Getting your child started on the road to saving money early on is never a bad idea. You don’t necessarily need to open a checking account for them right away, but having a savings account in his or her name can be extremely beneficial. Your child will have a place to store any money he or she receives on birthdays, holidays, and graduations. Plus, you’ll be able to teach him or her the value of having that money when your child asks for you to buy something.
If you want to get an idea of what types of bank accounts to look for, along with which ones to consider, read on.
Custodial Accounts for Young Children Explained
Have you been considering gifting your children money instead of opening a savings account? Opening a custodial account for them may be an option you want to consider. It’s important to know what this entails as there are legal and tax implications involved.
Custodial accounts are often referred to as Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) accounts. Most parents or guardians open these accounts for their children for the purpose of gifting them tax-exempt money.
First, be aware that any money transferred into a custodial account is legally your child’s. While you function as the manager of the account, the money is not yours to spend. The money in the account can only be used for the benefit of your child. If you put money into a custodial account, it should be earmarked for your child to use. You can’t “take it back” later.
When your child is no longer considered to be a minor based on state law, he or she has complete access to the money and become the legal owner of the account. This means he or she can choose to use the funds as they wish. If you’re gifting money to your child in this account for education, your child can decide to use it to buy a new car or travel around the world. If you think you might have a problem with this, consider using a 529 Plan instead.
If the goal is to save money for your child’s education, keep in mind that any funds accumulated in a custodial account will negatively impact the amount your child is qualified to receive in financial aid. The funds directly count as an asset for your child.
Lastly, there are tax consequences when opening a custodial account, and they affect your child as they’ll be the ones responsible for paying it (under Kiddie Tax rules). Because custodial accounts have an investment component to them, your child will have to pay tax on any income generated. If you have a financial advisor, it’s recommended you talk to them to get a good idea of how to manage the account.
What to Look For in a Savings Account for Your Child
Are you only looking to open a simple savings account for your child? They’re probably not going to be using it heavily. For this reason, it’s smart to choose a savings account that has no fees and no minimums. It should be very low-maintenance and shouldn’t cost you anything to maintain. You just want a simple account that holds your child’s money.
Of course, you should still choose a savings account with a decent APY. If the money is going to be held there for years, it might as well earn something! Most traditional banks offer pitiful APY’s – some close to 0.01%. Online-only banks tend to offer higher APY’s around the 0.60% – 0.90% range.
Online Banks Are Good Solutions
As you might be able to tell, online banks are great no-fee solutions, and they generally have fewer requirements than brick-and-mortar banks. Ally and Bank of Internet USA are both good online banks to look into.
Ally offers a competitive APY, doesn’t have a minimum deposit to open the account, there aren’t any monthly maintenance fees to worry about, and it has 24/7 customer service.
Bank of Internet USA currently has a 0.61% APY, there’s no monthly maintenance fees or minimum monthly balances required, but it does have a $100 minimum opening deposit.
While you may hesitate at the thought of using an online bank, your child is likely a pro at navigating the Internet. Banking is more mobile than ever, and your kid won’t be bothered by the lack of interaction with a bank teller. In fact, he or she will probably be thankful for the convenience it offers.
It’s convenient for you as well because you can simply deposit checks using a mobile app. It’s a great hands-off way to ensure your child is working toward a healthy financial future.
Some Internet-only banks don’t offer custodial accounts, so you want to check to see if you can open one first. Thankfully, most online banks have chat features so you can get answers to your questions quickly.
Check Into Local Credit Unions
Don’t think online-only banks are right for you or your child? You can always look into local credit unions. Some actually offer incentives for your child to save their money, which is great if you’re trying to teach them the importance of saving and managing their money.
Abilene Teachers Federal Credit Union is a fantastic example of this. It has a “Savings Safari Children’s Account,” and for every $5 saved, children receive a “Safari Buck” they can redeem for certain rewards.
This allows children to associate saving money with a fun event, which will only help motivate them to save more later on in life.
Checking Accounts for When They’re Older
Have a teenager, or just want to prepare ahead of time? Getting your child ready for their first job with a checking account is essential, as direct deposit is much better than having to go to the bank to cash a check every week. The following accounts are good for those 18 years and older:
Bluebird, by Amex: There are virtually no fees associated with this checking account, and you can send money to your child easily, making it a great option for those with kids going away to college.
Ally: Like its savings account, the checking account has no monthly maintenance fees, no minimum balance to open, and gives you access to 24/7 customer service. You can also send money to your child via Popmoney, and there are no fees incurred when transferring money to a non-Ally account. It also offers overdraft protection and a $10 ATM reimbursement.
Charles Schwab: There are no monthly maintenance fees, no minimum balance, and no ATM fees with this checking account. That’s right – you’ll be reimbursed for any ATM fees you incur. Charles Schwab also offers overdraft protection. Plus, if you want to introduce your child to investing a bit further, a Schwab One brokerage account comes free when you open a checking account. There are no fees to maintain it.
Open Your Child’s First Bank Account Today
Opening a savings account for your child is the first step toward teaching them the value of money. As a parent, you want to provide your child with the best tools and resources they can use to succeed, and a savings account is absolutely essential. There are far too many young adults out there without savings or checking accounts that don’t know how to manage their money – don’t let your child be one of them.
Certificates of deposit (CDs) are a great way to safely store your savings at a financial institution, as they offer a guaranteed rate of return, and CD rates tend to be higher than those on traditional savings accounts. Maybe you’ve even heard that credit union CD rates offer higher returns—but is that really the case?
On average, yes. As of September 2017, the average one-year credit union CD had a 0.63% annual percentage yield (APY), compared to the 0.51% APY average among one-year bank CDs. (You may also want to view our picks for the overall best CD rates.)
