Citi Flex Plan is a service that allows Citi Credit Card Holders creatively tap into their line of credit. With Citi Flex Pay, cardholders can split a large purchase into fixed monthly payments. With Citi Flex Loan, cardholders can borrow against their available credit without paying a cash advance fee.
Learn more about how Flex Pay and Flex Loan work and understand the pros and cons of each service.
How Citi Flex Pay Works
Typically, if you make a purchase with your credit card, it gets added to your balance and you make monthly payments based on the total amount you owe. Although you are only required to make minimum payments each month, you can pay more to reduce the amount of interest you owe or eliminate interest altogether.
With Citi Flex Pay, cardholders can separate purchases from their total balance and spread payment for those purchases over time in fixed installments.
“It can be helpful to pay off some, possibly large, purchases on your credit card over time on a fixed basis,” says Gina DeCorla, senior research analyst at Curinos, which provides data intelligence to financial institutions, “Rather than just paying the minimum amount as it lowers your credit utilization rate.”
The service is available for purchases of $ 75 or more. To use it, simply log into your online account and select a qualifying purchase marked with the Flex Pay icon. You will be presented with a few payment options, including an interest rate and a payment amount, and you can choose the one that works best for you.
Repayment terms can be up to four years, depending on the price of the item, and the annual percentage rate range is generally the same as your card’s annual purchase rate range. So if your card’s range is 13.99% to 23.99%, your Flex Pay APR options will also be in that range.
Payment for your Citi Flex Pay plan will be added to the minimum monthly payment in your account. There are no fees associated with the plan other than a late charge if you don’t pay on time.
You can also use Citi Flex Pay on Amazon purchases when you checkout instead of waiting for the purchase to be posted to your account. Use your Citi Card to make the purchase and choose the option to finance your purchase in equal installments.
While there may be some differences, Citi Flex Pay works similarly to payment plans offered by other card issuers, including American Express Pay It Schedule It and My Pursuit Plan.
Advantages and disadvantages of Citi Flex Pay
There are good reasons to consider using Citi Flex Pay for some of your larger purchases. Be sure to consider the downsides as well.
- Your APR is fixed instead of variable, protecting you from potential rate increases on longer-term plans.
- You don’t face any separate application, credit check, or monthly payment.
- The plan can help you pay off the purchase faster instead of just making the minimum payment on your entire balance.
- The APR will not be very different from the APR for regular purchase of your card.
- Not all purchases are eligible.
How does the Citi Flex loan work?
Citi Flex Loan allows cardholders to take out a cash loan with their credit card without counting it as a cash advance. As with Citi Flex Pay, you will repay your Citi Flex Loan in monthly installments and with a fixed APR.
Unlike a cash advance, there are no upfront fees associated with a Citi Flex loan, although there are late fees if you miss a payment.
“It’s never really wise to borrow money” through your credit card, says Alex Miller, founder and CEO of UpgradedPoints.com, a travel rewards website. Miller adds, however, that it is best if the transaction is not counted as a cash advance.
You can borrow as little as $ 500, but the maximum loan amount will be based on your credit limit, creditworthiness, and other factors. Repayment terms vary from one to five years.
To get a Citi Flex loan, you will start by checking your account for an offer. If you are eligible to receive one, you will choose a loan amount and then choose the repayment terms from a list of available options. Then you will decide how you want to receive the funds – options include direct deposit or paper check.
Your monthly cash loan payment will be added to your minimum payment amount.
Advantages and disadvantages of the Citi Flex loan
The ability to essentially get a cash advance without the drawbacks of just one might sound appealing, but there are both advantages and disadvantages of using a Citi Flex loan.
- It’s cheaper than asking for a cash advance.
- You don’t have a separate application, credit check, or monthly payment.
- Direct deposit financing can be completed in as little as one business day.
- The repayment terms last up to 60 months.
- The loan amount will reduce your available credit on the card, which may increase your Use rate and damage your credit score.
- You must receive an offer to be eligible – you cannot apply without it.
- Loans are not eligible for rewards.
- Citi does not disclose interest rates in advance.
Alternatives to using Citi Flex Plan
Whether you are planning to use Citi Flex Pay for a particular purchase or are considering getting a Citi Flex loan, it is important to check for yourself.
“In order to get the most out of fixed payment plans,” DeCorla explains, “clients need to have good control over their spending and not spend too much on impulse.”
You may also want to consider using your credit cards only if you can pay off your balance in full. “Paying your bill in full each month reduces your interest charge,” says Miller. “The more interest you collect, the deeper you sink into a debt hole.”
That said, if you do need cash, take the time to research alternatives that may offer a cheaper way to get financing compared to your credit card. Here are some potential options to consider:
- 0% APR credit card. If you’re planning on making a large purchase and want a little more flexibility in paying it off over time, consider using a 0% APR credit card. These cards charge no interest for a specified period after opening your account, which can last up to 20 months. As long as you pay at least the minimum each month and clear the balance before the promotional period ends, you will not pay any interest. Even if you still have a balance at the end of the promotional period, you will only pay interest on what is left.
- Balance transfer credit card. If you plan to use a Citi Flex loan to pay off another credit card balance, a balance transfer card could be a cheaper option. Like a 0% APR card, a balance transfer card offers a 0% APR period, during which you can pay off your balance without interest. Balance transfer cards typically charge an upfront fee of 3% to 5% of the transfer amount, so factor those fees into your calculations when you run the numbers.
- Personal loan. If you are looking for an installment loan, a Personal loan could be a cheaper option. According to Federal Reserve, the average interest rate on a two-year personal loan is 9.58%, compared to an average of 16.3% on credit cards that assess interest.
There are a few things to keep in mind when looking for alternatives. With each of these options, you will need to submit a separate credit application, which means additional investigation of your credit reports and separate monthly payments. Also, whether or not you qualify for a 0% APR credit card, a balance transfer credit card, or a personal loan with a reasonable interest rate depends on your credit situation. If you don’t have a voucher or excellent credit, you may not qualify for another credit card and your personal loan options may be too expensive.
As with any financial decision, it is important to consider all of your options before you decide on one. And if you’re considering applying for another loan or credit card, check your credit score first to see where you stand and determine if you need to work on improving your credit before you apply.