Learn about this financing option for eligible Citi cardholders.
What are Citi Flex Plans?
The Citi Flex Plan is a feature on the credit card that allows some Citi cardholders to utilize their credit limit in two ways:
- Citi Flex Pay allows you to purchase goods with your credit card and then pay for it over a set period at a fixed rate.
- Citi Flex Loan allows you to borrow against the available credit on your card and repay it using a fixed monthly payment.
The idea behind both options is to provide a way to make a large purchase or borrow without needing to apply for a new line of credit. You may also receive a lower interest rate than you would through other methods, such as taking out a personal loan or carrying a regular purchase balance on your card.
Not all Citi cardholders will be eligible to use the Citi Flex Plan as offers are based on creditworthiness. Individuals who meet the criteria will receive a direct offer from Citi, or they can log into their account to check if an offer is available.
How does Citi Flex Pay work?
Citi Flex Pay allows you to select a specific purchase made with your credit card and pay for it over a set period at a fixed interest rate. You can choose the duration (which will range from 3 to 48 months depending on the purchase amount), and you’ll know the fixed amount and expected interest in advance so you can budget accordingly.
The fixed monthly payment will be added to the minimum amount due on your credit card each month until it is paid in full.
Note: Citi Flex Pay recently partnered with Amazon so you can choose to use the payment plan directly in the checkout window on Amazon when you use your Citi card.
How are payments applied to the card when using Citi Flex Pay?
Citi Flex Pay payments do not need to be paid separately from your regular credit card bill. The way it works is that the amount of the fixed monthly payment will be added to the minimum amount due on your regular credit card.
If you pay more than the minimum due, the additional amount will be applied to the balance that carries the highest interest rate. For example, if you have a regular purchase balance of $5,000 (at a 14.99% interest rate), and then you have a Citi Flex Pay purchase that requires you to pay $75 a month (at a 7.99% interest rate). If the minimum due was $125, that would include the fixed payment for Citi Flex Pay of $75 plus an additional $50 towards the regular purchase balance of $5,000. However, if you decide to pay $250, the additional amount of $125 would be applied toward the regular purchase balance since it has a higher interest rate.
Therefore, if your goal is to pay extra towards your Citi Flex Pay balance, you should cover the minimum due in full for the billing period and the full amount of the regular purchase balance. Then any amount above that can be applied toward the Citi Flex Pay balance.
How does Citi Flex Loan work?
If you are eligible, getting a Citi Flex Loan is straightforward. There is no special application, no fees, and a hard inquiry is not made on your credit report. Once you receive an offer (more on that below), you can see the details in your online account. Citi will disclose the monthly payment options and repayment terms (including the interest rate and the monthly payment due), based on the amount you intend to borrow. The minimum amount for a Citi Flex Loan is $500, while the maximum depends on the amount available on your credit limit, along with other factors Citi considers such as your creditworthiness.
Once you
your loan amount selection, you can either request a check by mail or deposit it in the bank for that value. Direct deposits can reach you in just one business day.
Note: Extending the repayment period may reduce your monthly payment and provide a larger budget, but it will also cost you more in interest over the long term than a shorter period. Choose the shortest term you can afford.
How are payments applied to the card when using a Citi Flex Loan?
Just like Citi Flex Pay, the fixed payment for your Citi Flex Loan will be added to the minimum amount due on your card each month. If you pay more than the minimum amount due, the extra amount will be applied first to the balance with the highest interest rate.
Note: If your account has both a Citi Flex Loan balance and a balance transfer (with a lower interest rate than the Citi Flex Loan), payments will be applied to the Citi Flex Loan balance before being applied to the transfer balance. This means you must pay off the full Citi Flex Loan balance before payments are applied to the transfer balance. You could reach the end of the promotional balance transfer period without reducing the transfer balance at all.
How can you apply for a Citi Flex Plan?
Although you cannot apply for a Citi Flex Plan, a direct offer may be sent to you via mail or email, or it may be listed on your online account overview page. You can also call Citi customer service to check if you are eligible for a Citi Flex Plan or other offers.
Should you use the Citi Flex Plan?
The Citi Flex Plan can be a useful tool in some situations, but only if used wisely.
Explained Benefits:
- Once you receive an offer, you’re in: There is no separate credit check or application required to use the Citi Flex Plan, meaning no hard inquiry on your credit report.
- It can save you money: You can pay a lower interest rate using Citi Flex Pay than your regular purchase rate.
- A fixed-rate loan can make budgeting easier: Knowing you have a fixed payment due each month may work better for your budget than having a credit card bill that changes monthly.
- No additional fees: Citi Flex Loan does not add any extra loan fees like some other loan products. There are also no additional fees for Citi Flex Pay.
Explained Drawbacks:
- It may tie up your available credit for longer: If one of these plans lures you into running a higher balance than you normally would, it may affect your credit utilization. Utilization refers to how much of your total credit limit is being used, and it is a key factor in credit scoring. The more available credit you use, the greater negative impact it can have on your credit scores.
- You won’t earn rewards with the Citi Flex Loan: Purchases paid for with Citi Flex Loans are not eligible for rewards. You may still earn rewards on purchases made using Citi Flex Pay.
- You may find yourself in trouble: Citi Flex Plans may increase the minimum monthly payment amount to a level that impacts your budget.
Exploring Alternative Options
Before committing to a Citi Flex Plan, check out some other options. For example, you may be able to obtain a lower rate with a personal loan. The average rate for personal loans in the second quarter of 2020 was 9.5% for a 24-month loan, according to the federal portfolio.
You may
Another option is to get a new credit card with a promotional 0% interest rate for purchases and use that card to make a large purchase. You will pay the amount interest-free if you pay off the balance within the promotional period.
Or, if you have already made a purchase on a Citi card, you may be able to open a balance transfer card and pay off that balance at a 0% interest rate. But remember, once the promotional period ends on any of these offers, you will pay the regular credit card interest rate, which may be higher than what you would pay on the Citi Flex plan.
Takeaway
The Citi Flex Plan allows you to pay for a purchase over time at a lower interest rate than your regular purchase rate. Citi Flex offers quick access to cash without needing to apply for new credit. Both can be beneficial for borrowers who need some flexibility but do not wish to go through a loan process or apply for a new credit card. For those with strong credit who don’t mind exploring new products, there may be better ways to spread the cost of a purchase. For example, you could apply for a personal loan or open a new credit card with a promotional 0% interest rate. The bottom line: the Citi Flex Plan can be useful in emergencies, but use it cautiously. Overextending or purchasing amounts beyond your means will increase your minimum monthly payment burden, which could cause problems in the future.
Source: https://www.thebalancemoney.com/what-is-a-citi-flex-plan-5081199
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