Should You Get a Short Term Loan in the Square Cash App?
The Square Cash App , a peer-to-peer payment service, is currently testing short-term loans with select users. As reported by TechCrunch , the Cash App offers small loans with a maturity of four weeks. Although the new feature is only available to 1000 Cash App users, the company may offer broader adoption in the future.
Here’s how it works: Cash App users can ask for a small loan of $ 20 to $ 200 in the app. TechRadar says approval is instantaneous and users have four weeks to repay the loan. The Cash App currently offers a flat commission of 5%, which is 60% per annum when calculated.
For example, if you borrowed $ 200, you would be required to pay a flat fee of $ 10 if you pay off the balance on time. If you miss the maturity date, the Cash App will charge 1.25% (no compounding) every week. After the default, you will not be able to qualify for another loan from the Cash App.
Cash App Alternatives
Loans to pay – a costly alternative. These loans – usually up to $ 500 – are usually payable before your next paycheck. With commissions ranging from $ 10 to $ 35 for every $ 100 you borrow, a two-week payday loan can have an annual rate of almost 400%.
There are other online lenders like Oportun or OppLoans , for example, who can offer quick access to small emergency loans. Oportun recently announced a maximum annual all-in interest rate of 36%, while you can get 3-digit annual interest rate with OppLoans.
A less common option – alternative payday loans – can be obtained through federal credit unions. As reported by NerdWallet , these loans can be up to $ 2,000 with maturities ranging from one to twelve months. The maximum annual interest rate is 28% and the application fee is $ 20, making it much cheaper than a payday loan.
Bottom line
There are no details yet on the Cash App Short Term Loan – it may be a cheaper alternative to payday loans, but may be more expensive than some online lenders or alternative payday loans. Applying via the app is a convenient option, especially if you are already a Cash App user, but you should familiarize yourself with the small print before applying.