What Is a Rewards Credit Card?

A rewards credit card works like any other card. You make purchases and pay for them at a later date. The difference is that a rewards card also gives you cash back, rewards points, or some other incentive to reward you for using the card.

The types and rates of the rewards that these cards offer can vary widely. Different cards also offer different types of rewards. If you’re choosing a rewards card you will need to understand these differences and choose the card that will reward your spending habits.

Remember that card issuers offer rewards for two reasons. They want you to choose their card and they want you to use it. That’s good for the card issuer, but it may not be good for you.

If you are earning rewards from purchases you would have made anyway, you’re gaining. If you spend just to maximize rewards, you’re losing.

Cash Back vs. Points vs. Travel

There are three general types of rewards cards. The one you choose will depend on the type of rewards that you can get the best use out of. That will be determined by your existing spending habits.

1. Cash Back

Cash back is the simplest and most flexible form of reward. Every time you make a purchase, your credit card issuer will add to your cash back balance.

For example, a card offering 1% cash back gives you $1 for every $100 you spend.

Most card issuers will let you redeem your cash back for a credit against your card’s balance or a direct deposit to your bank account.

Another way to look at these cards is that they give you an automatic discount on everything you buy. If you spend $100 and get $1 in cash back, you really spent $99, meaning you got a 1% discount.

Tip: If you want simple rewards, we’d recommend a good cash back card. You can use the rewards you earn for almost anything.

2. Points

Some credit cards offer rewards points. You’ll earn a number of points for each dollar you spend using the card.

Points are more complicated than cash back. Each card issuer offers different redemptions, but common options include:

• Gift cards
• Merchandise
• Statement credits
• Cash
• Travel
• Partner transfers

Every reward may offer a different ratio of value-to-points.

For example, you might be able to redeem 1,000 points for $6 in cash or $10 in gift cards. There could be 1,000-point merchandise redemptions worth more than $10 or less than $6.

That means that understanding the true value of your points can be hard. The value could depend on how you redeem them. If you look carefully, you might find great opportunities to redeem your points at a high value. That can help you, but remember that the time you spend analyzing your points and how to maximize them is also valuable!

3. Travel

Travel credit cards offer rewards that are focused on travel-related spending categories like hotels, airlines, and rental cars.

Some travel cards are co-branded with a specific travel chain. These cards typically offer rewards directly associated with that brand’s loyalty program.

For example, Southwest credit cards let you earn Southwest miles with each purchase and Hilton credit cards let you earn Hilton points.

These co-branded credit cards may offer other perks when you use that brand’s services. You might get automatic loyalty status, which can come with free nights at hotels or room upgrades.

Other travel cards are generic and not partnered with a single airline. These cards will give you points or miles, but with redemption options focused on travel. They may also let you transfer your points or miles to a list of partner airline and hotel loyalty programs.

These cards give you more flexibility but don’t tend to offer the benefit of automatic status with an airline or hotel chain.

Flat-Rate vs. Category-Based Rewards

Knowing how to choose a rewards credit card requires more than just thinking about the type of rewards you can earn. You also have to consider the rewards rates.

Rewards credit cards come with either flat-rate rewards structures or category-based rewards.

Flat-rate rewards are simple. You earn the same rewards rate regardless of what you’re buying. A 1.5% cash back card gives you 1.5% back on everything you buy, whether it be pizza, gas, groceries, airfare, or anything else.

Category-based cards offer different rewards rates for different types of purchases. Usually, it’s based on the type of store you’re shopping at.

In general, category-based cards offer higher maximum rewards rates than flat-rate cards. However, flat-rate cards offer a higher baseline earning rate. If you’re willing to put in the effort to think about where to use different cards to earn more rewards, category-based cards can accelerate your earnings.

One thing to note is that some category-based cards change their bonus categories every quarter, adding another thing for you to keep track of.

How to Choose a Rewards Credit Card

Choosing the right rewards credit card involves answering a few questions.

What is My Credit Score?

Rewards credit cards usually require fair to good credit. Some premium cards require excellent credit, so make sure you have a chance of being eligible before you apply.

If you have poor credit, consider applying for a secured credit card instead. Build your credit score first before looking for a rewards card.

Is There An Annual Fee?

Many rewards cards charge an annual fee. These fees may be worth paying if the rewards or perks they offer can offset the fee, but make sure you don’t pay a fee without getting your money’s worth. If the rewards you earn don’t cover the fee, you’re losing money.

We’d recommend avoiding cards with annual fees until you get a better idea of how you use rewards cards and how much you can earn.

Can I Use the Rewards Credit Card Responsibility?

Rewards credit cards are still credit cards. That means they have high interest rates. If you don’t pay your balance off in full, each month, the accrued interest will quickly outpace any rewards you earn.

Make sure you can use a credit card properly and always pay off its balance before you start applying for rewards credit cards.

What Type of Rewards Do I Want?

Think about whether you want to earn cash back, points, or travel rewards. Your decision can help narrow down the list of cards you to consider and compare.

Where Do I Spend the Most Money?

Take a look at your spending habits and find out where you spend most of your money. A financial tracking app can be a huge help here.

If you do a large amount of shopping at grocery stores or you spend lots of money on gas, consider category-based cards that offer higher rewards rates for those types of purchases.

How Many Rewards Cards am I Willing to Carry?

Think about the amount of effort you’re willing to put into earning rewards. Rewards cards can be lucrative even if you put in minimal effort, but if you really get into it and work with an array of cards, you can optimize your rewards rates and earn even more.

We’d recommend keeping it simple to start with, especially if you’re new to credit cards in general. However, over time you might want to consider adding more cards to your wallet to exploit different types of spending.

Sample Wallets

Here are a few examples of how people can add cards to their wallets to maximize the rewards they earn.

Basic

The most basic strategy for how to choose a rewards credit card is to get just one and use it for everything you buy. Typically, you’d want a flat-rate card that offers a high rewards rate, such as the Citi Double Cash, which pays 2% cash back on all purchases.

Intermediate

If you’re willing to put in a bit more effort, you might have two or three cards in your wallet. This is the strategy I use.

I carry a Citi Double Cash to earn 2% cash back on most purchases and an American Express Blue Cash Preferred card for use at grocery stores (6% cash back) and gas stations (3% cash back). Because I do a lot of spending on those two categories, adding one extra card to my wallet lets me earn much more cash back.

If you do add a card, do it strategically. Analyze your spending patterns and select cards that will best exploit them. Always watch those fees!

Rewards Maximizer

Someone who wants to max out their rewards might carry three, four, five, or even more credit cards.

Usually, these cards will include a single flat-rate card and many different category-based cards, one for each type of store that the person usually visits. Category-based cards can offer 5% or more cash back at specific stores, meaning this strategy can more than double the earnings of carrying a single card.

However, it also means applying mental effort to remember where to use each specific card. It also requires applying for lots of cards, handling multiple monthly payments, and dealing with a large wallet.

This strategy is mostly used by rewards card enthusiasts and churners. It isn’t one I’d recommend for most people, especially if you’re not a big spender to begin with.

Conclusion

Rewards credit cards can deliver substantial paybacks, but to take full advantage of the incentives you’ll need to think about how to choose a rewards credit. A card that fits your spending habits and has no annual fee can put you ahead. A card with a high fee that doesn’t match your spending habits could lose you money.

With a little bit of planning, you can choose the rewards credit card that best suits your needs!

The post How to Choose a Rewards Credit Card that Fits Your Lifestyle appeared first on FinMasters.

If your credit score is closer to the upper limit of the “bad” credit score range, consider improving your credit score before applying for a credit card. This can open doors to credit cards for fair credit, which offer more favorable terms, including no annual fees and rewards programs.

Let’s look at some of the best credit cards for people with bad credit.

What Are Your Options

If you have poor credit, your best bet is a secured credit card. Secured credit cards are designed to provide credit card convenience and credit building power for people with poor credit or no credit.

Your second best option is an unsecured credit card for bad credit. Unsecured credit cards for people with subpar credit typically come with high fees, high interest rates, and little spending power.

The Best Credit Cards for Bad Credit

When we looked at credit cards for bad credit, we considered these points.

• Does the card have fees?
• What is the APR (Annual Percentage Rate)?
• What is the minimum deposit for a secured card?
• Can you upgrade from a secured to an unsecured card if you establish a good record?
• Will you earn rewards?
• Does the card have a minimum credit score or other requirements?

Here are our top picks for the best credit cards for bad credit.

BEST FOR REWARDS

Discover it Secured Card

The Discover it Secured Card is a top pick among secured cards. There’s no annual fee and the minimum deposit is $200. The regular APR is 27.74% (variable). You can upgrade to a secured card.

There’s a surprising range of rewards for a secured card. You’ll get 2% back on purchases up to $1000 per quarter at restaurants and gas stations. There’s a 1% cashback reward on all other purchases. With CashBack Match, you’ll get an unlimited dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically! Just remember to keep your balance down! Don’t buy things you don’t need just to get the reward.

Learn More

BEST NO FEE AND LOW APR

nRewards Secured Credit Card

The Navy Federal Credit Union offers the nRewards Secured Credit Card. There’s no annual fee and the regular APR is a variable 18%, unusually low for a no-fee card. The minimum deposit is $200 and upgrades are allowed.

You will have to be a member of the credit union. The card even offers rewards: one point for every dollar spent.

Learn More

NO CREDIT CHECK OR BANK ACCOUNT NEEDED

OpenSky® Secured Visa® Credit Card

The OpenSky® Secured Visa® Credit Card does not require a credit check, and you can be approved even without a bank account. This is an option for people with no credit score or a score below 350. There’s a $35 annual fee and there’s a variable APR of 25.64%.

There are no rewards.

Learn More

LOWEST APR

First Progress Platinum Prestige Mastercard® Secured Credit Card

The First Progress Platinum Prestige Mastercard® Secured Credit Card has no minimum credit score and you’ll only face a soft credit check with no impact on your credit. The variable APR on purchases is 15.24%. There’s a $49 annual fee, though, so you’ll have to carry significant balances to make the low APR worth the fee. The minimum deposit is $200.

The card also offers rewards: 1% Cash Back.

Learn More

UNSECURED CARDS

Unsecured Credit Cards for Bad Credit

Unsecured credit cards for bad credit can help you rebuild your credit score while enjoying the convenience of a credit card. And unlike secured credit cards, they don’t require a security deposit. 

Unsecured credit cards for people with bad credit typically come with high fees, high interest rates, and little spending power.

To help you make the best, and the least costly choice, we’ve narrowed down the best unsecured credit cards for bad credit.

Best unsecured credit cards for bad credit

UNSECURED STORE CARD OPTION

Fingerhut

Fingerhut is an online store that offers a store credit card aimed at people with bad credit. The application is easy and you’ll have a decision in seconds. There’s no minimum credit score or deposit but you will need to meet an income requirement and have a Social Security Number, among other requirements. They report to all three credit bureaus, so the card can help you build credit. The APR is a fixed 29.99%. Your credit limit will be assigned on approval.

If you use a Fingerhut account, make sure that you are buying items that you need and would have bought anyway. Also, be sure to check the price. Fingerhut offers easy credit, but many items are much cheaper at other stores. If you use it with caution, this card could help you build credit, but if you’re not careful, it could hurt your finances.

Learn More

Why We Recommend Secured Credit Cards

Secured credit cards are a great way to build your credit from the ground up or repair a history of bad credit.

You’ll still need to apply for one just like a regular card, but the eligibility criteria are a lot more inclusive in most cases.

With responsible use, a good secured credit card will eventually help you graduate to a regular credit card with much better terms.

