Chase is updating its definition of cash-like transactions in April: Here’s what you need to know
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Editor’s note: This post has been updated with new information.
In February 2021, I received six emails from Chase regarding changes to my account. If you’ve enrolled in paperless notices for your Chase accounts, you likely received similar emails. Otherwise, you probably received letters from Chase in the mail.
Regardless of how you received the news, these notices discuss revised terms that will affect most, if not all, Chase cards starting in early April. The exact date the revised terms will begin varies by card. But, since these changes are only days away for some accounts, I decided to update this post.
In the notices, Chase informed cardholders of changes to its cardmember agreement. In particular, the changes concern amendments, cash-like transactions, My Chase Plan and interest-free periods. You should read the notice to fully understand these changes, especially if you don’t always pay your balance in full each month.
However, in this guide, I’ll focus on one specific part of the notice: Chase’s new definition of cash-like transactions. After all, the new definition has concerned several TPG readers and staff. I’ll discuss what we know about these changes and what you should do to avoid incurring cash advance fees on your credit card transactions.
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Chase’s new definition of cash-like transactions
If you have a Chase credit card, you likely received an email titled “Important information regarding changes to your Chase account” or a notice from Chase in the mail earlier this year. In particular, in the “Revised Terms” section of this communication, there’s an “Important Definitions” subsection. In this subsection, you’ll see that Chase is redefining cash-like transactions as follows:
Cash-like transactions will be treated as cash advances. Cash-like transactions include, but are not limited to, the following transactions to the extent they are accepted:
purchasing travelers checks, foreign currency, money orders, wire transfers, cryptocurrency, other similar digital or virtual currency and other similar transactions;
purchasing lottery tickets, casino gaming chips, race track wagers, and similar offline and online betting transactions;
person-to-person money transfers and account-funding transactions that transfer currency; and
making a payment using a third party service including bill payment transactions not made directly with the merchant or their service provider.
Let’s consider what this new definition means and how you can avoid surprise cash advance fees on your account.
What does this new definition mean?
To determine the scale and impact of Chase’s new definition of cash-like transactions, consider the current definition of cash-like transactions. Here’s the current definition of cash-like transactions for Chase-branded Visa Signature and Visa Infinite products, such as the Chase Sapphire Reserve and Chase Sapphire Preferred Card:
The following transactions will be treated as cash advances: purchasing travelers checks, foreign currency, money orders, wire transfers or similar cash-like transactions; purchasing lottery tickets, casino gaming chips, race track wagers or similar betting transactions; and making a payment using a third party service.
If you compare the current definition with the new definition, you’ll notice several differences. In particular, Chase will soon treat the following types of transactions as cash advances:
- Purchases of cryptocurrency, digital currency and virtual currency
- Offline and online betting transactions
- Person-to-person money transfers
- Account-funding transactions that transfer currency
- Payments made through a third-party service, including bill payment transactions not made directly with the merchant or their service provider
- Cash-like transactions
Some readers are concerned about payments through third-party services. As you can see, the previous definition already included payments through third-party services. But the new definition adds a callout to specifically include “bill payment transactions not made directly with the merchant or their service provider.”
It’s unclear whether Chase will treat bill payment transactions made through a merchant’s third-party service provider as cash advances. For example, some consumers are concerned that using PayPal to pay a merchant or paying taxes through an IRS payment provider will be treated as cash advances. However, TPG reader Matt B. reached out to Chase about PayPal transactions on Facebook Messenger and got the following response:
The definition of cash-like transactions is being updated to include person-to-person money transfers and account-funding transactions that transfer currency (i.e. PayPal, Venmo, Square Cash, etc.). Cash-like transactions are not applied to all PayPal transactions such as goods and services; it will be applied to person-to-person money transfers using a credit card. These transactions are identified and flagged by VISA / Mastercard and will be posted as a cash advance and charged the cash advance fee. ^KB
Some readers are also concerned that Chase may treat charity donations as cash advances. But as long as you donate to a charity instead of transferring money to an individual, Chase shouldn’t treat donations as cash advances.
