Card Issuers Offer Less Costly Ways to Access Your Line of Credit | Smart change: personal finance

Melissa Lambarena

Credit cards are a convenient way to pay for something, but historically they have lacked flexible or inexpensive ways to access your line of credit beyond purchases.

Traditionally, one of the only other ways to leverage your line of credit for cash has been a cash advance, which usually comes with an exorbitant interest rate and high fees. If your finances are already in bad shape, this type of expensive short-term loan can make matters worse.

But lately, more convenient and affordable options are surfacing. In recent years, traditional credit card issuers and startups have introduced products and features that make it easier – and cheaper – to use your line of credit to pay off a friend, pay for major purchases at lower rates, cover a bill you can’t normally pay with a card, or have money deposited into your bank account.

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Easier peer-to-peer payments

Never carry cash these days? Or maybe you’re missing a few dollars for your share of the dinner check? You might consider turning to a feature like American Express. Send and divide, launched in November 2020 and available on eligible cards via the AmEx mobile app.

The “Send” portion of this feature allows you to use your qualifying AmEx card to pay other people through PayPal or Venmo, but without incurring the transaction fees that would normally apply to credit cards used like this on these platforms – typically about 3%.

Conditions apply, including limits on the amounts you can send, and these transactions are not eligible to earn rewards. But it can be a great solution to split the cost of food, gifts, or more.

“We have certainly seen sustained user engagement,” said Stephanie Schultz, vice president and head of emerging strategic partnerships at American Express. “One of the common categories we saw was gifts, especially during the holiday season.”

What to keep in mind: As with any charge to your credit card, you will need to pay a “Send” transaction in full before the due date to avoid paying interest. Conditions apply.

Flexible financing and installment loan options

What if you were looking to fund a much larger expense? Some card issuers and startups have turned your available credit into an installment loan.

Chase and Citi, for example, offer My lawsuit loan and Citi Flex Loan, respectively, to select cardholders. These options work much like a personal loan from a bank, with the money deposited directly into your bank account.

You will have a fixed period to repay the loan with a fixed monthly payment. You will be charged interest, but potentially at a rate lower than the current APR on your credit card. These options allow you to get a loan without an application, which means no further serious investigation of your credit report.

“With My Chase Loan, customers have told us that the ability to take out a loan with no application, no credit check, and no new account to manage, at an APR lower than their card’s standard APR is attractive,” said a door. – Chase spoke to an email. “They also like the transparency of knowing their monthly payment amount and loan term up front, and the reassurance that there are no origination or prepayment charges.”

If you need time to pay off a large purchase, this type of option may be a better deal than charging it straight to your card – and it’ll be cheaper than a cash advance.

What to keep in mind: These programs are targeted, so they may not be available to everyone at all times. Cons to consider include the potential impact on your credit usage (and your credit scores), as well as the overall cost of the loan, even at a lower APR. The loan amount you can apply for will be based on your available credit limit and your creditworthiness, so it may be worth checking personal loan rates from other institutions.

Nerd tip: If you want to break up an individual credit card purchase into more manageable chunks, you can turn to Chase’s My Chase Plan option or Citi’s Flex Pay feature instead. Conditions and fees may apply, but these options can make monthly payments more predictable. AmEx also offers a Plan It feature, for which a fixed monthly fee applies, but you will know how much you will pay each month. Conditions apply.


The start-up Upgrade offers a unique and flexible hybrid product that combines the strengths of credit cards and personal loans.

  • When you use it as a credit card, the remaining balances are converted into installment loans.
  • When you use it as a personal loan, you can get funds deposited into your bank account.

In either case, you can repay the amount in monthly installments equal to a fixed interest rate over a specified period.

What to keep in mind: The APR you qualify for varies, and like other installment loan options, it’s also worth checking rates from other lenders.

Third party options

If your credit card issuer isn’t as flexible with accessing your line of credit, third-party services may offer another option.

For example, for a fee, Plastic lets you use qualifying credit cards to cover bills you typically can’t pay this way, like rent, mortgage, child care, utilities, and more. You charge your card through Plastiq for the invoice amount (plus a 2.85% handling fee), then Plastiq pays the recipient on your behalf.

This can be a useful service if, for example, an invoice is due immediately but you need a little breathing room while you wait for a paycheck to arrive. And unlike some of the other options, you can earn credit card rewards, which could help offset some of those processing fees.

In the past, San Francisco resident and content creator Berna Anat used this service to pay bills and earn points for travel to New Zealand and other destinations.

“I never charge as much as the money I had already saved for that month,” she said.

What to keep in mind: While a 2.85% processing fee may be cheaper than a cash advance, it can still be a big jackpot, especially for large transactions. And if you can’t afford to pay the full fee before your credit card’s due date, you’ll incur interest on your card’s outstanding APR, which will be quite expensive. Additionally, some credit cards may not be compatible with third-party bill payment services. Before using one, read your card’s terms and conditions or ask the issuer how (or if) the payment will be processed. It can be treated as a cash advance, for example, rather than a purchase.

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