How Secured Cards Work

A secured credit card is secured by a deposit. You put down a deposit, and the deposit becomes your credit limit. You can’t charge more than you have on deposit. That means the issuer takes no risk. That’s why issuers will approve secured cards for people with bad credit.

Once you have the card, it works just like any other card. You can make charges up to the credit limit. It doesn’t say “secured” on it, and nobody will know it’s a secured card. You’ll get a statement and bill every month. If you pay the bill on time, you will pay no interest. If you carry a balance to the next statement period, you will pay interest.

Your card issuer will report to the credit bureaus. That will help you build credit, as long as you handle your card well.

Some secured cards have an annual fee. Others do not. The cards that don’t have annual fees often have higher interest rates. But remember that if you pay every bill in full and on time, that won’t matter. You won’t be paying interest.

Learn more about how secured credit cards work.

How to Build Credit with a Secured Card

If you have bad credit you will want to improve it. A secured credit card can help you do that.

Remember two key factors.

• Payment history is the most important part of your credit score. Make your payments on time.
• Credit utilization is also a critical part of your score. This is the percentage of your credit limit that you actually use. Keep your balance below 30% of your credit limit. Lower is better!

Here are some steps that will help.

• Use your card. A dormant card will contribute less to your credit than an active card.
• Pay every bill on time. On-time payments build credit. Late or missed payments kill credit.
• Pay every bill in full. Any balance carried past the due date incurs interest. That’s money out of your pocket.
• Watch your balance. Secured cards often have low credit limits. That makes it easy for your credit utilization to rise.

If your payment record is good, some issuers will raise your limit above your deposit. That keeps your credit utilization even lower. Some will even move you to an unsecured card if you keep a good record!

Low Fee or Low APR?

If you look at these cards, you’ll notice right away that, in most cases, the cards with no fees have significantly higher APRs. Most of the low-APR cards have annual fees.

That may seem like a reasonable tradeoff but consider these points.

• If you pay every bill in full and on time, you will never pay interest, no matter what the APR is.
• Most secured cards have low credit limits. If you do carry a balance, it will be for a low amount. The interest saving from the lower APR will not justify the fee unless you carry large balances all the time, which you should not do.
• Cards with fees may provide more rewards, but you’ll have to spend a lot to earn enough rewards to equal the fees. It’s hard to spend that much with a low credit limit!

In most cases, a low-fee card will be your best bet. Worry about rewards when you have better credit, and protect yourself from interest by paying your bills on time and in full. A card with a fee may be an option if it’s the only one you can get.

Remember that a low minimum credit score does not guarantee approval. Issuers will look at your record, and they may turn you down if they don’t like what they see.

What Comes Next?

You can get credit cards for bad credit. Once you have one, you have a new challenge: get that credit score back where you want it to be!

You already have one valuable tool: your new secured card. Make your payments on time and keep your credit utilization low, and you’ll be moving in the right direction.

Once you get a good pattern established with your secured card, consider another secured card.

A credit-builder loan from a local bank or credit union or an online lender like Self will give you an installment loan on your record.

In the long run, knowledge is the key to building better credit. Start by understanding how your credit score is calculated. Get your credit reports and learn to read them. Look for errors or signs of identity theft, and dispute any problems. You can do this yourself, and you should be very wary of anyone who promises to fix your credit: debt relief and credit repair scams are rampant.

Our article on rebuilding damaged credit should get you started. It takes time, but you can improve your credit, build your financial knowledge, and take control of your financial life at the same time!

The post The Best Credit Cards for Bad Credit in February 2024 appeared first on FinMasters.

They’re a bit of a hidden gem, but don’t worry, we’ve got you covered. Let’s dive into some of the best no-credit-check options out there.

Cards	Regular APR	Annual Fee	Rewards	Best For
Tomo Credit Card	0%	$0	Yes	Best Unsecured Credit Card
OpenSky® Secured Visa® Credit Card	25.64% (variable)	$35	No	Best for Unbanked Consumers
Chime Credit Builder Secured Visa® Credit Card	N/A	$0	No	Best for Revolving Security Deposits
GO2bank Secured Visa® Credit Card	22.99%	$0	Yes	Best Traditional Secured Card
Self Credit Builder Account with Secured Visa® Credit Card	N/A	$25	No	Best for Pairing with a Credit Builder Loan

5 Best Credit Cards With No Credit Check

When compiling this list, we primarily considered the following factors:

• Annual fees
• Cashback rewards
• Means of underwriting
• Customer review trends
• Security deposit requirements
• Annual percentage rates (APR)

Based on that research, here are our top picks for the best credit cards with no credit check:

These cards don’t require credit checks, but that doesn’t mean you’re guaranteed to qualify for them. Several have alternative eligibility requirements, and the card issuers may reject your application if you don’t meet them.

BEST UNSECURED CREDIT CARD

Tomo Credit Card

Annual Fee
$0

Regular APR
0%

Rewards
Yes

Additional Requirements
Financial history check

Instead of checking your credit score, Tomo uses your financial history to underwrite your application by reviewing your bank and investment account activities. If you have healthy cash flows, an emergency fund, and an investment portfolio, you should qualify for the card, which has no fees and rewards.

In addition, the Tomo Credit Card is unsecured, which means you won’t have to provide a security deposit when you sign up for an account. There aren’t many unsecured credit cards with no credit check.

Read more

Learn More

BEST FOR UNBANKED CONSUMERS

OpenSky® Secured Visa® Credit Card

Annual Fee
$35

Regular APR
25.64% (variable)

Rewards
No

Additional Requirements
N/A

Credit cards with no credit check usually require a security deposit. Since the providers can’t verify your creditworthiness, it’s reasonable to ask for another form of assurance. Unfortunately, you typically need a checking account to fund that deposit. As a result, unbanked individuals with poor credit struggle even more to get credit cards.

OpenSky is one of the few credit card issuers that doesn’t require a bank account when you apply. Its card is secured, but you can fund your deposit via Western Union transfer, check, or money order.

Read more

Learn More

BEST FOR REVOLVING SECURITY DEPOSITS

Chime Credit Builder Secured Visa^® Credit Card

Annual Fee
$0

Regular APR
N/A

Rewards
No

Additional Requirements
Chime checking account

Most secured credit cards require that you provide a lump-sum deposit upfront equal to the account’s credit limit. It’s refundable, but you won’t see it until you upgrade to an unsecured line or close the card.

The Chime credit builder secured card requires a deposit at the beginning of every month instead. It becomes your credit limit for the period and automatically pays off your balance at the end. However, you get to set the monthly deposit, and there’s no minimum, making it much more flexible than traditional secured cards.

Read more

Learn More

BEST TRADITIONAL SECURED CARD

GO2bank Secured Visa® Credit Card

Annual Fee
$0

Regular APR
22.99%

Rewards
Yes

Additional Requirements
GO2bank account

If you want a traditional secured card, GO2bank offers a decent one with no credit check. You need to have a bank account with the provider and set up direct deposit to qualify for the card, but its terms are more favorable than OpenSky’s.

Not only is there no annual fee, but you can earn some reasonable cashback rewards. In addition, the minimum security deposit is much lower than average. You can open a card with as little as $100.

Read more

Learn More

BEST FOR PAIRING WITH A CREDIT BUILDER LOAN

Self Credit Builder Account with Secured Visa® Credit Card

Annual Fee
$25

Regular APR
N/A

Rewards
No

Additional Requirements
Self credit builder loan

Self’s primary product offering is a credit builder loan. It’s an installment debt secured by its own proceeds, which you receive once you pay off the account. It doesn’t require a credit check and is a great way to improve your payment history with installment debt.

If you’re interested in establishing a diverse credit mix, Self is a good option. Once you have the installment account in good standing for three months and pay off at least $100 of its principal, you can automatically open Self’s secured card.

Read more

Learn More

1. Tomo Credit Card

The Tomo Credit Card is one of the more favorable credit cards you can get without a credit check. There are no annual fees or interest charges, and it has a decent rewards program for a card accessible with a bad credit score.

You earn discounts and benefits on Doordash, ShopRunner, and Lyft. Most importantly, the account doesn’t require a security deposit, which is rare for credit cards with no credit check.

That said, Tomo has some notable drawbacks. For one, there are no interest charges because the card won’t let you carry a balance for more than a week. It automatically debits your bank account every Monday to pay off your current balance, no matter when you incurred the charges.

If you want to use your credit card to defer payments, this will be a serious problem, and the Tomo Credit Card might not be your best choice. If your main objective is to build credit, those weekly payments could be ideal, as they will keep your credit utilization low.

In addition, Tomo uses an alternative underwriting method that involves reviewing your bank and investment account activity. As a result, you can still fail to qualify for the account, even though Tomo doesn’t check your credit.

Finally, the company receives consistent complaints from previous applicants and cardholders. Users report encountering glitches and problems throughout their customer journeys, with little assistance from customer support. Tomo is a relatively new company and they may sort these problems out, but you should be aware of them.

Unfortunately, there are very few unsecured credit cards that you can get with no credit check. If you’re not willing to compromise on those two factors, you’ll need to make other sacrifices and take calculated risks.

Learn More: Tomo Credit Card Review (2024): Unsecured Card With No Credit Check

2. OpenSky® Secured Visa® Credit Card

Besides its lack of a credit check, the OpenSky secured account’s primary appeal is that it doesn’t require a bank account. You can qualify for the card without one and pay the security deposit using a money order, check, or Western Union transfer.

That’s highly beneficial to the 6% of American adults who are unbanked, especially since it’s not always easy to rectify that issue. Unpaid overdraft fees, bounced checks, and bank account closures can damage your banking history, making it difficult to qualify for new accounts.

Otherwise, the OpenSky Secured card is a typical starter card. There’s a $35 annual fee, and you won’t earn any cashback rewards on your purchases. It also requires a traditional security deposit, starting at $200.

The APR is relatively low compared to other accounts on this list at 25.64% (variable), but that’s still too high to be affordable. Carrying a balance on even the cheapest of credit cards is a losing strategy.

Unfortunately, reviews indicate that the credit card company’s customer service may leave something to be desired. Apparently, the phone line is often unavailable, and representatives aren’t always as helpful as they could be.

Learn More: OpenSky® Secured Visa® Credit Card Review

3. Chime Credit Builder Secured Visa^® Credit Card

The Chime credit builder card’s unique draw is its revolving security deposit system. Instead of requiring a large lump sum upfront that’s inaccessible for months at a time, you make a new deposit each month.

The amount becomes your credit limit for the period, and the funds you provide go toward your balance at the end of each month. Fortunately, there’s no minimum, so you can forego the deposit entirely when cash is limited.

An interesting result of that system is that Chime doesn’t affect your credit utilization ratio because there’s no fixed credit limit. You don’t have to worry about damaging your score by running up a balance on the account.

Otherwise, the Chime card has fairly average terms. There’s no annual fee and no interest because you can’t carry a balance, but you won’t be able to earn any cashback rewards.

There are no alternative means of underwriting instead of a credit check, but you need a Chime bank account to sign up. The provider won’t accept your monthly deposits from any other account.

Fortunately, Chime generally receives positive customer reviews. Comments indicate that the card is effective at building credit, the mobile app is easy to use, and the customer service is reasonably responsive.

Learn More: Chime Credit Builder Visa® Card Review (2024)

4. GO2bank Secured Visa® Credit Card

GO2bank offers a traditional secured credit card with no credit check. You’ll need to provide a security deposit upfront to qualify, but you get to determine the amount and set your credit limit. The minimum amount is only $100, which is lower than average.

In addition, you must have a GO2bank account with direct deposits of at least $100 in the last 30 days to qualify. The provider requires that you fund your security deposit by transferring money from the GO2bank checking account.

