Square Cash app loan option

Square’s Cash App is Testing Short-Term Loans — Is That a Good Thing?

It’s now been a few years since I first came across Square’s Cash app. At the time, I had already been familiar with Square’s card readers and POS machines that are a staple at many small businesses, so I figured I’d check out their peer to peer payment tool and even snap up one of their free debit cards. Since then, I’ve seen the Cash app evolve in a few ways — including expanding into stock trading. That’s why I was interested to hear about their latest potential feature: short-term loans.

According to TechCrunch, the Cash App is currently in the midst of experimenting with the ability for select users to borrow between $20 to $200 for a flat interest rate. For this test, the fee is equal to 5% of the loaned amount. Users are expected to pay back these loans within four weeks — although an extra week of grace is apparently afforded to customers as well. However, should five weeks pass and a balance still be outstanding, 1.25% in non-compounding interest will be added with each passing week.

If you’re now checking your Cash app for this feature, you should probably know that the company says it’s currently only being offered to a mere 1,000 or so users. However, speaking to TechCrunch, a spokesperson said, “We look forward to hearing their feedback and learning from this experiment.”

It’s not exactly clear how long Square Cash has been planning this feature, but it definitely seems appropriate given the current circumstances. With Congressional leaders still at a standstill when it comes to cutting a deal, many Americans continue waiting on a second round of stimulus checks to help them stay afloat (see my recent UBI rant for more on this topic). To be clear, this is in no way a replacement for such assistance, but it could certainly come in handy for some users.

While 5% interest may not be great, it’s also not the worst option. Since the top loan amount is $200 at the moment, you’d end up paying $210 (assuming you paid it back on time or in the grace period). Again, that doesn’t sound so bad and, as TechCrunch notes, is a far cry from what some payday lenders would charge for a similar service.

Of course, one might wonder why you’d pursue this option instead of just making a necessary purchase with a credit card. After all, depending on the time of the transaction, you could potentially get more than four weeks of float time without paying any interest. The simple answer is that many Cash app users are likely without a credit card and unable to get one, making this point moot. On top of that, even if they do have a credit card, they may not be able to access cash from it — something they might need if they intend on using the funds for rent or other such expenses that might not allow for card payments.

Without having the chance to try out this feature for myself, it’s hard to say exactly how I feel about it. But, if nothing else, I’m at least intrigued by Square’s idea and tend to trust them as a company overall. Personally, I do think it sounds more helpful than predatory, yet I am admittedly not an expert on the subject. With that, I’d love to hear what anyone else thinks about this test and whether or not they believe the feature should move forward.

Author

Kyle Burbank

Founder ~ Moneyat30
Kyle is a freelance writer - including being the head writer for Fioney.com. He also serves as editorial director for the Disney fan site LaughingPlace.com and the founder of Money@30.com. In 2015, Kyle and his wife Bekah moved from Los Angeles to Springfield MO in pursuit of greater financial freedom. Together, the pair enjoy travel, coffee, and spending time with their dog Rigby. Additionally, as of 2023, they become first-time homeowners.

Other Articles by Kyle Burbank

happy couple looking outside a cab window

My New Vegas Preference: Why I've Been Going Back to Taxis

There's no question that Uber has been a game changer for travelers and commuters alike. Not only did the platform provide an often less expensive competitor for traditional cabs but also made them easier to hail and pay for. Plus, it provided plenty of people with a solid side hustle...
elevators inside Atlanta Marquis Hotel

Travel Tuesday: Atlanta Marriott Marquis Hotel Review

Over the years, I've spent countless hours in Atlanta Hartsfield-Jackson International Airport, but have never really ventured into the city itself (other than driving through it on road trips). So, when it was revealed that FinCon 2024 would be held in Downtown Atlanta, I relished the opportunity to finally explore...
Robinhood Presidential Event app

Trying Robinhood's Presidental Election Market: A Brief How-To

Is the upcoming presidential election not giving you quite enough anxiety? Then what if you also had money riding on it? Well, if you're a Robinhood customer, now you (potentially) can! That's right, early this week, Robinhood unveiled its Presidential Election Market. Here, eligible customers can purchase event contracts tied...

Leave a Reply

The "Email" field is empty, you must enter some text to proceed.The text you entered in the "Email" field appears to be invalid, please edit it and try again
Get Posts in Your Inbox
Featured Articles
happy couple looking outside a cab window

My New Vegas Preference: Why I've Been Going Back to Taxis

There's no question that Uber has been a game changer for travelers and commuters alike. Not only did the platform provide an often less expensive competitor for traditional cabs but also made them easier to hail and pay for. Plus, it provided plenty of people with a solid side hustle...
elevators inside Atlanta Marquis Hotel

Travel Tuesday: Atlanta Marriott Marquis Hotel Review

Over the years, I've spent countless hours in Atlanta Hartsfield-Jackson International Airport, but have never really ventured into the city itself (other than driving through it on road trips). So, when it was revealed that FinCon 2024 would be held in Downtown Atlanta, I relished the opportunity to finally explore...
Robinhood Presidential Event app

Trying Robinhood's Presidental Election Market: A Brief How-To

Is the upcoming presidential election not giving you quite enough anxiety? Then what if you also had money riding on it? Well, if you're a Robinhood customer, now you (potentially) can! That's right, early this week, Robinhood unveiled its Presidential Election Market. Here, eligible customers can purchase event contracts tied...
Money Nerds Unite - FinCon Atlanta 2024

FinCon 2024 Recap: Returning to the Conference After 5 Years

It's hard to believe but, prior to the last week, it had been five long years since I attended a FinCon event in person. After going to my first event in 2018, I attended the 2019 conference in Washington D.C. — and then, well, you know. Even though FinCon had...