Using data from DepositAccounts.com, another LendingTree company, we identified the top one-year credit union CD rates, as of Dec. 6, 2017. We then eliminated any credit union with a health rating lower than a B and identified the top three offerings in three categories: restricted, no cost, and best banking app. If there was a tie by APY, we went with the product with the lower minimum deposit. Here are the best one-year credit union CD rates.
Best CD rates for credit unions with no cost to join
The thing about credit unions is that they’re not usually just open to anyone. You usually need to meet some membership criteria in order to get in and get access to all of their really nice products. These credit unions, however, will let you in for free regardless of your personal details. (Note: Only two credit unions met our criteria for this list.)
Unify Financial Credit Union – 1-Year Share Certificate, 1.00% APY, min. deposit $1,000
Unify FCU offers the highest interest rates on CDs (which it calls share certificates) of any credit union with no cost to join. The interest rate on their 12-month CD, for example, is 1.00%, compared to the national average of 0.64% in August. You would earn $8.50 on a $1,000 deposit. If you withdraw your money early, however, you’ll face a penalty of 90 days’ worth of interest.
NASA Federal Credit Union – 1-Year Share Certificate, 0.55% APY, min. deposit $1,000
If the rigid inflexibility of CDs makes you leery, NASA FCU might be your best bet. They have a lot of flexible certificates, such as add-on certificates that let you start with as little as $250, and bump-rate certificates that let you opt for a one-time interest rate increase if rates go up. You can even take out a loan from your certificate should you need the cash before it’s matured. You can join NASA FCU with a complimentary membership to the National Space Society.
If you do need to make an early withdrawal, you will face a penalty of 180 days’ worth of interest.
Best credit union CD rates with restricted memberships or membership fees
Each of these credit unions have restricted membership criteria, but don’t let that scare you away. If you don’t meet their membership criteria, it’s possible to make a small donation to their charity of choice in order to become eligible for membership. Furthermore, these credit union CD rates offer some of the highest-returning share certificates out of any category.
Membership to USAlliance Financial is open to anyone who lives, works or worships in certain counties of Massachusetts, the city of West Haven, Conn., and a few districts in New York. However, if you don’t qualify by location, you can qualify by giving USAlliance authorization to make you a member of various organizations, including the American Consumer Council, if you aren’t already a member of these organizations. Keep in mind that these organizations may request fees.
Once you’re a member of USAlliance Financial, you can open a 12-month CD with a minimum of $500. Their early withdrawal penalty equals 180 days’ worth of interest earned on the amount you withdraw.
CapEd Credit Union – 12 Month CD, 1.70% APY, min. deposit $500
CapEd Credit Union supports teachers in the state of Idaho, but they don’t just serve teachers. Those who are willing to support education with a one-time $20 donation to the Idaho CapEd Foundation can become members of the credit union. Also, if you live in the state of Idaho and work for, volunteer with, or are retired from the industry of education, you are qualified for membership.
After becoming a member of CapEd Credit Union, you may open a 12 month CD with a minimum deposit of $500. Just make sure that you can afford to keep your money in the CD for one year because the early withdrawal penalty is 90 days’ worth of interest.
PenFed Credit Union – 1-Year Money Market Certificate, 1.61% APY, min. deposit $1,000
PenFed tops this list with an APY of 1.61%. With a minimum deposit of $1,000, you could earn $16.10 in one year. Interest is compounded daily and posts to accounts monthly. However, be aware of the steep early withdrawal penalty. If you withdraw funds before the year is up, you may forfeit all interest accrued up to that point.
Air Force Federal Credit Union – 1-Year Certificate, 1.56% APY, min. deposit $1,000
Members and family members of the military, civilian contractors, and certain employees are eligible to join the Air Force FCU, along with anyone willing to join the Airman Heritage Foundation ($25 annual membership fee).
This credit union comes in first place overall for highest interest rates for 12-month CDs. You can earn $15.60 by depositing a minimum of $1,000 in a 12-month CD, with an APY of 1.56%. You can also use your CD as collateral to earn a lower interest rate on a loan, and membership comes with a host of discounts for parks and businesses in the San Antonio, Texas area. Watch out for the early withdrawal penalties, however, worth half of whatever you would have earned between when you withdrew the funds and when it would have matured.
With a small deposit of $500, you can earn an APY of 1.55% on a 12-month CD. If you decide to withdraw funds early, you’ll face a penalty of 90 days’ interest or all interest earned, depending on which is less.
Best CD rates for credit unions with the best mobile apps
By their very nature, CDs aren’t something that require constant attention, poking, and prodding. It’s a set-it-and-forget-it kind of a deal, so you won’t need any spiffy banking apps to use CDs.
But, if you’d like to switch all of your banking to the same institution that holds your CDs, it might be a wise idea to consider one of these credit unions if you’re a digital junkie. Most credit unions lag behind their bank compatriots in terms of mobile banking apps, but these credit unions offer top-notch mobile apps, according to MagnifyMoney’s 2016 mobile banking app analysis.
Wright-Patt Credit Union – 1-Year Certificate, 1.74% APY, min. deposit $500
Unlike many credit unions, you can’t just make a simple donation to join Wright-Patt CU if you fail to meet their membership criteria. You need to live in certain areas of Ohio, be associated with Wright-Patterson Air Force Base, or be an employee of their select employer group, among other options.
You can earn $8.70 on a 12-month CD with just a relatively small $500 deposit. Early withdrawal penalties vary depending on the original term of your CD, however they’ll be anywhere between 5-12 months’ worth of dividends.
Delta Community Credit Union – 1-Year Certificate, 1.50% APY, min. deposit $1,000
There are many ways to join Delta Community CU, such as living in certain parts of Georgia, being a member of one of their select employers, or being a member of one of their partner organizations. Interestingly, citizens of many countries like Argentina, France, and Peru are also eligible to join.