GO2bank’s secured card is pretty rudimentary otherwise, like most credit cards with no credit check. There’s no annual fee, but the APR is high, and you won’t be able to earn any cashback rewards.

The most notable downside is that reviews suggest you may encounter account problems and struggle to receive adequate assistance. Previous customers report that there’s often a language barrier with the support team. However, many complaints are about the company’s prepaid debit cards, not the secured card.

5. Self Credit Builder Account with Secured Visa® Credit Card

The Self Visa credit card is a great way to build a foundation for your credit mix. To qualify for the account, you must first open a Self credit builder loan. It’s a unique type of installment debt that uses your proceeds as collateral, keeping them in a locked account for the life of the loan. As a result, it doesn’t require a credit check either.

During the repayment term, you make monthly payments as you would for any other loan. Once you’ve made three on time and paid off $100 in principal, you can open the Self Visa credit card using the amount as your security deposit.

Other than the unusual process for opening the card, it’s similar to other no-credit-check cards. There’s a $25 annual fee, and no cashback rewards or introductory offers.

Self receives mixed ratings across review platforms. Comments indicate that customer service can be tough to reach when you need to resolve issues or close accounts. In addition, they note that the loan and card are effective at building credit if you pay on time but have no safety net for missed payments and can be costly.

Learn More: Self Visa Credit Card Review

Choose a Card You Can Use Safely

As a result, it’s essential that you build a solid financial foundation and learn to use credit cards safely before applying for one. Here are some best practices to follow:

• Keep an emergency fund equal to your credit limit
• Avoid using cards to finance large purchases
• Set up autopay to prevent yourself from forgetting payments
• Pay your statement balance monthly to avoid interest charges

Credit cards should primarily be a way to build credit and earn rewards. Their interest rates are too high to risk carrying a balance on the account. If you think you might struggle to pay your statement balance on time each month, consider waiting to apply until your finances are more stable.

Learn More: How to Use Credit Cards Wisely: 11 Rules to Live By

Consider Secured Cards with Credit Checks

Applying for a credit card with no credit check is an easy way to qualify for an account despite having bad credit or limited credit history. However, it’s usually not necessary. Plenty of accounts with credit checks are available to subprime applicants.

If you’re willing to undergo incur a hard inquiry, you may be able to qualify for a credit card with more favorable terms than the ones on this list. Explore those options thoroughly before committing to a card with no credit check.

Learn More: The Best Credit Cards for Bad Credit in January 2024

Take Your Next Steps

Opening a credit card is an effective way to establish or rebuild your credit score. You can also significantly speed up the process by acquiring additional credit accounts, especially installment loans that diversify your credit mix.

However, you must learn how credit works before proceeding. Improving your score while protecting your finances is complex, and the journey is long with many potential pitfalls. Fortunately, you can be successful with patience and discipline. It takes time, but your efforts will pay off!

All Credit Builder Accounts made by Lead Bank, Member FDIC, Equal Housing Lender, Sunrise Banks, N.A. Member FDIC, Equal Housing Lender or Atlantic Capital Bank, N.A. Member FDIC, Equal Housing Lender. Subject to ID Verification. Individual borrowers must be a U.S. Citizen or permanent resident and at least 18 years old. Valid bank account and Social Security Number are required. All loans are subject to ID verification and consumer report review and approval. Results are not guaranteed. Improvement in your credit score is dependent on your specific situation and financial behavior. Failure to make monthly minimum payments by the payment due date each month may result in delinquent payment reporting to credit bureaus which may negatively impact your credit score. This product will not remove negative credit history from your credit report. All loans subject to approval. All Certificates of Deposit (CD) are deposited in Lead Banks, Member FDIC, Sunrise Banks, N.A., Member FDIC or Atlantic Capital Bank, N.A., Member FDIC.
The Self Visa® Credit Card is issued by Lead Bank, Member FDIC, Equal Housing Lender.

How We Chose the Best Credit Cards with No Credit Check

We evaluated these cards on several criteria.

• Annual fees. No fees are best, and lower fees are better than higher ones.
• Rewards. You don’t expect significant rewards in a card with no credit check, but there’s nothing wrong with taking the rewards you can get.
• Means of underwriting. Even cards with no credit check will look into your creditworthiness. We looked at the way the card issuers do that.
• Customer review trends. A positive reputation is a good thing.
• Security deposit requirements. Most cards with no credit check will require a deposit. A wider range of deposit options is a plus factor.
• Annual percentage rates (APR). If you pay your statements before the due date (as you should), you won’t pay interest at all, but it’s still worth looking for a low APR.

Not all of these factors will be important to all card users. You should look at the factors that are most important to you!

The post Best Credit Cards With No Credit Check in 2024 appeared first on FinMasters.

Unfortunately, credit cards are also one of the most expensive forms of consumer financing. They have an average interest rate of 21.47%, while mortgages and car loans sit at just 6.7% and 8.5%, respectively^[3,4]. Many Americans are paying over 20% interest on their credit card debts.

Despite the high costs, 35% of Americans let their credit card debts carry over from month to month^[5]. If you’re one of them, here’s why you should never be satisfied with making just your minimum payment.

What is a Credit Card Minimum Payment?

Let’s start with a quick refresher. Credit cards are a form of revolving debt, which means they don’t impose a strict deadline by which you have to pay your balances off in full. Your repayment term is up to you.

If you can afford to pay things off all at once, you can. You can also make your card’s minimum payment and keep your debt outstanding indefinitely.

The credit card minimum payment is the amount of money you’re required to pay toward your outstanding balance each month. If you don’t do so by the due date, your card issuer charges you a late fee and eventually reports you to the credit bureaus.

For example, say you owe $2,000 on one of your credit card accounts. Your credit card issuer will usually require that you pay at least $40 per month to stay in their good graces.

You can find your minimum payment on your credit card’s billing statement. It’s usually easiest to look it up online using your card issuer’s online interface.

How Credit Card Companies Calculate Your Minimum Payment

Credit card companies can calculate your monthly minimum payment in several different ways. It depends on the size of the balance you’re carrying on the statement date, which is the last day of your billing period. Let’s take a look at each option.

First, if your balance is low enough, your credit card issuer might choose to make it your minimum payment. For example, they might ask you to pay the entire amount whenever you owe less than $20.

If you’re anywhere between that debt balance and around $1,000, your card issuer will charge you a fixed dollar amount per month. Usually, it’s equal to the number below which they’d require you to pay your entire balance.

For example, a credit card company that asks you to pay your card’s balance as long as it’s below $20 would likely start your minimum payment at $20 if you owed $750.

Finally, if you owe more than roughly $1,000, your credit card company usually sets your minimum payment as a small percentage of your outstanding balance, rounded to the nearest ten. The most common amount is 2%, but it varies by card.

Alternatively, they may set it at a lower percentage, like 1%, and add in whatever fees and interest you accrued during that period.

If your account is in delinquency, your credit card provider may add your overdue balance to your minimum payment.

Why You Shouldn’t Make Only the Minimum Payment

As a Certified Public Accountant and personal finance writer, I’m seen as the money guy in my personal circles. As a result, I’ve spent a lot of time explaining various financial matters to my friends and family.

There are many different lessons I wish I could impress upon them. For example, you should save at least a third of your paycheck, start investing as soon as possible, and open up that Roth IRA already.

Unfortunately, those talks generally devolve into futile lectures. To my chagrin, none of them are interested in what my spreadsheets have to say, and I’m now reluctant to share my opinion on money matters unless heavily prompted.

However, there is one lesson that I still feel the need to beat people over the head with repeatedly: you should never make just the minimum payment on your credit card debt. Here’s why.

Minimum Payment Means Maximum Interest and Time in Debt

In theory, making the minimum payment on your credit card will eventually get you out of debt. Federal law prohibits card issuers from letting your balance grow faster than the minimum payment can reduce it. Your minimum payment usually just barely clears that requirement.

That means making the minimum payment maximizes the length of time you stay in debt. It also means you’re maximizing the amount of interest you accrue. 

While that should demonstrate the dangers of making your minimum payment, things are often worse in practice. Both previous examples assume you don’t need to use your credit card anymore and can pay it off without adding any further charges.

That’s not usually the case. Many consumers need their credit cards to stay afloat financially. As a result, they add more to their principal whenever they have available credit, and making the minimum payment keeps them in credit card debt indefinitely.

To top it off, when you carry a balance on a credit card, your card issuer takes away your credit card grace period. That’s the gap between the end of your billing cycle and the payment due date. It usually lasts about 25 days.

If you pay off your balances in full before the grace period ends, you’ll pay no interest on them. However, if you carry balances over, all of your purchases start accruing interest as soon as you make them, further compounding your costs.

How Making the Minimum Payment Affects Your Credit Score

Making the minimum payment on your credit card is almost always a mistake from a financial perspective, but it has slightly more nuanced implications for your credit score.

Paying the minimum is definitely worth doing if the alternative is not making any payment. It stops your credit card issuer from reporting you for late payment, which can significantly damage your credit score. Your payment history is worth 35% of your FICO score, which is more than any other factor.

However, if you could afford to pay more by tightening your budget, you’re hurting your credit score by choosing not to do so. That’s because of the second most significant aspect of your credit score, which is your amounts owed.

If you’re carrying so much debt on your card that you can only afford to make the minimum payment, you’re probably at or near your credit limit. That raises your credit utilization, which is one of the primary ways lenders determine whether you have a healthy amount of revolving debt.

Your credit utilization ratio equals your current revolving debt balance divided by your total available credit limit. For example, if you owe $500 on a secured credit card with a $1,000 credit limit, your utilization of the card is 50%.

It’s always best for your credit score to keep your utilization ratio between 1% and 10%. Lenders may consider anyone with a ratio above 30% to be an increased risk.

It’s always best for your #credit score to keep your utilization ratio between 1% and 10%.

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Both your total and per-card utilization ratios matter. If you have multiple credit cards, use this credit utilization calculator to determine the best approach to paying off your balances.

Alternatives to the Minimum Payment

As you can see, making your minimum payment should be your last resort. Every day your high-interest credit card debt is outstanding costs you money. Increasing your monthly payment by $50 or $100 could save you thousands in the long run.

Unfortunately, sometimes you simply don’t have the money to pay more than the minimum payment. If it only happens on rare occasions, it’s not the end of the world. Your finances will survive.

However, if you suspect that you’re going to be stuck making minimum payments for months at a time, it’s worth considering alternative measures. For example:

• Balance transfer: Some credit cards let you transfer your balances to them and charge 0% interest for up to eighteen months. These cards have strict qualification requirements, so they’re primarily for people with good credit.
• Refinance or consolidate: Refinancing or consolidating your credit card debt into an installment loan can help you get a more affordable interest rate or a lower monthly payment.

These remedies are drastic compared to tightening up your budget and paying more toward your credit card debt. They involve some level of risk, so make sure you do your due diligence first.

Key Terms to Remember

• Principal amount: the amount you have actually spent on your card.
• Interest: the amount the card issuer charges on a balance carried after the due date.
• Grace period: the interest-free period from the date of your purchase to the next payment due date.
• Outstanding balance: the total amount you owe on your card.
• Statement date: the date when you receive your monthly statement and bill.
• Due date: the deadline for making your payment.
• Report date: the date your issuer reports to the credit bureaus.
• Late fee: a fee that you will be charged if you fail to make at least the minimum payment by the due date.
• Billing cycle: the interval between your scheduled statement dates.
• Minimum payment: the lowest amount you are permitted to pay to keep your account in good standing.
• Full payment: paying your entire balance on or before the due date.

