Chase to Introduce Two New Credit Card Financing Options
If there's only one rule you follow when it comes to travel rewards credit cards, it's that you should never carry a balance. The massive interest rates banks charge — especially on travel rewards cards — will quickly strip away any value you may earn from points and miles. However, many Americans do carry balances from time to time, whether due to financial emergencies or poor planning, and Chase is offering two new options for them to finance those charges.
Beginning Aug. 10, 2019, Chase will introduce two new features called My Chase Loan and My Chase Plan, which may be made available to you from time to time. My Chase Plan is similar to American Express' pay over time: while there's no bonus for enrolling in this service, Chase may give you the option to pay for eligible charges over a period of several months instead of in one billing cycle. During this time you'll pay 1.72% of the purchase price each month until you've repaid the charge in full. This rate may vary from time to time, but once you initiate a My Chase Plan it will stay locked.
Chase will determine which accounts are eligible for this My Chase Plan feature based on your overall history with the bank and your credit score, and certain cash-like charges (including cash advances and annual fees) are explicitly excluded. 1.72% may seem like a low amount, but we're talking about a monthly fee instead of an annual one, and the payments do add up quickly.
My Chase Loan, on the other hand, narrows the gap between Chase's banking and credit businesses. If you opt into a Chase Loan you will be able to receive a cash deposit into an eligible US bank account. The interest rate on this program ranges from about 18-25% depending on which credit card you use to initiate the loan. At this rate interest will pile up so quickly that you should really only consider this as an absolute last resort. If you're strapped for cash, you'd be better off looking at a 0% APR card instead.
Chase's new flexible financing features were buried in the fine print of an email or letter sent to existing card holders, and that's exactly were they should stay. The high interest rates of My Chase Loan make it an unappealing program, and while My Chase Plan offers a more reasonable rate, it's still not a good idea. Carrying a balance on your credit card is a slippery slope, and Chase's financing offer makes it easier to start making bad decisions and slide into debt. When it comes to credit cards, you should stick to the principle of not swiping your card if you can't afford to pay the bill in full at the end of the month.