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My credit card issuers really want me to get a personal loan

A loan from your card issuer can help you pay off debt at a lower interest rate, but weigh other options before accepting an offer


A personal loan may help you pay off your debt. Read on to find out more about the process of getting a personal loan from major issuers, and make sure to research all of your options before making a decision.

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I’ve gotten several recent invitations from American Express and Chase to sign up for a personal loan. I have credit cards with both of these issuers, and both have been pinging me with emails and pop-up ads.

I pay my monthly credit card bills in full, so I don’t need a personal loan for debt consolidation. I also don’t have any other near-term personal loan needs (for instance, some people use personal loans to finance home improvements, cars, vacations, weddings and other large expenses – sometimes this makes sense, but it’s not always a good idea).

Even if I’m not suited for a personal loan right now, let’s take a deeper look at these offers to sort through who might benefit.

Check out all the answers from our credit card experts.

Ask Ted a question.

American Express

Amex is offering me up to $40,000 at a 6.98% APR to be repaid over 36 months. The email touts other benefits such as no origination fee, fixed monthly payments, an easy application that will not affect my credit score and excellent customer service.

If I were to borrow the full $40,000, I’d end up paying approximately $4,450 in interest over 36 months, and my monthly payments would be about $1,235.


Chase lists a similar set of benefits – no credit check, a fixed APR that’s lower than my credit card and no origination or early payoff fees. It adds that the “My Chase Loan” product only uses a portion of my existing credit card limit, so I can continue to use my card for other purchases (note that repurposing part of your credit line in this fashion could cause your credit utilization ratio to spike, thereby decreasing your credit score).

In my case, I could take out a personal loan of up to $8,000; that would seriously cut into my $12,500 credit limit. If I sign up for 36 monthly payments, my APR would be 8.99%. The rate goes down to 7.49% if I pay the loan back over 12 months and 6.99% if I opt for a six-month term.

How these terms compare with the rest of the market

Because my credit score is over 800, I could likely qualify for a personal loan with a rate as low as 4.99% elsewhere, although some of these charge origination fees (our sister site Bankrate.com has a helpful personal loans comparison table).

Personal loans are generally easy to apply for – you can often apply online in just a few minutes, and if you’re approved, you can typically gain access to the funds within 24 hours. Getting a personal loan through one of your existing credit card issuers could be slightly easier, although it probably wouldn’t make a dramatic difference.

If you’re interested in going down this route, I’d suggest shopping around with at least three lenders, perhaps including a mix of companies that you have already established relationships with and others that you have not.

How buy now pay later factors in

American Express, Chase and Citi appear to be the credit card issuers that are most aggressively pushing alternatives to credit cards. These include personal loans (a Citi Flex Loan is similar to the aforementioned personal loans that Amex and Chase have offered me) and their versions of buy now pay later services that compete with the likes of Affirm and Afterpay. Traditional financial institutions are losing between $8 billion and $10 billion in annual revenues to these and other fintech buy now pay later competitors, according to McKinsey.

Big banks are striking back with offerings such as American Express Pay It Plan It, My Chase Plan and Citi Flex Pay. These have a few key differences from personal loans. For starters, eligible purchases are made with a credit card (these aren’t lump-sum distributions like personal loans, which can be used for a wider variety of purposes). After the fact, cardholders can designate these eligible purchases to be paid back in installments. With American Express, for example, the “Plan It” feature applies to goods and services costing at least $100.

I recently used my Blue Cash Preferred from American Express card to buy something for $108.38. Using “Plan It,” I could potentially pay this back in 12 monthly installments of $9.68, 18 monthly installments of $6.67 or 24 monthly installments of $5.16. All three scenarios involve a monthly plan fee of $0.64. American Express is careful not to call it interest, but if we were to consider it essentially an interest charge, it would equate to an APR of about 7% (which, not coincidentally, is in line with the personal loan rate that Amex offered me).

The Chase and Citi installment plans operate in a similar fashion. Some cardholders appreciate the predictability – they know exactly how much they owe each month, and for how long, as opposed to carrying open-ended credit card debt. Making minimum payments could stretch on for a lot longer and cost a lot more money, considering the average credit card charges 16.22%.

Buy now pay later services such as Affirm rival credit cards in some ways but differ in others. A key theme is that your mileage may vary. Some Affirm plans are interest-free, and I’ve seen 0% terms as long as 39 months on some purchases (such as Affirm’s partnership with Peloton). In other cases, customers might pay up to 30% APR. It depends on your creditworthiness as well as what you’re buying and where you’re buying it.

Bottom line

Credit cards offer a number of advantages over personal loans, debit cards, cash and buy now pay later services (including better rewards, superior fraud protection, extended warranty coverage, purchase protection and more). The one big drawback of credit cards is the high interest rates. Ideally you would avoid these by paying in full (or perhaps by signing up for a card that offers a 0% interest promotion for up to 20 months on new purchases or balance transfers).

If you need more time to pay off new purchases or existing debt, it’s worth considering the personal loan and installment payment plans offered by your existing credit card issuers. The ultimate goal, however, should be to get to a place where you can pay your credit cards in full, thereby avoiding interest and taking advantage of credit cards’ superior rewards programs and buyer protections.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and I’d be happy to help.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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