Prioritize Your Monthly Payments by Return

If your finances are advanced enough that you’re saving a significant portion of your income each month, you need to be intelligent about where you allocate your resources. You want as much of your money as possible to go where it’ll benefit you the most.

In other words, you usually want to direct your funds to the account that will bring you the highest return. When it comes to debt, that means concentrating on paying down the account with the highest interest rate, commonly known as the debt avalanche technique.

In practice, you also have to consider your other savings goals, such as building an emergency fund or saving for retirement.

To get help planning your debt repayment and investment strategies, consider reaching out to a credit counselor or a financial advisor.

Learn More: Are financial advisors worth it? Check out our survey of over 600 Americans to get some insight into the answer: Are Financial Advisors Worth It? (2021 Survey).

The post The Dos and Don’ts of Making Minimum Payments on Credit Cards appeared first on FinMasters.

Compare Cards

Best Secured Credit Cards

BEST FOR NO CREDIT

Citi Secured Mastercard

Citi Secured Mastercard is an inexpensive way to build credit, making it the best solution for customers with little or no credit history. Learn more

Fees
$0 annual fee

APR
27.74% (Variable)

Minimum deposit
$200

Convertibility
Yes

Apply Now

BEST FOR BAD CREDIT

OpenSky® Secured Visa® Credit Card

With no credit check required and a high approval rate, the OpenSky® Secured Visa® Credit Card is a top choice for those who are recovering from bankruptcy or have a low credit score. Learn more

Fees
$35 annual fee

APR
25.64% (Variable)

Minimum deposit
$200 (Refundable) 

Convertibility
No

Apply Now

BEST FOR LOW APR

Applied Bank® Secured Visa® Gold Preferred® Credit Card

The Applied Bank® Secured Visa® Gold Preferred® Credit Card has one of the lowest APRs on the market, even compared to traditional credit cards. Learn more

Fees
$48 annual fee

APR
9.99% (Fixed)

Minimum deposit
$200

Convertibility
No

Apply Now

BEST FOR LOW DEPOSIT

Capital One Platinum Secured

Capital One’s secured credit card is an excellent choice for those who want to start rebuilding their credit with a flexible security deposit. Learn more

Fees
$0 annual fee

APR
30.49% (Variable)

Minimum deposit
$49, $99 or $200

Convertibility
Yes

Apply Now

BEST NO-FEE CARD

Discover it Secured

With a rewards program that rivals even the best of credit cards and no annual fee, Discover it is a favorite among many cardholders. Learn more

Fees
$0 annual fee

APR
28.24% (Variable)

Minimum deposit
$200

Convertibility
Yes

Apply Now

BEST FOR REWARDS

Capital One Quicksilver Secured Rewards

Quicksilver Secured Rewards from Capital One is our pick for the best secured credit card for rewards. Learn more

Fees
$0 annual fee

APR
30.49% (Variable)

Minimum deposit
$200

Convertibility
Yes

Apply Now

Citi Secured Mastercard

Best for No Credit

Summary: Citi Secured Mastercard is an inexpensive way to build credit, making it the best solution for customers with little or no credit history.

Description: 

The Citi Secured Mastercard is a great starting point for people with limited credit history who want to build credit and eventually switch to a regular credit card. You don’t need a credit history or an excellent score to apply. As long as your credit report doesn’t show a bankruptcy in the last two years, qualifying is easy.

Citi Secured reports to all 3 major credit bureaus and gives you free access to your FICO score online to help you ensure that you’re building a positive credit history. It also has no annual fee, which makes it a low-cost option for people new to credit, like students. 

The downside of this card is the lack of rewards and a high APR. If rewards are important to you, then a card like Discover it is a better option, as long as you’re eligible to qualify. 

Before you prioritize rewards, remember that you will probably have a low credit limit, and you’ll want to keep your balance below 30% of your limit. It may be hard to spend enough to gain significant rewards without stretching your credit utilization rate.

Citi Secured Mastercard is a good stepping stone if you’re new to credit. With responsible use, it helps you build a good credit history and transition to a card with more perks. 

Apply Now

Best Alternative for No Credit:

Chime Credit Builder Card: Chime is another low-cost way to build credit. It has no annual fee, no interest, and it doesn’t require a credit check. You will need to have a Chime spending account to use the card. 

Read our full Chime Credit Builder Card review

OpenSky® Secured Visa® Credit Card

Best for Bad Credit

Summary: With no credit check required and a high approval rate, the OpenSky® Secured Visa® Credit Card is a top choice for those who are recovering from bankruptcy or have a low credit score. 

Description: 

OpenSky believes in giving everyone an opportunity to improve their credit score. Since applicants are not required to undergo a credit check or even have a checking account, it’s easy to get approved for the OpenSky® Secured Visa® Credit Card even if you have a history of bad credit or no credit at all. 

Another perk that makes OpenSky attractive is flexibility: you choose your credit limit by putting down a refundable cash deposit that ranges between $200 and $3,000. The card also boasts a 25.64% variable APR, which is relatively low for a secured credit card. 

Where OpenSky falls short is the $35 annual fee and lack of rewards. However, if rebuilding your credit history is more important to you than a lower fee and rewards, it’s a fair price to pay. Another downside is not having the option to upgrade to an unsecured credit card. When your credit improves and you qualify for a better card, you’ll have to apply for one somewhere else. 

Apply Now

Read our full OpenSky Visa review

Best Alternative for Bad Credit:

Sable ONE Secured Credit Card: Relative newcomer Sable ONE doesn’t require a credit check, has no annual fee, and allows you to qualify for an unsecured card in as little as 4 months. It also has a solid rewards program that includes up to 2% cashback with select merchants like Amazon, Netflix, or Spotify. 

Applied Bank® Secured Visa® Gold Preferred® Credit Card

Best for Low APR

Summary: The Applied Bank® Secured Visa® Gold Preferred® Credit Card has one of the lowest APRs on the market, even compared to traditional credit cards. 

Description: 

Applied Bank’s biggest benefit is its 9.99% fixed APR. But a low APR isn’t really a selling point when it comes to a secured credit card. You may be paying only 9.99% in interest charges, but you’re still paying to borrow your own money. Like we mentioned before, it’s best to avoid paying APR altogether. Pay every bill in full and on time and you’ll never pay interest!

The real benefit of this card is the fact that it doesn’t require a credit check. This feature gives people with a damaged credit history a chance to rebuild their credit. If your spotty credit history is making it challenging for you to get approved for a secured card, Applied Bank is not a bad alternative. 

If you can qualify for a more affordable card, our advice is to skip Applied Bank’s visa. It has no rewards, it’s pricey, and it doesn’t allow you to convert to a regular credit card once you improve your credit history. 

Apply Now

Read our full Applied Bank secured card review

Best Alternative for Low APR:

First Progress Platinum Prestige MasterCard: The First Progress Mastercard has similar features to Applied Bank’s visa. It has a low APR of 15.24% (Variable), a $49 annual fee, and no minimum credit score required for approval. 

Capital One Platinum Secured Credit Card

Best for Low Deposit

Summary: Capital One’s secured credit card is an excellent choice for those who want to start rebuilding their credit with a flexible security deposit. 

Description:

If you’re looking to rebuild credit at a low cost, the Capital One secured card might be your answer. You can get access to a $200 credit limit in return for a refundable security deposit as low as $49. It also has no annual fee, making it a very affordable way to repair your credit history and gain access to the advantages of a credit card. 

Like most secured credit cards, it has a high APR. This means that if you don’t pay off your balance every month, you’ll be hit with a hefty interest charge. It’s best to avoid carrying a balance on any credit card!

If you use your card responsibly, you’ll have a chance to upgrade to a regular credit card and earn back your deposit. 

Overall, the Capital One Platinum card is a solid, low-cost choice, but not everyone can qualify. Applicants without a bank account or a credit history will have a hard time being approved.  

Apply Now

Read our full Capital One Platinum review

Best Alternative For Low Deposit:

Sable ONE Secured Credit Card: Sable ONE makes our list once again. This time, it’s because it doesn’t require a minimum deposit amount. They also claim you can get back any deposit you put down in as little as 4 months. 

Discover it Secured Credit Card

Best No-Fee Card

Summary: With a rewards program that rivals even the best of credit cards and no annual fee, Discover it is a favorite among many cardholders. 

Description: 

Discover it is kind of like the unicorn of secured credit cards: it’s among the select few that offer rewards and it has no annual fee. You earn 2% cash back on the first $1000 you spend at restaurants and gas stations each quarter, and unlimited 1% cashback on all other purchases. They’ll even throw in a bonus and double your cash-back rewards during your first year. 

Besides great rewards, the card comes with no annual fee and gives you free FICO score access each month so you can monitor your credit. As your credit score improves, you can convert to an unsecured credit card. 

One of the few downsides of Discover it is its high variable APR. A high interest rate is common among secured cards. As long as you pay your bill on time, that’s not something you need to worry about. 

As far as unsecured credit cards go, Discover it is hands down one of the best ones on the market. It has a unique offering that is hard to come by – you can earn cash while you re-build your credit and no annual fee. 

Remember that your credit limit will be low and it may be difficult to earn enough to make those rewards matter without pushing your credit utilization into dangerous territory. Always put your credit health ahead of rewards!

Apply Now

Capital One Quicksilver Secured Rewards

Best for Rewards

Summary: Quicksilver Secured Rewards from Capital One is our pick for the best secured credit card for rewards. With no annual fee, it’s also an economical pick, but you’ll need at least fair credit. 

Description: 

Quicksilver Secured Rewards lets you earn a generous 1.5% cashback on all your purchases and 5% cash back on hotels and rental cars booked through Capital One Travel. Unlike the Discover it card, rewards aren’t capped, which means your rewards earnings don’t have a fixed limit. 

Don’t get carried away with those unlimited rewards, though. You will still want to keep your spending low enough to keep that balance below 30% of your credit limit. Unless you make a very large deposit, that limit is likely to be low. That will make it hard to spend enough to get meaningful rewards and still maintain good credit utilization. Still, every little bit counts, and with no annual fee, there’s not much to lose.  

You don’t want to be carrying a month-to-month balance on this card, as the APR is very high. If you will pay your balance in full and on time every month and you’d like to earn cashback while building good credit, Quicksilver is an excellent choice for you. 

Not everyone can qualify for this card. You can at least have a fair credit score to be eligible. Different issuers may define “fair credit” differently, but if your credit score is below 580 approval may be difficult.

Apply Now

Best Alternative for Rewards:

Bank of America Customized Cash Rewards Secured: This secured card from Bank of America has no annual fee and offers worthwhile rewards: 3% cash back in the category of your choice, 2% at grocery stores capped at $2,500, and 1% cashback on all other purchases. 

How to Choose a Secured Card

There are countless secured credit cards out there. How do you know which one is the right choice for you? 

The best card for you is the one that suits your needs and priorities. Here are a few questions that will help you narrow down your choices to the one that’s right for you. 

Does it report to all 3 credit bureaus? 

To improve your credit score, your credit card activity (i.e., making payments on time) has to be reported to a credit bureau. Make sure you choose a card that reports your activity to all 3 major credit bureaus – Equifax, TransUnion, and Experian. 

How much can you afford for the initial deposit? 

Many secured credit cards require you to put at least $200 down to “fund” your new card. This becomes your new limit. Ideally, it’s better to get a higher limit to reduce your credit utilization ratio and improve your credit score. 

If you can’t afford a larger deposit you may have to keep your spending very low to keep your credit utilization down.

If you can’t afford to put down the minimum amount, consider a card with a smaller security deposit, like the Capital One Platinum Secured Credit Card. 

Does it give you an option to upgrade? 

Your ultimate goal with a secured credit card is to improve your credit enough to eventually transition to a regular credit card.  

