The loans have payback terms of one to five
years, and monthly repayments are added to
your card’s minimum payment due. Citi and
Chase say they report payments to the credit
bureaus as credit card payments, not as separate
loan payments.
Having different types of credit on your reports
can positively affect your scores. In this case,
“there’s no added benefit to your credit score,
beyond just having a credit card and making a
payment,” Rae says.
You can continue using your credit card, but
you’ll want to track your balance and stay under
the credit limit to avoid costly fees. You also
won’t get cash back, miles or points with the Citi
or Chase loan.
THE COSTS AND RISKS
Rae advises the loans should only be considered
for emergency expenses if you don’t have
savings, rather than discretionary purchases.
“If you’re trying to book a vacation or shopping
for clothes, I wouldn’t recommend this product,”
he says.
Credit card loans may cost less than cash
advances, but they aren’t cheap.
Citi Flex Loans carry annual percentage rates
that range from 7.99% to 8.99%, while My
Chase Loan offers vary from 16.99% to 22.24%
APR for borrowers with excellent FICO credit
scores (over 720).
For example, a five-year, $5,000 Citi Flex Loan
at 8.99% APR would have monthly payments of
$104 and total interest of $1,226.
Taking the loan also increases your credit
utilization rate — how much of your credit limit
is used. Most financial experts recommend