Delta Community CU used to be the lowest-earning credit union on our list, but recently increased the APY on this product from 0.75% to 1.50%. The early withdrawal penalty is 90 days’ worth of interest on a 12-month CD.
Eastman Credit Union – 1-Year Investment Certificate, 1.25% APY, min. deposit $1,000
Eastman Credit Union also has pretty restrictive membership requirements. You’ll have to be an employee (or a family member of an employee) of one of their select employers, or live in certain parts of Tennessee, Texas, or Virginia.
Eastman CU is another one of the rare credit unions that allow you to withdraw your dividends penalty-free before the maturity date, although again, doing so will lower your total returns. Currently, you can earn an interest rate of 1.25% on a 12-month CD. With a minimum deposit of $1,000, that translates into earnings of $12.50 after one year. If you withdraw your money before the CD matures, you’ll owe a penalty fee of anywhere between seven days’ worth of dividend earnings or all of your dividend earnings.
Banks are more likely to call their products certificates of deposit, while credit unions often refer to them as share certificates. Aside from the name, the biggest difference between the two is that credit unions have higher average annual percentage yields (APYs), as of September 2017. That’s good news: It means more money back in your pocket when the CD matures (i.e., reaches the end of its term and is available for withdrawal).
There really is no difference in safety between depositing money in a CD with a credit union versus a bank, as long as they participate in either the National Credit Union Administration (NCUA) for credit unions, or the Federal Deposit Insurance Corporation (FDIC) for banks.
According to Neal Frankle, a Los Angeles-based Certified Financial Planner with Wealth Pilgrim, deposits of up to $250,000 per financial institution are “backed by the full faith and credit of United States Government, so it’s pretty solid.”
For the most part, choosing a CD at a bank or a credit union boils down to your preference as a consumer: Do you want to be a bank customer or a member of a credit union? Here’s a primer on the differences.
The biggest advantage of credit union CDs over bank CDs is that you can likely earn more interest. But with both products, the longer the CD term, the more interest you will earn. And with a CD laddering strategy, you can have the best of both worlds: frequent access to your money, yet you can still keep it locked away in high-interest, long-term CDs.
Beyond that, the disadvantages of opening a credit union CD are the same as if you’re opening a CD with a bank. You can’t access that money without paying an early withdrawal penalty until the CD matures. While CDs do offer some of the highest rates for any financial product you’re likely to come across at a bank or credit union, they still don’t really earn great interest. If you’re investing for the long-term (like retirement savings), your money is better invested in the riskier (but higher-earning) stock or bond market.
Perhaps you’ve decided to build a CD ladder within your IRA, or maybe you’re looking for a safe way to store your retirement cash for a specific period of time. Whatever the reason, you’re interested in getting an IRA CD and, understandably, want to know what products will give you the best rate of return.
You can get an IRA CD with terms ranging from three months to more than six years, with interest rates generally increasing with the term length. There are lots of options, so we’ve rounded up the top IRA CD rates that are available right now for a variety of terms. You’ll select your IRA CD terms based on your CD-ladder master plan or whenever you’ll need access to your money.
Every month, we choose the top IRA CD rates using data from another LendingTree company DepositAccounts.com, a database of offerings at more than 17,100 banks and credit unions. On Dec. 6, 2017, we sorted the products by APY, then eliminated institutions with a health rating below a B. We then eliminated products that are not available nationwide. From there, we chose the IRA CD with the highest APY among products with a minimum deposit no greater than $5,000. Here are the best options. (Average CD rates referenced below are based on DepositAccounts.com data as of Dec. 6, 2017.)
The top IRA rates in December 2017
3 Month IRA CD – EverBank, 3 Month Yield Pledge IRA
Three-month IRA CDs typically offer the lowest interest rates of any IRA CD term. EverBank offers the best rate of 1.01% APY and a minimum deposit of $5,000. That rate is well above the national average.
Six-month IRA CDs typically earn a little bit better, but they’re still not great. Nationwide Bank offers the highest interest rate at 1.20% APY for deposits less than $100,000. That translates into an earning of $5.98 on a $1,000 deposit. Compare that to the average of all regular 6 month CDs, at 0.41%.
1-Year IRA CD Rates – EverBank, 1-Year Yield Pledge IRA (Traditional, Roth)
Regular one-year CDs earn an average interest rate of 0.64% APY. EverBank, however, is offering a one-year IRA CD at 1.72% APY. You’ll need a $5,000 minimum deposit to earn $86 in interest once the CD matures.
18-Month IRA CD Rates – First Internet Bank of IN, 18 Month IRA (Traditional, Roth)
Two-year regular CDs earn an average interest rate of 0.90% APY. Nationwide Bank, on the other hand, is currently offering 1.90% APY on a 2-year IRA CD. This would translate into an earning of $38.36 with a minimum $1,000 deposit.
2-Year IRA CD Rates – Nationwide Bank, 24 Month IRA (Traditional, Roth)
Two-year regular CDs earn an average interest rate of 0.88% APY. First Internet Bank, on the other hand, is currently offering 1.85% APY on a 2-year IRA CD. This would translate into an earning of $37.34 with a minimum $1,000 deposit.
3-Year IRA CD Rates – EverBank, 3-Year Yield Pledge IRA (Traditional, Roth)
Three-year regular CDs are earning an average interest rate of 1.11% APY currently. EverBank is nearly doubling that, with an interest rate of 2.10% APY with their 3-Year Yield Pledge IRA CD. With those interest rates and a $5,000 minimum deposit, you would earn $321.66 when the certificate matures.
4-Year IRA CD Rates – GTE Financial, 48-Month IRA Certificate – Member Advantage
Four-year regular CDs are currently earning an average interest rate of 1.30% APY. GTE Financial again claims the top interest rate for these IRA CDs, with an interest rate of 2.27% APY. You would earn $46.97 on this CD with a $500 minimum deposit.
