Chase offers creative payment and borrowing options for credit card holders: My Chase Plan and My Chase Loan. My Chase Plan is a version of buy now, pay later, while My Chase Loan allows cardholders to borrow against their available credit limits. Here’s what you should know about these programs before you decide to use one.
[Read: Best 0% APR Credit Cards.]
How My Chase Plan Works
My Chase Plan is a BNPL plan specific for Chase cardholders. “BNPL became successful enough that the traditional players started thinking of how to respond,” says Mike Sullivan, consultant in personal finance to Take Charge America, a nonprofit credit counseling and debt management agency. “Some of them are trying to compete by offering the same kinds of plans.”
Here’s how it works. After you make a purchase over $100, log in to your Chase app or online account and select the “Pay with My Chase Plan” option. Depending on the purchase and your credit history, you’ll be given one, two or three plans from which to choose. Plan length can range from three to 18 months.
Once your plan begins, you’ll pay a fixed amount for the designated number of months, which is simply added to your card’s minimum payment due. Though there is no interest, a flat fee based on the amount of each purchase transaction, the number of billing periods and other factors is added onto the payment amount each month, so splitting your payments comes with a cost.
Pros and Cons of My Chase Plan
— It’s convenient. There’s no application or credit check needed since eligible purchases will automatically indicate if the My Chase Plan option is available. “Why open a different kind of account if you can simply pull out your card and then after the fact say, ‘I want to pay for this in three, 10 or 18 payments’?” says Sullivan.
— It’s more versatile than other BNPL plans. The major BNPL services like Afterpay, Klarna, Zip and PayPal’s Pay in 4 most commonly split purchases into four payments. My Chase Plan provides more flexibility and longer time frames.
— It provides structure. If you’re someone who tends to revolve balances for a long time or only pay the minimum on your cards, My Chase Plan’s fixed payment amount ensures you’ll pay off the purchase in a set amount of time. Even with the added fee, it can wind up being less costly than carrying a balance for many months or years.
— You’ll get rewarded. Because you used your Chase card for the initial purchase, you will earn points or cash back.
— It’s not free. Even though you aren’t being charged an annual percentage rate on the purchase, it’s important not to overlook the added monthly fee, says Sullivan.
— It could impact your credit. If you’re using My Chase Plan, it’s likely to impact your credit utilization ratio — the percentage of available credit that you are using. This matters because credit utilization is one of the major factors in your credit score calculation; the higher your utilization, the more your score can be impacted.
— It adds to your monthly debt obligation. Especially in a period of inflation, Sullivan says you should be carefully weighing whether you want to increase your monthly bill obligations. He says to ask yourself: “If I take on any debt right now and things continue this way, will I be able to make those payments?”
[Read: Best Personal Loans.]
How My Chase Loan Works
My Chase Loan allows you to borrow from your available credit, but in a much more consumer-friendly way than a cash advance. For starters, there are no fees, and you’ll actually have a lower (not higher) APR on the amount you borrow. My Chase Loan only uses up a portion of your credit limit, so you still have the ability to use the card for purchases if needed.
To set up your My Chase Loan online or in your app, choose your loan amount (there’s a $500 minimum, and the maximum depends on your creditworthiness and account history). Next, decide how long you want the loan term to be (12, 18 or 24 months). Once you choose, the funds are deposited into your bank account within two business days. Your fixed monthly payment schedule will begin the next billing cycle.
“The idea that you can simply click a button and have that money put into a reasonable fixed-rate APR loan can be attractive for emergencies,” says Sullivan. However, he cautions against using the loan for impulse purchases.
Pros and Cons of My Chase Loan
— Quick access to cash in an emergency. “If you have someone who needs to put a new AC unit in their home, this can be a great alternative to putting it on a traditional credit card,” says Brian Stivers, investment advisor representative and founder of Stivers Financial Services.
— No application or credit check. “For the most part, if you have been a good customer, my guess is they’d probably give you pretty good terms,” says Sullivan, since you’re already an approved borrower. And it happens instantly.
— A lower APR than your card’s regular purchase rate. While borrowing from your credit issuer with a cash advance is universally perceived as a bad idea because of the high APR and fees, My Chase Loan has a lower APR than the purchase APR on the card and no fee.
— You may get better rates elsewhere. Though the APR is lower than the card’s regular rate, that doesn’t mean you can’t score a better deal. “Right now, there are a lot of sources of installment loans and personal loans that are running as little as 6% or 7%,” says Sullivan. “The question is what is the APR on the Chase Loan? You still have to consider that.”
— It could tempt you to spend beyond your means. “Make sure you need what you’re borrowing, and not just because it’s easy to get,” says Stivers. There’s a big difference between borrowing to make a necessary home repair versus a beach vacation, he adds.
— No rewards. Taking out a My Chase Loan will not give you points or cash back as a regular credit card purchase would.
[Read: Best Home Equity Loans.]
My Chase Alternatives
While My Chase Plan and My Chase Loan offer two convenient options, it’s always a good idea to explore other lending products to decide which is best for you. Here are some others to consider:
— A 0% APR offer. “I always recommend to people that whenever they can, if it’s going to be a major purchase that they know they want to pay off in a few months, to look for a pure 0% interest offer,” says Stivers. This might be a credit card with an introductory 0% APR period or a deferred interest offer. The key is to make sure you fully pay your balance before the promotional period ends.
— A BNPL service. If there are other BNPL providers available at the point of sale, that’s an option to consider, as these usually do not have fees or interest. However, you’ll typically be required to complete the full payoff in a shorter period of time.
— A personal loan. “From my experience, all credit card loans are going to be a higher interest rate than if you qualify for a loan at your local credit union or bank,” says Stivers. If you have a strong credit profile to qualify for favorable terms and time permits, it might be a better move for you to shop around and find a low-interest personal loan.
— A home equity loan. Borrowing against your home equity usually has lower rates than other types of loans, because the loan is secured by your home. However, you do risk losing your home if you aren’t able to pay the loan back. Qualifications are also more stringent, and it’s a longer application process.
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