💳 What Is a Credit Card Loan?
1. Carrying a Balance (Regular Credit Card Use)
- When you don’t pay your full statement balance, the unpaid portion is considered a loan from the bank.
- Interest applies (APR usually 18–30% in 2025).
- Minimum payments keep the account open, but interest compounds fast.
2. Cash Advances
- Withdrawing cash from your credit card at an ATM.
- Comes with:
- Cash advance fee (usually 3–5% of the amount).
- Higher APR than purchases (often 25–35%).
- No grace period → interest starts immediately.
- Very expensive, best used only for emergencies.
3. Credit Card “Loan” Programs
- Some issuers (like American Express, Citi, Chase, Capital One) offer structured installment loans from your credit card account.
- Features:
- Fixed repayment schedule (e.g., 12–36 months).
- Lower APR than normal revolving credit, but higher than personal loans.
- Payment is added to your monthly card bill.
- Example: Citi Flex Loan or AmEx Plan It.
📊 Typical Rates & Terms (2025)
- Purchase APR: 18–30%
- Cash Advance APR: 25–35% + fees
- Issuer Loan Programs: 6–18% (depends on credit score and bank)
- Personal Loans (for comparison): 6–20%
✅ Pros of Using Credit Card Loans
- Fast and convenient — no separate loan application.
- Can help in short-term emergencies.
- Issuer programs may have predictable payments.
❌ Cons
- High interest compared to traditional loans.
- Cash advances are especially costly.
- Can hurt your credit utilization ratio, lowering your credit score.
- Risk of falling into long-term debt.
💡 Smarter Alternatives
- Personal loans (from banks/credit unions) → lower interest and fixed terms.
- Balance transfer credit cards → 0% APR promo for 12–21 months if you qualify.
- Home equity line (HELOC) → lower rates if you own a home.
- Emergency fund (best long-term plan).
👉 Do you want me to put together a side-by-side comparison between credit card loans vs. personal loans vs. balance transfer cards so you can see which one saves the most money depending on your situation?