We also don’t yet know how Chase will determine which transactions are cash-like. Specifically, we don’t know whether Chase will rely on the merchant category codes or use Level 3 data when available. After all, Level 3 data would allow Chase to see more detailed information about your purchases, including line-item details.
However, we can get some clarity from TPG reader Walter’s experience. He emailed Chase about whether a payment to a debt-collection company would be considered a cash-like transaction (and hence incur a cash advance fee). Walter said a Chase representative responded as follows:
We cannot determine how a transaction will be processed by a merchant. If the charges is considered a cash-like transaction, you’ll be assessed the fees associated with the account. If you need more information, please contact the merchant. We appreciate your business and thank you for choosing Chase. If you have any other questions or concerns, you can call the number below or send us a secure message. Thank you, Michael Chase Email Servicing 1-800-436-7927
I reached out to Chase to confirm that the two reader-reported responses shown above accurately represent Chase’s official stance. However, as of publishing, Chase hadn’t responded to my request.
What to know about cash advances
Generally, cardholders can get a cash advance on a Chase credit card through an ATM, convenience check or in person at a Chase bank branch. However, when you use your Chase card to make a cash-like transaction, you’ll face the same cash advance fees.
You’ll generally want to avoid cash advances on credit cards due to high fees. After all, a cash advance is effectively a loan from your credit card issuer. On a cash advance, you’ll need to repay the amount of the cash advance plus the following charges:
- Fees: Cash advance fees on Visa Signature and Visa Infinite cards are often $10 or 5% of each transaction’s amount, whichever is greater.
- Interest: Cash advances typically have a higher interest rate than purchases. And unlike purchases, which allow a grace period before interest begins to accrue, cash advance interest starts to accrue immediately.
As such, you should avoid cash advances whenever possible. But, since Chase may treat more transactions as cash advances starting in April, you may be worried that you’ll unknowingly use your card for a cash-like transaction and incur cash advance fees and interest.
How to avoid transactions that post as cash advances
Luckily, there are several steps you can take now to prepare for the April changes. First of all, you can call or secure message Chase to set the cash advance limit as close to $0 as possible on all of your cards.
Typically your cash advance limit is set to a percentage of your card’s credit limit, but you can usually request a lower limit. Chase should automatically decline any cash-like transactions over your cash advance limit. So you should be able to prevent considerable cash advances on your account by asking for a lower cash advance limit.
Second, you may want to call or secure message Chase to ask about specific transactions. In particular, it’s reasonable to ask Chase whether it will soon treat a particular transaction you’ve made in the past as a cash advance. For example, if your apartment allows you to pay rent via a third-party service provider, you can ask Chase whether it will soon treat this transaction as a cash advance. However, Chase may not be willing or able to answer this question in some cases and may instead direct you to the merchant.
As such, you may also want to ask specific merchants how they’ll process your transaction. For example, before using your card to pay a bill, ask the merchant whether they’ll process your payment as a cash advance or cash-like transaction instead of a purchase.
Finally, once Chase’s new definition of cash-like transactions begins on your accounts, keep a close eye on your transactions. After all, if Chase treats one of your transactions as a cash advance, you’ll want to pay for the transaction, interest and fees as soon as possible to limit how much the transaction costs you.
Chase may soon treat more transactions as cash advances. As such, I’d be hesitant to use Plastiq to pay bills once Chase implements its new definition of cash-like transactions. Likewise, I wouldn’t use a Chase credit card to fund a new account or pay a friend through PayPal. But I’ll collect data points from TPG readers and staff in April and update this guide once we have a better idea of what types of transactions Chase is treating as cash advances.
Earlier this year, Chase informed its cardholders it would be updating its definition of cash-like transactions in April. However, it’s unclear how Chase will determine which transactions are cash-like (and hence treated as a cash advance). So, many cardholders (including me) still aren’t sure how some transactions will code.
I’ll collect data points from TPG readers and staff in April and update this guide again once we have a better idea of what types of transactions Chase is treating as cash advances. If you have a data point you’d like to report, please click on my name at the top of this guide and email me.
Featured photo by Maskot/Getty Images
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