5-Year IRA CD Rates – Mountain America Credit Union, 5 Year IRA
Five-year IRA CDs hold the top spot for interest rates out of any category on our list. National averages for a regular 5-year CD is 1.57% APY, however Mountain America Credit Union outperforms the average with a 2.80% APY on its 5-year IRA CD for members. The minimum deposit is $500
6+ Year IRA CD Rates – Air Force Federal Credit Union, 7 Year IRA
Interestingly, these very-long-term IRA CDs don’t offer higher interest rates than the shorter-term five-year IRA CDs. Air Force Federal Credit Union offers the highest term for their seven-year IRA CD, at 2.50% APY. That’s still a lot less than Mountain America Credit Union which offered a 2.80% APY for a five-year IRA CD. Still, with Air Force Federal Credit Union’s seven-year IRA CD, you would earn $471.71 on a minimum deposit of $2,500 when the IRA CD matures.
Opening an IRA CD generally requires filling out a form or talking to a banker. You’ll have to have a way to fund your IRA CD, whether that’s rolling over an existing retirement account into an IRA CD or depositing cash into the product. The same limits that apply to IRA contributions apply to IRA CDs: $5,500 per year ($6,500 if you’re over age 50) of your own money across all your IRA accounts each year, and you can do a rollover once per year.
Unless you’ve invested in a bump-up IRA CD, you won’t be able to take advantage of a higher rate until your CD matures. Withdrawing funds from an IRA CD before they mature will result in a stiff penalty. Bump-up IRA CDs give you a chance to increase your interest rate to a higher level if it’s available, but you’re generally only allowed to do this once or twice during the life of the CD.
You can either use the the direct-transfer method or the indirect-transfer method. The direct transfer method requires setting up your new IRA account filling out a form authorizing the bank or credit union to transfer money from the old account into the new account. The indirect transfer method involves you asking for a check from your old IRA account. You have up to 60 days to deposit that check into your IRA CD to avoid incurring a penalty.
Short-term certificate of deposit (CD) accounts offer investors a safe opportunity to squirrel away money for a future expense. If you’re looking for a brief solution for storing your cash and want to earn more interest than a typical savings account will offer, a 6 month CD can make a lot of sense. (It’s also a good place to start if you’re building a CD ladder.)
Using information from DepositAccounts.com, another LendingTree company and a database of offerings at more than 17,100 banks and credit unions, we found the five banks and five credit unions with the top 6 month CD rates. If there was a tie, we chose the institution with the smaller minimum-deposit requirement. We pulled these rates on Dec. 4, 2017, and we excluded promotional offerings. The national average APY on 6 month CDs (among banks and credit unions) is 0.41%, according to the DepositAccounts.com database. These options outperform that average by a long shot. (You may also want to view our picks for the overall best CD rates.)
Banks with the best 6 month CD rates
M.Y. Safra Bank
6 month CD APY: 1.42% Bank information: M.Y. Safra Bank has been around since 2000, offering a wide variety of banking products to their customers. Although their physical location is in New York, they provide online banking to customers located outside of New York. Where to open CD account: Online Minimum balance to open: $5,000 Maintenance fees: $0 Early withdrawal penalties: Credited interest or 90 days’ interest — whichever is greater
6 month CD APY: 1.41% Bank information: A subsidiary of First Internet Bancorp, this online bank founded in 1999 has no branch locations, but offers service online in all 50 states. Where to open CD account: Online Minimum balance to open: $1,000 Maintenance fees: $0 Early withdrawal penalties: 90 days’ interest
6 month CD APY: 1.36% Bank information: Security State Bank is located in Scott City, Kan., but anyone can open an account online. Where to open CD account: Online Minimum balance to open: $25,000 Maintenance fees: $0 Early withdrawal penalties: 90 days’ interest
6 month CD APY: 1.31% Bank information: ConnectOne Bank opened its doors in 2005 in Englewood Cliffs, N.J. ConnectOne Bank serves customers all over New Jersey and recently expanded to New York City. It also serves all U.S. residents and citizens online. Where to open CD account: Online Minimum balance to open: $500 Maintenance fees: $0 Early withdrawal penalties: 90 days’ interest
6 month CD APY: 1.29% Bank information: VirtualBank is a subsidiary of Louisiana-based IBERIABANK Corp., offering 24/7 digital or telephone access on eCDs, open to applicants anywhere in the U.S. Where to open CD account: Online (paperless account options) Minimum balance to open: $10,000 Maintenance fees: $0 Early withdrawal penalties: 30 days’ interest
6 month CD APY: 1.30% Credit union information: Founded in Portsmouth, N.H., in 1957, Service Credit Union originally served employees of Pease Air Force Base. Today, it has grown to serve over 200,000 people throughout New Hampshire, North Dakota, Massachusetts, and even Germany. Membership details: To become a member, you must live or work, or have family members that live or work in New Hampshire or Falmouth, Bourne, Mashpee, and Sandwich, Mass. Current members of the military, veterans, retirees, and reservists of the U.S. Armed Forces along with their families are also eligible for membership. Where to open CD account: You can open an account online or at one of their many branches. Minimum balance to open: $250 Maintenance fees: $0 Early withdrawal penalties: Determined by credit union.
6 month CD APY: 1.10% Credit union information: Headquartered in Evansville, Ind., Evansville Teachers Credit Union was created in 1936 by teachers who wanted to help their colleagues get back on their feet after the Depression. Decades later, this credit union has continued to live by their “People Helping People” philosophy by extending their financial services to groups and organizations outside the educational realm. Membership details: If you are employed, retired from, or have a relationship with someone affiliated with their eligible groups, you are eligible for memberships. Where to open CD account: Open an account online or one of their branches. Minimum balance to open: $1,000 Maintenance fees: $0 Early withdrawal penalties: The credit union imposes penalties based on withdrawals made before maturity.
