A few weeks ago, JPMorgan Chase announced their plans to jump into the personal loan sphere in a few new ways. The banking giant aims to compete for their own piece of the personal loan pie with two brand new financing options, available to their credit card customers.
The first product to roll out will be an exciting point-of-sale financing option, called My Chase Loans. This optional feature will allow existing cardholders to borrow against their unused lines of credit. When utilized, My Chase Loans will make it easy for these customers to simply use the Chase app to request cash loans. After approval, the funds will be automatically transferred into customers’ checking accounts for immediate availability.
If this sounds like a hybrid between a cash advance and a personal loan, that’s because it is. With My Chase Loans, though, cardholders will save money in interest charges over time, as well as avoid the high fees (and higher interest rates) typically associated with cash advances.
At the same time, My Chase Loans will offer cardholders an immediate, convenient option for financing when they need cash for large purchases. This will come in handy for expenses such as a home remodeling project.
Need to finance a smaller purchase, such as a new transmission or hot water heater? Then the other new product from Chase might be more up your alley.
In addition to the loan option above, JPMorgan Chase will also be rolling out a product called My Chase Plan. With this tool, cardholders can opt to finance any of their previous purchases totaling over $500, by simply selecting them in the app.
After financing, customers have the ability to pay off those larger purchases over a longer period of time while also saving money. That’s because these purchases won’t be factored into the revolving balance on the credit card account, which could accrue interest at rates averaging over 15% (but often going as high as 35%!).
Instead, purchases selected through My Chase Plan would have an established repayment schedule and be subject to a monthly installment plan fee. Though Chase has not come out and said what this fee will be, it is touted as being a money-saving feature for consumers who are interested in point-of-sale (POS) financing options.
So, why is Chase offering these money-saving features to their credit card customers? Simple: they want a piece of the fintech, POS financing market, which is estimated to be worth almost $400 billion. Plus, they also need to keep up with other credit card issuers -- such as American Express, who introduced the Pay It, Plan It feature last year.
In exchange for lower financing fees and the convenience offered by My Chase Plan and My Chase Loans, the card issuer giant will be able to cast a large shadow on the banking industry… as well as keep up with the Joneses within the industry.
“This will allow us to compete in the personal loan space, importantly without taking any incremental risk, as this will be a targeted product feature for our existing customers,” said Jennifer Piepszak, who is the chief executive officer for JPMorgan’s card business.