Some card issuers periodically review your account and upgrade you to a regular credit card if your credit has improved enough. Others don’t offer a path to upgrade, which means you’ll have to re-apply for an “unsecured” card elsewhere. 

If you’d like the option to upgrade, look for a convertible card. 

Is the annual fee worth it? 

Some secured credit cards charge high annual fees or even monthly maintenance fees. It’s best to avoid these cards. There are plenty of secured cards out there that don’t charge any fees at all. 

If you’re going to pay a fee, make sure you’re getting something in exchange. For example, some cards designed for people with bad credit will charge an annual fee. If this is the only way to qualify for a secured card, paying an annual fee is worth it as long as it’s not exorbitant. 

How important are rewards to you?

Rewards are a nice perk, but they shouldn’t be too high on your priority list when choosing a secured credit card. If your card has a lower limit, cash back rewards are not exactly worth it. 

Take the QuickSilver Rewards card for example. You’ll need to spend at least $220 each month to offset your yearly fee and break even. But that means your limit (aka your deposit) has to be over $700 to keep your credit utilization ratio 30% or lower. 

Your priority when choosing a secured credit card should be improving your credit score by using it responsibly. If spending enough to earn points affects your credit score, rewards are not worth it. 

Choose your card carefully and prioritize what matters most to you. Remember, your primary focus should be to build up a good credit history. Use your card responsibly and keep your credit utilization to a minimum. 

With responsible use, a good secured credit card will eventually help you graduate to a regular credit card.

FAQ

The post Best Secured Credit Cards of 2024 appeared first on FinMasters.

What’s The First Premier® Bank Secured Card?

The First Premier Bank secured credit card was created for people who have no credit or bad credit. There’s no credit check, so almost anyone can be approved.

Like most secured cards it will report to all 3 credit reporting agencies. That can help you establish a good payment history if you use the card wisely.

First Premier Bank Secured Credit Card Rates & Fees

Below are some of the basic features of the First Premier® Bank Secured Credit Card:

• Interest rate: 19.9% APR
• Annual fee: $50
• Rewards: None
• *Security deposit: $200
• Foreign transaction fee: 3% of each transaction amount in U.S. dollars.
• Credit reporting: Reports payment information to all three credit bureaus.
• Late payment fee: Up to $39.00
• Credit limit increase fee:  25% of the amount of the credit limit increase
• Return Item fee: Up to $39.00
• Balance Transfer fee: N/A
• Cash advance fee: Either $8 or 5% of the amount of each cash advance, whichever is greater.

*With secured cards, you will need to provide a refundable security deposit, which determines what your initial credit limit will be. The credit card company holds that deposit in case you don’t pay your bill.

First PREMIER® Secured Credit Card Features

• Easy Online Application Process
• Monthly Access To Your FICO score
• Reports to all three major credit bureaus
• Manage your account 24/7 with online or telephone access
• Automatic Credit Limit Increase (if you qualify)

Monthly FICO Score

Each monthly statement for your First Premier® Bank Secured Credit Card will contain your FICO score. This allows you to track your credit-building progress using the same score that most lenders use.

First Premier does not state which FICO scoring model you get or which credit bureau provides it. Your credit scores may vary with different scoring models and credit bureaus.

You can view your FICO score by logging into your online account and looking at your statement.

First PREMIER® Credit Limit Increase

While you can always add additional funds to your deposit to increase the credit limit (up to $5,000), after 12 months you will be considered for an unsecured credit limit increase.

The decision on if you will get an increase is based on how you use the account during the first 12 months. This means it is possible to get an increase without depositing more money after the first year.

However, remember that you will pay a fee of 25% of the amount of the increase you receive.

For Example: If you get approved for a $250 credit limit increase, a charge of $62.50 will deduct from your available balance.

First Premier does not offer the option to upgrade to an unsecured card. Once your credit improves you will probably want to close the account and apply for a credit card with better features and lower fees.

Understanding Your Security Deposit

Your initial security deposit will determine your credit limit and affect your credit profile. With First Premier® your initial deposit can be as low as $200.00, but you can deposit up to $5,000 to increase your credit limit.

The amount you deposit will become your credit limit.

A small deposit is easy to manage, but you will have to use your card very carefully to avoid running a high credit utilization rate, which can damage your credit.

Adding to your deposit and raising your limit will tie up some cash, but it will make it easier to build credit. Your deposit is refundable.

First Premier® Bank Secured Card Pros & Cons

Alternatives To The First Premier® Card

A secured credit card through First Premier® is a viable option if you have no credit or bad credit and you need a credit card. If you can qualify for a no-fee secured card, that would be a better option.

Many no-fee secured cards allow prequalification without a hard inquiry on your credit, so have nothing to lose by seeing if you’ll qualify. It’s always worth looking at several secured cards to be sure you’re getting the best deal.

No matter if you are looking to start building your credit or need to rebuild your credit, a secured credit card is one of the best tools to use on your journey.

Best Secured Credit Cards

There are other ways to build credit, and several of them can be used alongside a secured card.

Experian BOOST can help you build your credit record with phone and utility payments… and it’s absolutely free!.

Try Experian BOOST Now!

Self online credit builder loans are straightforward to apply for and the application process is easy.

Learn More

Steps To Take After You’re Approved

The real work starts once you have been approved for your First Premier® Secured Mastercard® Credit Card.

1. Monitor Your Credit

Monitoring your credit is a key part of trying to build or rebuild your credit. Keeping an eye on your credit reports will help you understand your credit and your finances and will give you an early warning of identity theft.

You should try to find a free service that allows you to monitor all 3 of your credit reports.

Monitor Your Credit for FREE!

Credit Sesame’s 100% free credit monitoring service is hassle-free with no strings attached.

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2. Pay In Full and On Time

Making on-time payments sounds simple, but sometimes it isn’t. We all live in the real world where things almost never go as planned.

It’s not always easy, but it’s important to make all payments on time. Late payments will trigger costly late fees and do serious damage to your credit. If you’re not sure if you’ll be able to make payments, minimize spending on your card.

It’s also important to pay your balance in full. The First PREMIER® Bank Secured Credit Card has a reasonable interest rate, but you don’t want to pay interest at all.

If you pay your balance in full for each statement period, you will not pay interest.

3. Keep Credit Utilization Low

Another factor to consider is credit utilization. This is the percentage of your credit limit that you actually use. Secured cards typically have low limits, so you’ll have to watch your balance carefully to keep credit utilization down.

Credit utilization is an important component of your credit score. Try to keep your balance below 30% of your limit. Under 10% is even better!

For example: If your First PREMIER® Bank Secured Credit Card has a $400 credit limit and your balance is $100, your credit utilization is 25%. That’s not bad, but it could be better.

Here’s a proven way to use a credit card to build credit.

Place a single small recurring expense, like a Netflix account or your Internet bill, on your card. Set up a pull from your checking account to cover the bill and be sure the balance stays high enough to make the payment.

Put the card away and forget about it. Your card will be active, payments will be made on time, you won’t pay interest, and your credit utilization will stay low.

4. Don’t Make Minimum Payments

The minimum payment seems like an easy way to keep your card in good standing. It can be tempting to just make that minimum payment, especially if you’re pressed for cash.

Don’t do it. Making only the minimum payment is a sure way to push your balance up, bloat your credit utilization, and raise your interest costs. It’s not good for your credit or your finances.

How To Cancel Your First Premier® Credit Card?

First Premier Bank lets you cancel your credit card at any time by calling its customer service line.

Cancel By Phone: Call First Premier One®at 1-800-987-5521 to speak to a rep and tell them you want to cancel your First Premier® secured credit card.

Is There A Fee For Closing My Account?

Outside of the fees associated with your remaining balance, there is no fee for closing your account.

Your security deposit will be refunded, minus any balance.

The card has an annual fee, so if you’re no longer using it it’s a good idea to close the account. You may reduce the length of your credit history and that could cause a small temporary drop in your credit score, but it’s not worth it to keep paying that fee for a card you aren’t using.

Should You Get This Card?

The First Premier® Bank Secureold Preferred® Credit Card is designed for people who need a credit card and want to start building a credit record. It requires no credit check and is available to almost anyone.

If you qualify for a no-fee secured card, that will be a better option. It’s worth going through a pre-qualification process for a no-fee card to find out.

Before you get this card, we suggest comparing it with other secured cards that don’t require a credit check, like the OpenSky® Secured Visa® Credit Card or the Applied Bank® Secured Visa® Gold Preferred® Credit Card. Comparing these cards will give you confidence that you’ve selected the best option for your situation.

Always shop around before selecting any financial product!

All Credit Builder Accounts made by Lead Bank, Member FDIC, Equal Housing Lender, Sunrise Banks, N.A. Member FDIC, Equal Housing Lender or Atlantic Capital Bank, N.A. Member FDIC, Equal Housing Lender. Subject to ID Verification. Individual borrowers must be a U.S. Citizen or permanent resident and at least 18 years old. Valid bank account and Social Security Number are required. All loans are subject to ID verification and consumer report review and approval. Results are not guaranteed. Improvement in your credit score is dependent on your specific situation and financial behavior. Failure to make monthly minimum payments by the payment due date each month may result in delinquent payment reporting to credit bureaus which may negatively impact your credit score. This product will not remove negative credit history from your credit report. All loans subject to approval. All Certificates of Deposit (CD) are deposited in Lead Banks, Member FDIC, Sunrise Banks, N.A., Member FDIC or Atlantic Capital Bank, N.A., Member FDIC.
The Self Visa® Credit Card is issued by Lead Bank, Member FDIC, Equal Housing Lender.

The post First PREMIER® Bank Secured Credit Card Review (2024) appeared first on FinMasters.

The Applied Bank® Secured Visa® Gold Preferred® Credit Card is a solid option for anyone that has bad credit and needs a secured credit card. There’s no credit check and the APR is unusually low. 

This review should help you understand how this card works, its benefits, and its shortcomings. 

What Makes It Different?

The Applied Bank® Secured Visa® Gold Preferred® Credit Card is offered through Applied Bank. It is designed for people who need to use a credit card while establishing or rebuilding credit.

The biggest selling point of the Applied Bank® Secured Visa® Gold Preferred® Credit Card is that approval is pretty much guaranteed. There is no minimum credit score required and no credit check.

The card also helps you build a credit history by reporting to all three major credit reporting agencies.

Like all secured cards, it requires an initial security deposit once you get approved.

There is an annual fee, but almost all cards that have no credit check charge an annual fee. The fee is substantially lower than the fees on most unsecured cards designed for people with bad credit.

Card Features

The Applied Bank® Secured Visa® Credit Card is packed with several features that make it one of the best secured credit cards that you can get without a credit check.

• Card type: Secured
• Rewards: None
• Credit reporting: Reports payment information to all three credit bureaus.
• Credit check: Absolutely no credit check or minimum credit score is required.
• Requirements: Verification of residence, identity, and ability to pay.
• Credit limit increase: You can increase your credit limit up to $5,000 by adding additional deposits any time after your application has been approved

This is a solid combination for most people who have no credit or badly damaged credit.

Rates and Fees

• Interest rate: 9.99% (Fixed)
• Annual fee: $48
• *Security deposit: $200 minimum, $1,000 maximum
• Foreign transaction fee: 3% of each transaction in U.S. dollars
• Credit reporting: Reports payment information to all three credit bureaus.
• Cash advance fee: Either $5 or 5% of the amount of each cash advance, whichever is greater.
• Late payment fee: Up to $38.00
• Returned payment fee: Up to $38.00

*With secured cards, you will need to provide a refundable security deposit, which determines what your initial credit limit will be. The credit card company holds that deposit in case you don’t pay your bill.