6 month CD APY: 1.05% Credit union information: Founded in 1935, the Chevron Federal Credit Union is a private, nonprofit institution with branches in California, Louisiana, Mississippi, Texas, and Utah. Membership details: Membership is open to Chevron Corp. employees, retirees and affiliates, residents of San Francisco, and residents in Frederick County, Md. Where to open CD account: Branch locations and online Minimum balance to open: $500 Maintenance fees: $0 Early withdrawal penalties: 90 days’ interest
6 month CD APY: $250,000+, 1.05%; $100,000-$249,999, 0.95%; $1,000-$99,999, 0.85% Credit union information: Founded 70 years ago, Northwest Federal Credit Union currently serves approximately 200,000 members. Membership details: Government employees, retirees and household members affiliated with the National Reconnaissance Office, Office of the Director of National Intelligence, the Department of Homeland Security, the National Geospatial-Intelligence Agency, and member companies. Where to open CD account: Online banking, branches, or phone: 703-709-8900 (844-709-8900 toll-free). Minimum balance to open: $1,000, $100,000, and $250,000. Maintenance fees: $0 Early withdrawal penalties: The credit union uses an APY calculation that reduces interest earnings based on the amount withdrawn prior to maturity.
6 month CD APY: 6 month Sapphire, 0.90%; 6 month Gold, 0.65%; 6 month Silver, 0.40%. (Interest-rate rewards — Sapphire, Gold and Silver — are calculated based on length of membership.) Credit union information: PenFed is a credit union that serves military and government personnel as well as individuals willing to support the military. It was established in 1935 and currently serves people in the U.S., Guam, Puerto Rico, Okinawa, and Portugal. Membership details: With a $17 donation to Voices for America’s Troops or the National Military Family Association, anyone is able to join PenFed. Membership is also available to active or retired Military personnel, employees of the U.S. government, family members or roommates of eligible individuals, as well as employees, affiliates, and residents of several locations and organizations. Check their application page to see the organizations and locations that are eligible for free membership. Where to open CD account: Over the phone or in person at a PenFed branch. Minimum balance to open: $1,000 Maintenance fees: $0 Early withdrawal penalties: 60 days’ interest
The CD rates offered by banks and credit unions are generally higher than those on savings accounts.
The rates are fixed and guaranteed for the length of their term.
The discipline of keeping the funds in the CD means the money will be available upon maturity. (Note: Most banks offer a seven-day grace period to reinvest or withdraw the investment, after which the funds will roll over into a new CD. However, you are not guaranteed the same rate.)
Six-month CD rates are lower than those offered on longer CD investment terms.
To tap into the CD funds — even for emergencies — consumers must accept a loss through penalties, which can include a percentage of the funds, a percentage of the earned interest, or a combination of both. A typical penalty on a short-term CD is between 30 and 90 days’ worth of interest earnings.
If you’re not confident you can do without access to the funds for six months, you may be better off putting your money in a traditional savings account, which is likely to earn less interest than a CD.
Since CD rollovers may reset at a different percentage rate, consumers must speak with the bank before the grace period ends to ensure they are getting the best deal.
Using a 6 month CD for laddering
A CD ladder comprises small-amount CDs with varying terms and respective interest rates that contribute to a long-term investment strategy. After the 6 month CD matures, investors can withdraw the funds for a predetermined expense. Or, they can reinvest the money into a longer-term CD with a better rate. By staggering the maturity dates on short-term CDs, consumers have access to their cash on a regular, predictable basis.
Where can you open a CD account?
Consumers can open 6 month CD accounts (or longer) from banks and credit unions. Bank and credit union CD rates are based on Federal Reserve rates, and there may be strategic times to pursue these short-term instruments following a rate increase.
Are you looking to start or grow a business? Opening a business savings account can offer federal protection for the funds you deposit (up to $250,000) and provide a source of liquidity should inevitable expenses arise. You can earn interest while setting aside money for capital improvement or income taxes. A commercial savings account can add credibility to your business, arm you with a business debit card and help your cash flow.
The best way to choose an account that fits your needs is to start by comparing the annual percentage yield offered by banks and credit unions. Then look for benefits that might make the account attractive based on your needs. Is there a monthly maintenance fee or a minimum deposit to open? Does the bank provide ample access to ATM and online account services?
Deciding which business savings account is best for your needs can be a difficult process, but hopefully this roundup of our picks for best savings accounts will help give you a head-start.
The best business savings account rates — December 2017
Live Oak Bank claims the 1.05% APY rates on its business accounts are eight times the national average. There is no minimum opening balance or deposit required to open a business savings account.
The business savings account is open to deposits of up to $5 million and is free of monthly maintenance fees. You may make up to 6 withdrawals from your Live Oak Bank Savings account per statement cycle, including preauthorized, automatic and telephone transfers. After that there’s a $10 fee per withdrawal. Live Oak Bank, established in 2008, holds assets of $2.12 billion.
The bank is in Wilmington, N.C., and is a member of the FDIC. Learn more about business savings at Live Oak Bank. Small Print: The bank may verify credit and employment history at its discretion, meaning you may receive a pull against your credit report. Restrictions on joining: none.
BoFI Federal Bank offers the top APY rate in the DepositAccounts nationwide survey of business savings accounts. The bank’s Business Premium Savings Account with a high-yield 1.01% APY can be opened with a $25,000 minimum deposit.
There is no monthly maintenance fee for the account and no average daily balance requirement.
BoFI also makes it easy to access your funds when you need it. Customers have ATM access to their accounts along with free online banking. However, ATM withdrawal limits are $1,010 per day and there’s a daily purchase limit of $5,000. BofI is an FDIC-insured bank based in San Diego and publicly traded online. Other products include Business Interest Checking and Business Money Market accounts.
