Square’s Cash app is beta testing a new feature where users can borrow $20 to $200, the loan length is four weeks and cash app is charging a flat fee of 5% (multiplied by 52 weeks is 60% or almost 80% with compounding interest). Currently this feature is being offered by 1,000 users.
Obviously Cash app will position this as a cheaper alternative to a payday loan, but when your ‘competitive’ advantage is to be cheaper than the most expensive loans in existence I’m not sure that’s a selling point. It’s disappointing as cash app has been doing good things such as the cash app boosts. Even credit card issuers that offer to turn your credit card into a personal loan don’t charge rates as high as cash app.
Hat tip to TechCrunchÂ
wow cash app is really scum. i thought having 0 customer support was bad
Id hope they get a customer service line up!! Customer service sucks…3 months and counting and still cant get help i need
Oh honey no..
Negative feedback on this is not cool doc, as this deal does not apply to everyone, it’s better than several alternatives which makes it a great deal for some
I don’t think you know what “great deal” means
I don’t think you know what the alternatives are.
Exactly. You get 50 day loans by buying gift cards with a credit card at a grocery store and buying MOs.
How much better is it than more expensive options? I have no idea how much payday loan costs.
400% APR the range payday loans sit in. And that is if you pay on time.
Is this even legal? That’s payday loan territory…
Feels usurious
This is actually even worse than 60% APR. There are 365/(7*4)=13.04 four-week periods in the year. (1.05)^13.04= 1.89. So APR is 89%.
Too bad they don’t offer a savings account like this.
I can offer loans up to 4 weeks and $2,000 for no cost. You just need a credit card reader that’s coded as a grocery store
lmao.
Wow. I couldn’t help but burst out laughing at the title. At least they only lend up to $200?
lol same
Is the service restricted to some states? Because I’m not sure how it would be legal in NY state where I live. Thought the interest rate/fee cap was 25% annual for any loan with very few exceptions.
Probably, it’s only in beta testing to 1,000 people at the moment.
Sounds like they’re trying to get some extra money from millennials and zoomers who may not know better.
Targeted at PayDay Loan demographics. They will compare this against Payday loans, and see that it’s better.