The annual fee is reasonable for a card without a credit check. If you qualify for a no-fee secured card, that would be a better choice.

Get Approved for the credit you need in less than 60 Seconds with the Applied Bank secured Visa card!

Apply Now →

Paying Your Security Deposit

Your security deposit is will determine your initial credit limit. The amount that you deposit will become your credit limit. This limit’s the issuer’s risk and allows them to issue cards without a credit check.

You can use a credit, debit, or prepaid credit card to fund your deposit.

Applied Bank® accepts either MasterCard® or Visa® and the application is designed to make it quick and easy no matter if you are on a mobile device or a desktop computer.

When you submit your application, you are giving Applied Bank® the authority to process the full security deposit, this will place an immediate hold on the funds selected as your credit line.

Applied Bank does not keep your debit card information on file.

Credit Limit Increase

You can increase your credit limit up to $5,000 by adding additional deposits at any time after your account has been approved.

You can request a credit limit increase at any time by contacting their Customer Service Department.

If you get approved, you’ll receive instructions on how to send the additional security deposit needed to fund the increase to your credit limit.

Increasing your own credit limit can help your credit score by decreasing your credit utilization.

Pros & Cons

Alternatives

A secured credit card through Applied Bank is a great way to get your credit profile started and gain the convenience of a credit card without a credit check.

The only real disadvantage to this card is the annual fee, but it’s still reasonable for a card that does not require a credit check. If you qualify for a no-fee secured card, that would be a better option.

No matter if you are looking to start building your credit or need to rebuild your credit, a secured credit card is one of the best tools to use on your journey.

Best Secured Credit Cards

There are other options available for building or rebuilding your credit. They can be used alongside the Applied Bank® Secured Visa® Gold Preferred® Credit Card.

Experian BOOST can help you build your credit record with phone and utility payments… and it’s absolutely free!.

Try Experian BOOST Now!

Self online credit builder loans are straightforward to apply for and the application process is easy.

Learn More

Steps To Take After You’re Approved

The real work starts once you have been approved for your Applied Bank® Secured Visa® Gold Preferred® Credit Card.

1. Monitor Your Credit

Monitoring your credit is a key part of trying to build or rebuild your credit. Keeping an eye on your credit reports will help you understand your credit and your finances and will give you early warning of identity theft.

You should try to find a free service that allows you to monitor all 3 of your credit reports.

Monitor Your Credit for FREE!

Credit Sesame’s 100% free credit monitoring service is hassle-free with no strings attached.

Get Started Now →

2. Pay In Full and On Time

Making on-time payments sounds simple, but sometimes it isn’t. We all live in the real world where things almost never go as planned.

It’s not always easy, but it’s important to make all payments on time. Late payments will trigger costly late fees and do serious damage to your credit. If you’re not sure if you’ll be able to make payments, minimize spending on your card.

It’s also important to pay your balance in full. The Applied Bank® Secured Visa® Gold Preferred® Credit Card has a low interest rate, but you don’t want to pay interest at all.

If you pay your balance in full for each statement period, you will not pay interest.

3. Keep Credit Utilization Low

Another factor to consider is credit utilization. This is the percentage of your credit limit that you actually use. Secured cards typically have low limits, so you’ll have to watch your balance carefully to keep credit utilization down.

Credit utilization is an important component of your credit score. Try to keep your balance below 30% of your limit. Under 10% is even better!

For example: If your Applied Bank® Secured Visa® Gold Preferred® Credit Card has a $400 credit limit and your balance is $100, your credit utilization is 25%. That’s not bad, but it could be better.

Here’s a proven way to use a credit card to build credit.

Place a single small recurring expense, like a Netflix account or your Internet bill, on your card. Set up a pull from your checking account to cover the bill and be sure the balance stays high enough to make the payment.

Put the card away and forget about it. Your card will be active, payments will be made on time, you won’t pay interest, and your credit utilization will stay low.

4. Don’t Make Minimum Payments

The minimum payment seems like an easy way to keep your card in good standing. It can be tempting to just make that minimum payment, especially if you’re pressed for cash.

Don’t do it. Making only the minimum payment is a sure way to push your balance up, bloat your credit utilization, and raise your interest costs. It’s not good for your credit or your finances.

How To Close Your Account

According to Applied Bank®, you may close your account at any time. In order to close your account, you must:

• Give them written notice of your intent to close your account at the address for inquiries shown on your Statement
• Pay your outstanding balance in full.

Once you do that your notice to close your account will become effective as soon as they can reasonably act on it. 

Is There A Fee For Closing My Account?

Outside of the fees associated with your remaining balance, there is no fee for closing your account. 

Your security deposit will be refunded.

The card has an annual fee, so if you’re no longer using it it’s a good idea to close it. You may reduce the length of your credit history and that could cause a small temporary drop in your credit score, but it’s not worth it to keep paying that fee for a card you aren’t using.

A Solid Choice

The Applied Bank® Secured Visa® Gold Preferred® Credit Card is a solid choice for people who need a credit card and want to start building a credit record. It requires no credit check and is available to almost anyone.

If you qualify for a no-fee secured card, that will be a better option. It’s worth going through a pre-qualification process for a no-fee card to find out.

There are other options available without a credit check. The OpenSky® Secured Visa® Credit Card uses no credit check and has a lower annual fee than the Applied Bank® Secured Visa® Gold Preferred® Credit Card. It also has a much higher APR.

If you’re sure you will never carry a balance, you might choose the Open Sky card for its lower fee. If you think you might carry a balance, the low APR of the Applied Bank® Secured Visa® Gold Preferred® Credit Card might make it a better choice.

Compare this card to other options and make the choice that best suits your financial needs!

All Credit Builder Accounts made by Lead Bank, Member FDIC, Equal Housing Lender, Sunrise Banks, N.A. Member FDIC, Equal Housing Lender or Atlantic Capital Bank, N.A. Member FDIC, Equal Housing Lender. Subject to ID Verification. Individual borrowers must be a U.S. Citizen or permanent resident and at least 18 years old. Valid bank account and Social Security Number are required. All loans are subject to ID verification and consumer report review and approval. Results are not guaranteed. Improvement in your credit score is dependent on your specific situation and financial behavior. Failure to make monthly minimum payments by the payment due date each month may result in delinquent payment reporting to credit bureaus which may negatively impact your credit score. This product will not remove negative credit history from your credit report. All loans subject to approval. All Certificates of Deposit (CD) are deposited in Lead Banks, Member FDIC, Sunrise Banks, N.A., Member FDIC or Atlantic Capital Bank, N.A., Member FDIC.
The Self Visa® Credit Card is issued by Lead Bank, Member FDIC, Equal Housing Lender.

The post Applied Bank® Secured Visa® Gold Preferred® Credit Card Review (2024) appeared first on FinMasters.

To help you make the best choice, we’ve narrowed down the best unsecured credit cards for bad credit. We’ll explore their features and whether or not they’re the best option for rebuilding your credit

What Is an Unsecured Credit Card for Bad Credit? 

An unsecured credit card for bad credit is a regular credit card, meaning it has the same features and works the same way as any other traditional, unsecured credit card. The difference is that it’s specifically designed for people with bad credit.  These credit cards have more lenient approval criteria, making it easier for people with damaged credit to qualify. They also tend to have high fees and high interest rates. Many have both annual and monthly fees, adding up to a hefty cost.

If you use one of these cards, you will probably want to treat it as a temporary credit building tool. Use it only when you need to, pay your bills in full and on time every month (so you don’t have to pay interest), and move to a card with lower fees as soon as your credit allows it.

5 Best Unsecured Credit Cards for Bad Credit

Let’s take a closer look at our top five picks.

#1

Indigo® Mastercard® Credit Card

The Indigo® Mastercard® Credit Card offers fast, easy prequalification and no monthly fee. The annual fee is still on the steep side and the initial credit limit is low. 

Fees
$0-$99

APR
24.9%

Initial credit limit
$300

Monthly fee
$0

Visit Website

Learn more about Indigo® Mastercard® Credit Card

#2

Surge® Platinum Mastercard®

The Surge® Platinum Mastercard® offers a higher initial credit limit than most unsecured cards for bad credit, but watch out for those fees! 

Fees
$75-$125

APR
29.99%

Initial credit limit
$300 to $1000

Monthly fee
$10/month after the first year

Visit Website

Learn more about Surge Mastercard

#3

Credit One Platinum Visa

The Credit One Bank Platinum Visa is one of the few unsecured credit cards for bad credit that offer borrowers cashback rewards. 

Fees
$75 first year, then $99

APR
29.24%

Initial credit limit
$300

Monthly fee
Annual fee is billed monthly

Visit Website

Learn more about CreditOne Platinum Visa

#4

Milestone Mastercard® – $700 Credit Limit

The Milestone Mastercard® is specifically designed for borrowers with a challenging credit history. The $700 credit limit is high for cards in this category, but the fees are on the high side too.

Annual Fee
See terms

APR
See terms

Initial credit limit
$700

Monthly fee
$0 the first year (billed $0 each month); $150 annually thereafter (billed $12.50 each month)

Visit Website

Learn more about Milestone Mastercard

#5

Destiny Mastercard®

The Destiny Mastercard’s fees are on the high side, but the card is accessible to people with bad credit and the foreign transaction fee is reasonable, making it one of the better travel options in this category.

Fees
See terms

APR
See terms

Initial credit limit
$700

Monthly fee
$0 the first year (billed $0 each month); $150 annually thereafter (billed $12.50 each month)

Visit Website

Learn more about Destiny Mastercard

Indigo® Mastercard® Credit Card

Summary: With no monthly maintenance fees and easy pre-qualification, the Indigo® Mastercard® Credit Card is one of the better unsecured credit cards for borrowers with bad credit. 

Description

Indigo® Mastercard® Credit Card can help people with challenging credit histories rebuild their credit. You can check if you pre-qualify within minutes for an initial credit limit of $300, with no impact on your credit score.

Unlike other unsecured cards for bad credit, Indigo doesn’t bury you in high monthly maintenance fees or program fees. It does have an unpredictable annual fee that can range from $0 to $75 during your first year and $99 every year after. The fee is based on your creditworthiness. If Indigo considers you a risky client, the fee will be on the higher end of the spectrum. 

Overall, it’s a fair price to pay to improve your credit, as most cards of its type have even higher fees. If you want to improve your credit without paying a fee and you don’t need an emergency loan, a secured credit card is a much better option. 

Indigo reports your activity to all three major credit bureaus. Using the card responsibly can improve your credit score and help you qualify for a better unsecured credit card in the future. As long you pay your balance in full every month to avoid paying the high APR of 24.9%, Indigo is one of the better options in this category. 

Surge® Platinum Mastercard®

Summary: If you have less than perfect credit and need access to a higher credit limit, the Surge® Platinum Mastercard® may be able to help you, but it will cost. 

Description 

Celtic Bank’s Surge® Platinum Mastercard® differentiates itself by offering borrowers potential access to an initial credit limit between $300 and $1000. The amount you’re approved for will depend on your creditworthiness at the time of application. 

Once you’re approved, you may be able to qualify for a limit increase in as little as 6 months. This can help you improve your credit score faster because it can lower your credit utilization ratio. Free monthly access to monitor your credit score is another perk. 

If you’re looking for an affordable way to rebuild your credit score, Surge is not the best choice. You’ll pay $125 annually during your first year ($75 after that), and $120 in monthly fees every year after. The monthly fees are waived if your credit limit is $750 or $1000. Surge also has one of the highest APRs on the market and no rewards. 