3. First Internet Bank of Indiana, 1.00% APY up to $250,000, ATM services
First Internet Bank offers an FDIC-insured savings option for businesses with a relatively good 1.00% APY. However, if you have more than $250,000 to put in their business savings account, they’ll award you with a 1.26% APY. Unfortunately, the FDIC only insures up to $250,000. So, if you deposit more than $250,000 into the savings account, the excess deposit amount will not be insured by the FDIC.
It costs $100 to open your business account and you must maintain an average daily balance of $1,000 to avoid a $2 monthly maintenance fee.
There is no minimum balance to open or maintain the account. Unlimited deposits can be made each month and six transfers or withdrawals are allowed without charge.
The First IB ATM cards are offered to sole proprietors only. There is no charge for ATM transactions or electronic statements. Founded in 1999 by the First Internet Bancorp, First IB offers remote banking in all 50 states.
Fine print: Only six preauthorized, automatic, PC, or telephonic transfers are allowed each month. This restriction is common among most of these institutions, however, First Internet Bank will charge you $5 per item if you go beyond the allotted six.
on First Internet Bank Of Indiana’s secure website
4. Digital Federal Credit Union (DCU), 1.00% APY, $25,000 minimum balance
Digital Federal Credit Union offers a solid 1.00% APY rate through its Business DCU Ltd Savings Account with a minimum $25,000 balance.
Businesses participating in the DCU Ltd Savings Account receive 24/7 online banking, mobile banking through the DCU Mobile Banking App, access to DCU ATMs, deposits, transfers or balance verification. Watch out for their ATM fees, though. They charge $0.75 per withdrawal from a non-DCU ATM, which will surely add up if you make regular withdrawals. Created by the Digital Equipment Corporation in 1979, DCU is the largest credit union in Massachusetts by assets. Federally insured by NCUA, DCU is based in Marlborough, Mass.
Restrictions on joining: To join, you must meet eligibility requirements within the field of membership for employers, organizations, participating communities or condominium associations.
5. Community Bank of Pleasant Hill, 0.98% APY, No minimum balance
With its 0.98% APY, the Business Premier Money Management Account at Community Bank of Pleasant Hill offers highly competitive rates to explore. You need only put down $25 to open the account and maintain a minimum balance of $10,000 to avoid a $10 monthly service charge and $4 paper statement fee.
ATM access is offered surcharge-free when using ATMs in the MoneyPass® network. Community Bank began operations on Dec. 6, 2006, and is a member of the FDIC. Members can search for partner ATMs online or through mobile access.
Fine print: Just watch out for hefty withdrawal fees. You can make free withdrawals on the second and fourth Wednesdays of the month; on other days, there’s a $25 withdrawal fee. If you plan to make regular in-person withdrawals, this probably isn’t the best account for your needs.
on Community Bank Of Pleasant Hill’s secure website
6. Community Bank of Raymore, 0.98% APY, $25 minimum deposit to open
The Community Bank of Raymore created its Premier Money Management Account specifically for business customers who carry high balances and are looking for security. It costs $25 to open your account but you’ll earn a solid 0.98% APY.
You must maintain a balance of at least $10,000 or you’ll be assessed a monthly $10 charge. You may only make free withdrawals on the second and fourth Wednesdays or face a $25 fee.
Electronic statements are free of charge. Nationwide ATM service without charge is available through the MoneyPass® network.
The Community Bank of Raymore was chartered in Missouri in May 15, 1979. According to the bank website, the idea of the bank originated at a community meeting at Raymore Elementary School in 1976.
Fine print: You’ll be restricted to two days a week for making free withdrawals in Raymar, too, on the second and fourth Wednesdays of the month. Other days, you’ll have to cough up $25.
7. Presidential Bank (Maryland), 0.50% APY, $5,000 to open, ATM services
Presidential Bank’s Commercial Premier Savings account offers a 0.50% APY, making it a decent — if not extraordinary — bet for business owners.
Business customers are not required to maintain a minimum balance on the account in order to receive all ATM privileges. So long as you use one of their ATMs you won’t incur fees, but there is a $0.75 ATM fee for non-network ATMs. Free online banking, mobile banking and ATM card come with the account.
Established in 1985, Presidential Online Bank was one of the first lenders to offer online banking. Located in Bethesda, Md., it currently lists assets in excess of $550 million.
The Business Regular Savings account at UniBank currently pays out 0.35% AYP for all accounts starting at $2,500. It costs $500 to open your business account and the monthly service fee is $12.
You can have that service fee waived by maintaining a $2,500 minimum daily balance. Customers have online, telephone and ATM access to their business accounts. There are more than 25,000 surcharge-free UniBank ATMs available through the MoneyPass® network.
Established in 2006, the bank is located in Lynnwood, Wash. While its business savings account rates leave much to be desired, the bank’s strength may lie in its current money market rates, which Deposit Accounts says are 70 percent higher than the national average.
9. Andrews Federal Credit Union, 0.31% APY, ATM banking
The Business Base Share Savings account at Andrews Federal Credit Union offers a 0.31% APY. You can open the account with as little as $5 and there is a $100 minimum balance requirement to earn the APY.
The account comes with free online banking, free eStatements and a debit card. Transactions are free at Andrews Federal & CO-OP ATMs. However, there is a $25 charge for withdrawals that result in overdrafts.
Founded in 1948 in Suitland, Md., Andrews Federal Credit Union has assets over $1.5 billion and offers a range of banking services to 120,000 members worldwide.
Restrictions on joining: $5 fee to join the credit union. Open to field of membership including nationwide membership eligibility through the American Consumer Council.
Rounding out the top 10, the business savings accounts at SaviBank offer a decent 0.30% APY. It costs $100 to open the account. If you keep a minimum daily balance of $250, the bank dismisses a $5 monthly service charge.
