Are New Credit Card ‘Loans’ Right for You? Read Policies Carefully

American Express has had the option for a while. And more recently, Citi (Citi Flex Loan) and Chase (My Chase Loan) have jumped into the fast-evolving market segment that offers consumers the ability of taking out a loan against the unused portion of their card’s line of credit.

But read the policy for your credit card carefully regarding this new option. Interest rates can be high — up to 20 percent or higher — depending on various factors.



Before Citi and Chase jumped into this lending segment, American Express introduced “Pay It, Plan It” in 2017, which offers customers the option of paying off individual purchases over periods from three months to two years.

This option, regardless of which credit card is linked to it, may work for many consumers looking to make large purchases — and spread out payments separately from their normal revolving credit terms. You usually don’t have to apply for a separate loan or undergo a new credit check. Loan payments are rolled into your regular payment, meaning there is not additional bills to keep track of. You can spread out payments for a terms of up to 60 months, depending on the card or policy.

But consumers need to shop around for the best rates, including the many options available for personal loans. A credit card issuer, such as Citi or Chase, will likely offer you a loan rate that’s lower than your card rate. But that rate may still be higher than market rates available for personal loans that are not tied to a credit card.