Overall, Surge is a decent short-term solution if you need access to funds. The high fees and APR mean you should focus on rebuilding your credit quickly and move on to a less expensive product.  

Credit One Bank Platinum Visa for Rebuilding Credit 

Summary: The Credit One Bank Platinum Visa is one of the few unsecured credit cards for bad credit that offer borrowers cashback rewards. 

Description

Credit One lets you rebuild your credit while earning 1% cashback rewards on eligible purchases like gas, groceries, and more. 

While cashback rewards may seem like a bonus worth the $75 to $99 annual fee, you’d need a higher limit than the initial $300 it offers if you want to make the most of your points. If earning points is important to you, this type of credit card is not the best option. There are better secured credit cards with no annual fee that offer better cashback rewards. 

Credit One regularly reviews your account to determine if you’re eligible for a limit increase and gives you free access to your Experian credit score. This will help you to rebuild your credit and eventually graduate to a better credit card. 

Milestone Mastercard®

Summary: The Milestone Mastercard® is specifically designed for borrowers with a challenging credit history and is one of the cards with a higher credit limit. 

Description

The card’s initial credit limit is a rather high $700, which is reduced once you subtract the annual fee. The credit limit is pretty high for this type of card. Even when you subtract the annual fee, it still has more buying power than most cards.

A high credit limit can help you keep your credit utilization down if you keep a low balance. It can also encourage you to run up a balance with a very high interest rate.

In the first year of using the card, the annual fee can be as high as $175, so it’s best to focus on building up your credit score and switching to a card with lower fees. Despite its annual fee and high APR of 35.90% (which you won’t have to pay if you make every payment on time and in full), it can still be one of the more affordable unsecured credit cards for bad credit on the market. 

*See terms

Destiny Mastercard®

Summary: The Destiny Mastercard® is available to people with bad credit. Fees are on the high side, but the card is accessible, and the foreign transaction fee is reasonable, making it one of the better travel options in this category.

Description

Like most credit cards of its kind, it has a very high APR (35.90%), so carrying a balance from one month to the next can end up costing you. 

The $700 credit limit could help you keep your credit utilization down but could also encourage you to carry a balance.

The best way to take advantage of this card or any other unsecured credit card for bad credit is to pay off your balance each month and keep your credit utilization low.  

While it doesn’t have any rewards, it gives borrowers with bad credit a chance to improve their credit history.

*See terms

Unsecured Credit Cards for Bad Credit vs Secured Credit Cards

Unsecured credit cards for bad credit and secured cards can both help you build a positive credit history. If you pay your bills on time and keep your credit utilization low you will improve your credit.

But which is better for rebuilding credit? 

Typically, a “bad” or poor credit score is anything under the 600 range. For example, Vantage considers a credit score between 500 and 600 poor, while FICO considers a score between 300 and 570 very poor.  

Secured credit cards are usually a better alternative. The best secured credit cards have no annual fee, offer good cash back rewards, and have a lower APR than most unsecured credit cards for bad credit. 

The only difference between secured and unsecured credit cards is the security deposit. Secured credit cards require you to use your own money to put down a refundable security deposit which will act as your new credit limit. 

Your security deposit is fully refundable, so you’ll get your money back when you close your account. Many secured cards will convert your card to an unsecured card if you establish a good payment history. 

If you can’t or don’t want to put down your own money as a deposit, unsecured credit cards for bad credit are your next best alternative. They don’t require a security deposit and give you emergency access to credit. 

Because lenders take on more risk by extending credit to someone with a spotty credit history, unsecured credit cards for bad credit have many disadvantages. They have high APRs, high fees, and little spending power. Many of them also have setup fees and other monthly maintenance costs. 

If you keep an unsecured card for bad credit for more than a year or two you will spend more on fees than you would for a deposit on a secured card, and you won’t get that money back.

The unsecured credit cards we’ve selected are better than most unsecured credit cards for bad credit. That being said, secured credit cards are a better way to improve your credit score. 

If you do use an unsecured card for bad credit you will usually want to replace it with a card that has lower fees as soon as your credit score allows it.

Bottom Line

Unsecured credit cards for bad credit can help you repair a history of bad credit while you enjoy the perks of a credit card.  

While they don’t require a security deposit, that doesn’t mean they’re better than secured credit cards. They’re expensive, have limited spending power, and most have no rewards. It’s often better to use a secured credit card with no annual fee to repair your credit and gain access to the advantages of a credit card.

The post 5 Best Unsecured Credit Cards for Bad Credit in 2024 appeared first on FinMasters.

So what do you do?

Here’s what you’re not going to do: spend days researching every single card out there. It’s almost impossible (and a waste of time) to sift through hundreds of choices. 

All you have to do to find the best credit card for you is to narrow down your choices based on your financial goals and spending habits.

To make it easier for you, we’ve already done this. Read on to find out how to decide which credit card to get and what type benefits you the most.

Should I Get a Credit Card? 

In today’s increasingly cashless world, credit cards almost feel like a necessity. More vendors prefer digital payments over cash, while some businesses like hotels and airlines, insist on credit card payments to secure your booking. 

Although they can make life easier, carrying the responsibility of owning a credit card isn’t an easy decision.

Choosing the Right Credit Card: 8 Types to Consider

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If not carefully managed, credit cards can tempt you to overspend, accumulate debt, and damage your credit score. If you’re prone to spending beyond your means or struggling with debt, a credit card may not be a good choice at the moment.

However, when used responsibly, credit cards can be a useful tool to finance your purchases, build a strong credit score, and earn valuable rewards from your spending. 

If you’re shopping for a credit card, make sure you understand how to use it wisely and learn about credit before you sign up for one.

How Do I Pick the Right Credit Card?

The search for a credit card can be overwhelming if you don’t know where to start. Here are the steps that will guide you in the right direction.

Check Your Credit Score 

Before you look for a credit card, it’s important to understand how credit scores work and find out what your credit score is.

Many financial institutions offer their customers complimentary credit score checks. You can also request a free copy of your credit report from any of the three major credit reporting agencies – TransUnion, Experian, and Equifax.

Your credit score will determine what type of credit card you can qualify for. For example, you can get a basic credit card even with a poor credit score, but you need very good credit to qualify for a rewards-focused credit card.

With a high credit score, you can successfully qualify for almost any type of card. If your score is lower you can still get a card, but your options will be limited.

Consider Your Needs and Goals

The best credit card for you is the one that meets your unique needs. For example, a student who’s just starting to build credit will need a different credit card than a frequent traveler who wants to collect air miles.

Questions like these can help you figure out what you want to get out of your card and what features you want to prioritize when shopping for one. The more you understand your needs and goals, the easier it will be to find the right card for you.

8 Different Types of Credit Cards

The different categories below will help you narrow down your options when you’re credit card shopping. Consider choosing a card that aligns with your spending habits, lifestyle, and financial goals.

1. You Want an Affordable Credit Card: No Annual Fee Credit Cards

Owning a credit card doesn’t have to come with a price tag. If you only plan on using your card occasionally or you’re trying to save money, a credit card with no annual fee is a great option.

Many credit cards offer valuable benefits and features without charging a yearly fee, allowing you to get the flexibility of having credit without the upfront cost. Focus your search on credit cards with a $0 annual fee that offers robust rewards you value.

For example, if you like cash back rewards, choose a no-fee card with a generous cash back rewards rate.

OUR PICK

Chase Freedom Unlimited

Why we picked it: 

• No annual fee
• 1.5-5% cash back 
• Earn a $200 bonus + 5% gas and grocery store offer
• 0% intro APR for 15 months on purchases and balance transfers

Learn more

2. You’re a Student: Student Credit Cards 

Student credit cards are specifically designed for young college or graduate students. 

Since most students have little or no credit, the main purpose of this credit card is to help them build a solid credit history. A good credit score allows you to get pre-approved more easily when you apply for car loans, mortgages, better credit cards, or any other loans.

If you use your card responsibly, it’s a good way to learn how to use credit, manage your money, and build your financial literacy. The majority of student credit cards have no annual fees, making them an ideal choice for the price-conscious college student.

While student credit cards don’t offer the same robust rewards that regular credit cards do, many of them do come with great perks. Look for a student credit card with a good rewards program or other benefits, like a sign-up bonus.

OUR PICK

Discover it Student Cash Back

Why we picked it:

• No credit is required to apply
• No annual fee
• 5% cash back on rotating bonus categories
• Unlimited cash-back match at the end of the first year
• Flexible cash back redemption options

Learn more

3. You Have Poor Credit or No Credit: Secured Credit Cards or Unsecured Credit Cards for Bad Credit 

Your choices are limited when you’re credit card shopping with damaged credit or no credit history. Most credit card lenders will consider someone with bad credit or a thin credit file a risky borrower.

However, that doesn’t mean all hope is lost. Credit builder credit cards are a great alternative for people struggling with qualifying for credit.

Secured credit cards are the best option, followed by unsecured credit cards for bad credit. Both types of cards help you build credit from scratch or rebuild your credit score so you can qualify for a better credit card down the road.

Secured credit cards are a better alternative because they’re easier to qualify for, have lower annual fees, and reduce the risk of spending outside your means. With secured credit cards, you’re required to put down a cash deposit to secure credit. Because your own deposit secures the card, it prevents you from building up a big credit balance.

Tip: Most cards for poor credit or no credit will give you a low credit limit. Your credit utilization is an important part of your credit score, so you’ll have to watch your spending and keep your balance below 30% of your credit limit.

When building good credit is your top priority, look for a credit builder card that has low fees and rewards responsible usage over one that offers rewards. To help you find the right card, we’ve rounded up the best secured credit cards and best unsecured credit cards for bad credit.

OUR PICK: BEST SECURED

Discover it Secured Credit Card 

Why we picked it: 

• No credit score required to apply
• No annual fee 
• Convert to unsecured card with responsible use 
• 1-2% cash back rewards  

Learn more

OUR PICK: BEST UNSECURED

Petal® 1 “No Annual Fee” Visa®

Why we picked it: 

• Approval based on banking history, not credit score
• No annual fee
• 2-10% cash back rewards at select merchants

Learn more

4. You’re a Frequent Flyer: Travel Rewards Credit Cards

Credit cards that offer travel rewards are best suited for cardholders who travel often and have a good-to-excellent credit score.

These cards give you the chance to earn points or travel miles through everyday purchases and travel-related expenses that can be redeemed toward travel. For example, airline miles can be used to redeem free flights or make your next trip more affordable.

Besides points and air miles, many travel cards come with various rewards meant to enhance your travel experience such as:

• Airport lounge access
• No foreign transaction fees
• Travel insurance
• Early boarding
• Free checked bags
• Hotel room or seat upgrades

If you’re loyal to an airline or hotel, consider a loyalty program card that offers airline or hotel-specific rewards. Otherwise, a flexible travel rewards card is your best choice.

Although many travel credit cards come with an annual fee, the rewards that come with them often offset the price tag if you’re earning enough points. Look for a card with robust rewards, a sign-up bonus, and the travel perks you value the most.

OUR PICK

Chase Sapphire Preferred®

Why we picked it: 

• 60,000 points intro offer
• High rewards for spending on travel and other categories 
• No foreign transaction fees 
• Trip cancellation insurance, primary rental car coverage, and lost luggage insurance 

Learn more

5. You Like Cash Rewards: Cash Back Rewards Credit Cards 

The flexibility of cash back credit cards makes them some of the most popular rewards credit cards on the market.

Every qualifying purchase earns you a percentage of cash back that’s stored on your credit card account until you’re ready to redeem it. For example, a card offering 1.5% cash back gives you $15 for every $1000 you spend. Depending on the issuer, cash back rewards can be redeemed as gift cards, a statement credit towards your credit card balance, or even a direct deposit to your account.