Checks and third-party withdrawals are limited to six for each calendar month.
Established in Burlington, Wash., in 2005 as Business Bank, SaviBank offers 24-hour access to accounts through online banking and surcharge-free ATM locations nationwide over the MoneyPass® network.
To come up with this list, we first used data from DepositAccounts.com, which tracks rates on a range of deposit accounts across thousands of banks in the U.S. Note: DepositAccounts is also owned by MagnifyMoney’s parent company LendingTree.com.
We eliminated any institutions that were given a health rating below a B by DepositAccounts. We also weeded out any credit unions that have very restrictive membership requirements. From there, we chose the top 10 business savings accounts with the highest APY. And lastly, all the banks on our list offer FDIC or NCUA insurance.
Business savings accounts vs personal savings accounts
Business and regular savings accounts may offer many of the same features ,such as 24/7 online banking, free electronic reporting, debit cards, fund transfers and ATM machines.
The trade-off in choosing a business account is that you’ll get services focused on business planning and spending in exchange for a less-desirable APY.
When you compare the interest earned on a business savings account with the best APY rates offered on savings accounts, it may not look like opening a business account is a wise strategy. The top business savings account APY right now is 1.05%. The top APY among personal savings accounts is 1.50% with no minimum deposit and ATM access. You can weigh the services, charges and minimum account fees between the top business and top personal savings accounts to decide which is best for you.
There are other benefits to offset any differences in earnings, particularly if your business is incorporated. It’s considered sound business practice to separate your personal saving and checking accounts from your business saving and checking accounts. A business account can help you manage cash flow, accounting, recordkeeping and working capital. At income tax time, separate accounts can help you differentiate business from personal expenses.
Paired with a business checking account, your business savings account can add professional branding, since all payments and correspondence with clients will bear your business name.
Or you can create savings in your business account to pay quarterly income taxes or purchase equipment.
Finally, business savings accounts are secure when you open accounts with banks and credit unions that are insured up to $250,000 per account by the FDIC or the NCUA.
North Shore Bank of Brookfield, Wis., says that a business savings account can boost your credit ratings and make it easier to obtain a business loan, since the lender can see you have an account dedicated to your company.
Choosing the right business savings account
When evaluating a financial institution for your business, there’s more than just finding a good APY.
Many of the banks on our Top 10 list look great on the APY front but carry fees that can eat into any of the returns you might make. Particularly, watch out for fees for ATM or bank withdrawals, monthly service fees and ATM fees.
The Small Business Administration (SBA) has identified the key factors to consider when searching for the right bank or credit union. These include:
Getting a credit card while you’re in college might seem dangerous or confusing. But if you are able to use a student credit card responsibly, you do not need to be afraid, and you can set yourself up for financial success after you leave school.
Fortunately, learning how to choose and use the right student credit card is relatively simple. Make sure you avoid annual fees and go with a bank or credit union you can trust. When you get the card, make sure you use it responsibly and pay the balance in full and on time every month. If you do these things consistently over time, you can leave school with an excellent credit score. And if you want to rent an apartment or buy a car, having a good credit score is very important.
Good Grades Reward program: Did you study extra hard this year? If you’ve gotten a 3.0 GPA or higher for an entire school year, Discover will reward you with an extra $20 cash back. You can get this reward for up to five years in a row as long as you’re still a current student when you apply.
Free FICO score: Just like how you have grades for your classes, your FICO score is your “grade” for your credit. Credit cards have a huge effect on your FICO score. You can watch how your new credit card affects your score over time with a free FICO score update on your monthly statement.
5% cash back : You can earn up to 5% cash back at different places that change each quarter, on up to $1,500 in purchases every quarter that you activate. Past categories have included things like Amazon purchases, restaurants, and ground transportation. Even if you don’t buy something in the bonus category, you’ll still earn 1% cash back on all other purchases.
Cash back match at end of your first year: In addition to rotating 5% cash back categories, new cardmembers will also get an intro bonus. When your first card anniversary comes around, Discover will automatically match your cash back rewards you earned during your first year.
Remember to sign up for bonus places: Even though this card comes with a great cash back rewards program, it comes with a catch: you’ll need to manually activate the bonus places each quarter. You can do this by calling Discover or logging in to your account online. If you forget, you’ll still earn 1% cash back if you make any purchases in the qualifying categories.
Gift certificates only available at certain levels: You can redeem your rewards for many things such as Amazon purchases, a statement credit, or a donation to a charity, to name a few. But, if you’d like to get a gift card instead, you’ll need a cash back balance of at least $20 saved up in your account.
The Discover it® for Students card offers great perks for college students, such as a rewards program for good grades and a free FICO score so you can learn about your credit firsthand. Its cash back rewards program is our favorite. No other card for students (that we could find) offers the opportunity to earn up to 5% cash back. And with no annual fee, this is our top pick.
1% cash back on every purchase, 2% at grocery stores and wholesale clubs, and 3% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter
Magnify Glass Pros
Cashback program: You’ll earn 2% at grocery stores and wholesale clubs and 3% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter. All other purchases will earn you 1% cash back. The higher rate you get for gas purchases is great for students who commute to class.
Redemption bonus: If you’re a Bank of America customer, you’ll receive a 10% customer bonus every time you redeem your cash back into a Bank of America® checking or savings account. The bonus is even better if you’re a Bank of America Preferred Rewards client — you could get a 25-75% bonus. Cardholders who redeem this way will maximize their cash back.
Free FICO® Score: A large part of getting a credit card in college is to build your credit score. The hope is that monitoring your FICO® Score on a monthly basis will let you see your score rise through proper credit behavior.
Foreign transaction fee: This card has a 3% foreign transaction fee, not suitable for students who travel abroad. You will negate any cash back earned while using this card outside the U.S.
