Citi is offering its Citi Flex Loan, while Chase
plans to launch My Chase Loan in late 2019.
The new products appear to be aimed at taking
a share of the ballooning market for personal
loans, which hit a record $143 billion in the first
quarter of 2019, according to credit reporting
agency TransUnion, an increase of 19.2% year
over year.
Credit card loans are fast, convenient and
cheaper than cash advances. But personal
finance experts say the loans are still costly and
can lower your credit scores, making it more
difficult to obtain credit with low interest rates in
the future.
Before you accept this seemingly simple way
to get cash, consider the risks and compare
your alternatives.
HOW A CREDIT CARD LOAN WORKS
Citi and Chase customers don’t have to request
a loan — or even apply. The companies are
promoting their “flexible financing offering” or
new “loan feature” via email, direct mail or on
account log-in pages.
“It’s very tempting because it’s so fast and easy,
with no application,” says David Rae, a certified
financial planner based in Los Angeles. “If
you’re already in debt, it can cause that debt to
snowball and become a big problem.”
The amount you can borrow depends on how
much credit line you have available. Once you
choose a loan amount and repayment term, the
issuer transfers the cash to your bank account
within a couple of days. Citi will alternatively
mail a check.