Some cash back credit cards offer a flat percentage on every qualifying purchase, while others offer higher percentages of cash back on certain spending categories like dining, groceries, or gas.

If you use your credit card to pay for everything, a cash back card is a great way to put your spending to work. As long as you use it responsibly and pay off your bill each month, you can get a lot of value out of it.

To maximize your rewards, choose a card that has a high rewards rate, a generous sign-up bonus, and an annual fee that is worth the perks it offers.

OUR PICK

Discover it Cash Back

Why we picked it:

• No annual fee
• 5% cash back on rotating spending categories
• Unlimited cash-back match at the end of the first year
• 0% intro APR for 15 months

Learn more

6. You’re a Loyal Customer: Store Credit Cards

A store credit card is a type of credit card offered by a specific retailer like Walmart, Amazon, or Costco. Retailers use store credit cards to incentivize shoppers to spend more and build loyalty. In return, loyal shoppers receive rewards, ongoing promotions, and discounts that can be used in-store.

Some store cards can only be used at one specific retailer, while co-branded store cards that have a Visa, Mastercard, American Express, or Discover logo can be used everywhere.

According to experts, people should take caution before signing up for a store credit card. These types of cards have high interest rates and low credit limits. If you’re easily tempted to spend, it can be a dangerous slippery slope to accumulating debt and damaging your credit score.

While store credit cards have their drawbacks, you can still benefit from the rewards they offer as long as you use them responsibly.

OUR PICK

Amazon Prime Rewards Visa Signature

Why we picked it:

• No annual fee
• $100 Amazon gift card sign-up bonus
• 5% rewards at Amazon and Whole Foods
• 2% rewards at restaurants, drugstores, and gas stations

Learn more

7. You Want to Pay Off Credit Card Debt: Balance Transfer Credit Cards

If paying off credit card debt is your top priority, a balance transfer credit card with a 0 percent intro APR could be the tool you need.

This introductory offer lets you move high-interest credit card debt to another card with a lower promotional interest rate. Consumers can take advantage of an interest-free period of 12 months or longer which allows them to pay off their outstanding balance without being charged any interest fees.

With discipline, you can quickly chip away at your principal balance and save money on interest charges before the introductory offer expires.

Tip: Make sure payments are always on time. A late payment could cancel your interest-free promotion.

If you’re looking to consolidate debts using a balance transfer credit card, we recommend one that has the following features:

• No balance transfer fees
• A 0 percent intro APR
• No annual fee

OUR PICK

Wells Fargo Reflect®

Why we picked it:

• 0% APR for 21 months on purchases and balance transfers
• No annual fee
• $600 of cell phone protection

Learn more

8. You’re a Business Owner: Business Credit Cards

Business credit cards are specifically designed for business owners who want to keep their business and personal expenses separate.

Small business owners can use business credit cards to make the most of business transactions while earning rewards on their everyday spending. Using a separate credit card for business-related purchases also makes it easier to track business expenses during tax season.

Business credit cards can offer an array of benefits like cash back, 0 percent intro APR, welcome bonuses, and more. Identify which benefits you value the most and choose the card that offers the best value for your business.

OUR PICK

Ink Business Unlimited®

Why we picked it:

• 1.5% cash back on various categories
• No annual fee
• Bookkeeping software to manage business expenses and more
• 0% intro APR on purchases for the first 12 months

Learn more

Choose the Card That Gives You the Most Overall Value

There’s no such thing as “the perfect credit card”— each credit card has its strengths and weaknesses. But that doesn’t mean the perfect credit card for you doesn’t exist.

Before you begin your search, ask yourself the right questions and understand your credit score. When you’re ready, look for a card that helps you maximize rewards and aligns with your financial goals and spending habits.

The post Choosing the Right Credit Card: 8 Types to Consider appeared first on FinMasters.

How We Picked These Credit Cards

When looking for the best credit cards for fair credit, we took the following things into account: Is there an annual fee? Is there a fee for international spending? What other fees does the card have? What is the APR (Annual Percentage Rate)? Does the card offer rewards? Does the card have a signup bonus? Does the card have any other perks?

Based on all this research, here’s our top six for customers with fair credit:

BEST NO-FEE CARD

Capital One Platinum Credit Card

Annual Fee
$0

Regular APR
30.74% (Variable)

Rewards
No

Credit Score
580+

The Capital One Platinum Card is a simple, basic credit card with no annual fee and no international transaction fee. The minimum credit score is 580, so it’s accessible with fair credit. That figure was not provided by Capital One and is not a preapproval offer. You can check for pre-approval with no hard credit inquiry on the website.

You’ll have fraud coverage and unlimited access to your credit score. You may be considered for a higher credit limit in as little as 6 months. There are no rewards: this is a basic card.

The downside: There’s a high 30.74% variable APR. Only use this card if you are sure that you’ll be paying off the balance in full every month.

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NO FEE PLUS REWARDS

Petal® 2 “Cash Back, No Fees” Visa® Credit Card

Annual Fee
$0

Regular APR
18.24% – 32.24% (Variable)

Rewards
Yes

Credit Score
630+

The Petal® 2 “Cash Back, No Fees” Visa® Credit Card (issued WebBank) has no annual fee and a variable APR of 18.24% – 32.24%. There are no international fees, making this a great travel card. You’ll also get free access to an app that helps with budgeting and with financial decisions.

Rewards: You get 1% cash back on purchases and 2% to 10% cash back at selected merchants. You also get 1.5% cash back on eligible purchases after 12 on-time monthly payments.

The downside: The minimum credit score is 630, so you’ll need to be in the upper half of the “fair” range to qualify. Petal will qualify applicants with no credit score on the basis of bank account information.

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NO PENALTY APR

Avant Credit Card

Annual Fee
$0-$75

Regular APR
29.24% – 35.99% (Variable)

Rewards
No

Credit Score
580+

The Avant Credit Card has a minimum credit score of 580, placing it squarely in the fair credit score bracket. You can miss a payment without triggering a penalty APR, a plus for the absent-minded or those on a shoestring budget. You may pay a late fee. The regular APR is 29.24%–35.99%, depending on your credit.

The downside: You may pay an annual fee, varying with where you applied. See the issuer’s website for details.

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BEST FOR WALMART SHOPPERS

Capital One Walmart Rewards® Mastercard®

Annual Fee
$0

Regular APR
18.99% – 29.99% (Variable)

Rewards
Yes

Credit Score
580+

The Capital One Walmart Rewards Mastercard is a great deal if you shop at Walmart regularly and a decent deal even if you don’t. The minimum credit score is 580. There is no annual fee or international transaction fee, and the APR is 18.99% or 29.99%.

Rewards: The real story here is the rewards.

• 5% cash back for online purchases at Walmart.com.
• 2% cash back at Walmart stores, restaurants, and on travel.
• 1% cash back on other purchases.
• Earn 5% cash back in Walmart stores for the first 12 months after approval when you use your Capital One Walmart Rewards® Card with Walmart Pay.

The rewards do not expire.

The downside: The APR is on the steep side. Pay your balance in full on or before the due date!

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BEST FOR STUDENTS

Discover it® Student chrome

Annual Fee
$0

Regular APR
18.24% – 27.24% (Variable)

Rewards
Yes

Credit Score
640+

The Discover It Student Chrome card is a solid offer for college students. There’s no annual fee or international transaction fee. There’s a 0% intro APR on purchases for 6 months. The regular APR is from 18.24% to 27.24%. Even applicants without a credit score may qualify.

Rewards: You get 2% cash back on gas and restaurant spending, up to $1000 per quarter. There’s 1% unlimited cash back on other purchases. Discover will automatically match all the cash back you’ve earned at the end of your first year!

The downside: The 2% cashback reward comes with a low spending limit, only $1000 per quarter.

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THE MOST INNOVATIVE DEAL

Upgrade Cash Rewards Visa®

Annual Fee
$0

Regular APR
14.99% – 29.99% (Variable)

Rewards
Yes

Credit Score
580+

The Upgrade Visa Card with Cash Rewards is a different kind of credit card. The basics are not unusual. There’s no annual fee, activation fee, or maintenance fee. The APR ranges from 14.99% to 29.99%.

The feature that makes this card different is that any balance carried beyond the due date is converted to a fixed-rate installment loan. You’ll pay in equal monthly installments, which makes budgeting easier. You can also request a personal loan through your card, with funds sent straight to your bank.

Rewards: You’ll get 1.5% unlimited cash back when you make a payment.

$200 bonus after opening a Rewards Checking account and making 3 debit card transactions.

The downside: The minimum credit score is 580, so if you’re at the lower end of “fair” you may not qualify. Interest rates may be high.

Learn More

What You Need to Know Before Picking a Card

There are some factors you need to consider and keep in mind when picking your next credit card – any card, not just the ones for fair credit.

Watch Those APRs

When a card issuer cites a range of APRs you can be sure that people at or near the minimum score for that card will be paying the rate at the high end of the range.

Revolving credit – predominantly credit cards – gets very expensive with a low credit score. Look at the data:

Source: Consumer Financial Protection Bureau

Fortunately, you don’t have to pay those high-interest rates. If you pay each bill in full on or before the due date, you will pay no interest at all. When your card carries an APR over 20%, compounded daily, that’s a very good thing.

Use Your Credit Card Wisely

A credit card can be a convenience or a catastrophe. It can help you build credit or help you destroy it. To keep your outcomes positive, remember these points.

Your credit card for fair credit will affect your score in two main ways.

• Payment history makes up 35% of your FICO score. Making payments on time is the single most important thing you can do to boost your credit.
• Credit utilization makes up around 30% of your score. Your credit utilization rate is the percentage of your credit limit that you actually use. If your credit limit is $1000 and your balance is $300 your credit utilization rate is 30%. Keeping your balance below 30% of your limit will help your credit and keeping it lower will help your credit more.

Here’s what you need to do to make your card an asset instead of a liability.

• Use your card. An active card does more for your credit than a dormant one.
• Pay every bill on time. Late or missed payments kill credit. On-time payments build credit.
• Pay every bill in full. If you pay in full before the due date, you won’t pay interest. That’s a free loan from the card company! If you carry a balance you will pay high interest, compounded daily.
• Never make the minimum payment. Minimum payments are a one-way street into the credit card debt trap. Even if you can’t pay the whole balance, pay as much above the minimum as you can.
• Keep your balance low. Remember your credit utilization and keep track of it.

Using a credit card wisely takes discipline, but that discipline will build your credit and prevent you from accumulating high-interest debt.

Build on That Start

Once you’ve established good habits with your credit card, consider an installment loan. Many banks and credit unions offer credit-builder loans, or you can apply with an online lender like Self. These loans are designed for people with poor credit. They put an installment loan on your record, which improves your credit mix, and if you make your payments on time you’ll be boosting your score.

Knowledge is the key to building better credit. Start by learning how your credit score is calculated. Get your credit reports: they will give you better awareness of your own financial situation. If you have trouble understanding them, look at this guide to how to read a credit report. Many credit reports contain errors. You’ll want to watch out for them and dispute any problems that you find.

There’s no need to hire a person or company to improve your credit. You can do anything they can do. If anyone tells you that they can remove legitimate items from your credit report, give you a new credit identity, or fix your credit issues, you may be looking at one of many debt relief or credit repair scams.

It takes time and effort to rebuild damaged credit. It’s worth it to make the effort. You won’t just be raising your credit score, you’ll also be taking control of your financial life!

Conclusion

Here are our top picks for the best credit cards for fair credit again, plus their most standout features:

The post Best Credit Cards for Fair Credit (580 to 669 Credit Score) appeared first on FinMasters.