If you use the Cash App and find yourself in a financial pinch, there may be a short term solution.
The Cash App is something I only recently discovered when I was researching various PayPal alternatives. It was fun to discover that you could very easily get free money on the Cash App, kind of like PayPal in the early days.
Then I learned of all the fun boosts, contests, and other interesting tweaks they added to what’s ostensibly a payments platform. I recognize that a lot of them can be just a distraction but if you use the app as your main payments platform, you’re better off with these boosts and contests than without.
That said, one feature they rolled out last year that caught my eye was the ability to borrow money. Sometimes your finances get a bit out of sync, especially if you’re paid bi-weekly, which is why so many fintech companies offer paychecks 2 days early.
Cash App has upped the ante by offering a short term loan (not cheap but accessible) to qualified users:
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How Much Does a Cash App Loan Cost?
Before we talk about how to get it, we need to address costs. Loans, especially short term loans, are typically very costly. The companies that issue them are preying on customers who are in dire situations.
With Cash App, a loan will cost you 5% of the loan balance immediately and then 1.25% per week after the grace period. You have four weeks to pay off your loan followed by a one-week grace period before the 1.25% interest rate kicks in. This interest is added to the amount you need to pay them each week.
In terms of fees and costs, it’s better than a title loan or pay day loan but you are limited to how much you can borrow ($200). (more importantly, you can’t get a second loan if you have an existing one)
If you compare it with some popular cash advance apps, it’s cheaper in the sense that many of them don’t charge you for the loan but require a monthly membership fee.
It appears that the Cash App is really meant as a short term stop gap measure, for emergencies that may pop up before your next paycheck. If you need more money or for a longer time period, it is often better to go with a personal loan rather than this route.
How to Borrow Money from Cash App Borrow
Not everyone has access to Cash App Borrow, to see if you do, follow these instructions:
- Open the Cash App
- Click on your account balance in the lower left (if you don’t have a balance, it looks like a house)
- It should take you to the Banking section, now look for “Borrow up to …” (it has a blue arrow icon)
- If you can’t find it, you don’t have access (more below). If you do, you can take out a loan.
- Tap on “Unlock.”
- Cash App will indicate how much you can borrow ($20 to $200, depending on your regular deposits)
- Read the agreement (Borrow Loan Agreement) carefully, then accept the loan if you want it.
How to Get Access to Cash App Borrow
Cash App Borrow is available to people who make regular deposits into their Cash App account. The more you deposit on a regular basis, the more you’re eligible to borrow through Cash App borrow.
The maximum loan amount, $200, is available if you deposit at least $1,000 per month into your Cash App account.
Should You Borrow from Cash App?
If you need a little bit of cash quickly, it’s a good option to have. If you only need a few bucks, the cheapest option is to borrow money from friends and family.
But sometimes you can’t or you feel badly asking to borrow money. The Cash App only offers up to $200 so it’s not a tremendous amount, something someone could conceivably be able to lend you without much difficulty.
If you don’t have that as an option, borrowing even the full $200 from from Cash App only costs you $10. On a percentage basis, it’s high (5%) but not from a nominal basis.
Anything else I should know?
If you already have a Cash App loan, you can’t get another one. You have to pay back the first loan before you get another one. Many short term lenders prey on consumers who need to roll over their loans (and then charge them more fees).
If you make regular deposits but still don’t have access, it’s possible that your history (credit or otherwise) is such that they’ve decided not to extend it to you. You can call Customer Service to see if they can share more as to why you don’t have access.
The Cash App Borrow loan is not meant to be a long term solution. The low limit ($200 max) and short time frame (four weeks) indicates it’s best used for when the timing of paychecks and bills get a bit out of sync.
It’s a nice to have option that is simpler than going the route of a more traditional loan. To get access though, you’ll need to make sure you have those regular deposits of at least $1,000 to get the full $200.