive the money.

The Federal Reserve of St. Louis data shows that the average APR for cards that charge interest was 20.4% in November 2022. This is already quite high. In many cases, cash advances interest rates are higher than this.

This means that the cash advance will cost you.

Credit card loan programs allow you to borrow against your existing credit limit. This is similar to what you would do if you requested a cash advance. These loan programs offer many benefits, not just a cash advance.

• Fixed interest rates for the entire term of the loan

• Credit checks are not required.

• There are no fees, other than your interest payments and any late payments.

• This transparent process lets you see which options you might be eligible for, and the monthly cost.

These types of loans are offered by major lenders such as Chase and Citi to cardholders who meet certain criteria. Logging in online to your Chase or Citi account will show you what loan options are available.

My Chase Loan lets you borrow as little as $500 There are many payment options available. You might be able choose from a 6-month or 12-month plan. This could be possible at a lower APR (think single-digits) than your card’s variable rate for purchases. Your creditworthiness will affect the terms and rate you receive. Each loan option will have a monthly payment. The monthly payment for your loan will be added to the minimum credit card payment until it is paid off. If you choose to pay your loan off early, there is no penalty. These terms apply.

Citi Flex Loans work in the same way: Borrow at least $500 and pay a fixed interest rate for a specified time. You can choose between loans of various amounts and lengths. Then, you will see your monthly payment based on which terms you select. Your minimum monthly credit card payment for the month will include your payment. These terms apply.

There may be other options than the loan programs offered by big companies. You might be able to use hybrid products such as Upgrade from a startup. These can be used for purchases just like a traditional credit card but you pay your bill in fixed monthly payments at a set APR. This is similar to a personal loan. By requesting cash to be deposited into your account, you can borrow against your credit limit. Although terms and APRs may vary, it might still be cheaper than a cash advance.

These loan programs provide quick access to funds at a fraction of the cost of a cash advance. However, there are downsides.

• You don’t get cash in hand immediately. The My Chase Loan may take up to two business days for the loan money to be directly deposited into your account. Citi Flex Loans are also available as direct deposits, which take as little as one business day, and mailed checks, which take however long it takes.

• Personal loans have higher interest rates than personal loans. However, personal loans can be offered at lower rates if you meet certain criteria. It might be worth taking the time to look around and see if there are other ways you can get the money that you need.

• Interest will still be charged. There are options for payment that don’t charge interest if you have money to pay for future purchases. However, you might be charged a fee.

Credit cards can be used to delay or split interest payments if you have high-priced purchases.