The Bank of America® Cash Rewards credit card for Students is a great option for students who commute to class and spend on groceries. This card has an added redemption bonus for Bank of America® checking or savings accountholders that is a great way to increase your cash back.
1.25% cash back if you pay on time: Each purchase you make earns a flat-rate 1% cash back. There’s no bonuses or categories to track: a simple 1% on everything. And then you get 0.25% on top if you make the payment on time. This makes it handy for people who want as simple a card as possible. And it rewards great behavior.
Higher credit lines after on-time payments: If you’re approved for this card, you’ll receive a credit line of at least $300. If you make five on-time payments in a row, you can call Capital One and ask them to increase your credit line.
No foreign transaction fee: This is a great card to take overseas, because you won’t have to pay any foreign transaction fees. Most cards charge an average 3% foreign transaction fee, but Journey allows you to use your card abroad without being charged extra fees.
High 24.99% variable APR: This card carries an interest rate that’s almost twice as high as some other student credit cards, such as the Wells Fargo Cash Back College Card with a rate as low as 11.90% variable APR. It’s just one more incentive to pay off your bill in full each month.
We really like this card because it actively rewards you for developing good credit-management behavior by offering a small cash back bonus for on-time payments. In addition, the cash back program is straightforward with no confusing categories to remember or opt into, making this card a good option for students who want a simple, flat-rate card.
Interest rates as low as 11.90% variable APR: Depending on your credit, your interest rate could be between 11.90% and 21.90% variable APR, but their is no gurantee you'll receive the lower rate. This is a lower variable APR range than most student cards, and can help if you aren't able to pay your balance in full one month.
3% cash back rewards for the first six months: Normally you’ll earn 1% cash back on all purchases. For the first six months, though, you’ll earn 3% cash back on any purchases you make for gas, groceries, or drugstores.
Access to credit education: Wells Fargo provides you with all sorts of tools and information to learn about things like credit, budgeting, and expense tracking. While this is a nice feature, it’s not exclusive to Wells Fargo. You can get this information from free tools such as Mint, or even reading books and blogs. But it is pretty handy having it right at your fingertips when logged in to your account.
Need to be a Wells Fargo member to apply online: You can go into any one of the 6,000+ branches and apply for the card. You can also apply online, but you’ll need to be an existing Wells Fargo customer. However, anyone can open a checking account online with a minimum deposit of $25.
High bars for some cash back redemption options: There are a lot of redemption options available through Wells Fargo’s own online cash back rewards mall. However, if you’d just like straight cash, you have a few options. You can request a direct deposit into your Wells Fargo checking account, savings account, or Wells Fargo credit card (if applicable) in $25 increments, or request a paper check in $20 increments. That can take a long time to accumulate if you’re not spending much with your card.
The Wells Fargo Cash Back College Card is a relatively simple card with a great intro bonus of 3% cash back for the first six months. In addition, the low variable APR is handy for those who think they’ll be carrying a balance on their credit card from month to month at some point in the future. This is generally something we recommend against, but if you can’t avoid it, the Wells Fargo Cash Back College Card is your best bet.
$20 reward for good credit card usage: If you can maintain your account in an “exceptional way” for your first year, you’ll get a bonus $20 reward on your card’s anniversary. All you have to do is not have any late payments, don’t charge over your card’s limit, and use your card for at least six out of twelve months.
Up to $500 random winner each quarter: It’s like playing the lottery, except you don’t have to buy a lottery ticket. Each quarter Altra will choose one student cardholder at random and pay back all of their purchases from the previous month, anywhere between $50 to $500.
Earn rewards: For the first 60 days after you open your account, you’ll earn 2 points per dollar spent. After that you’ll earn 1 point per dollar spent. You can redeem these points for cash back, merchandise through their online rewards mall, or travel.
Redeem points for a lower interest rate: If you’ll need a car in the future, this might be a good credit card to get. You can trade in 5,000 points for a 0.25% reduction, or 10,000 points for a 0.50% reduction on an auto loan through Altra Federal Credit Union. That could end up saving you a ton of cash in the long run.
1% foreign transaction fee: This is definitely one card to leave at home if you’ll be traveling or studying abroad. Most credit cards charge a 3% foreign transaction fee, so this is on the low side. Still, it’s not too hard to find a student credit card with no foreign transaction fee, such as the Discover it for Students or the Capital One Journey Student Rewards card.
Must join Altra Federal Credit Union: Luckily, anyone can join, but it might take a bit of legwork on your part compared to a bank. If you don’t meet certain membership eligibility criteria, you can join the Altra Foundation for $5. Then you’ll need to open a savings account with a minimum $5 deposit that must remain in the account while you have your card open.
If you're a student who doesn't mind working with a credit union, Altra provides a card that has several rewards benefits. This card is a good option if you may be taking out an auto loan in the next few years, since you'll benefit from a reduced interest rate by trading in your rewards points. In addition to earning rewards, using this card responsibly can help you build credit.
Chip + PIN technology: Most credit cards have chip + signature technology, and while this is good inside the U.S. you may face issue when traveling abroad. That’s where a card with chip + PIN functionality is the safest bet when traveling outside the U.S.
No foreign transaction fees: When you travel abroad you will not be charged additional fees like other cards.
Cashback rewards: You will earn unlimited 1.5 points for every $1 you spend on all purchases everywhere, every time and there is no expiration on points. This is a decent flat-rate that isn’t limited to bonus categories.
Redemption bonus: Bank of America customers will receive a 10% customer bonus every time cash back is redeemed into a Bank of America® checking or savings account. The bonus is even better if you’re a Bank of America Preferred Rewards client — you could get a 25% - 75% bonus. Redeeming this way allows you to maximize your cash back rewards.
Free FICO® Score: The main reason to get a credit card as a student is to boost your credit score. So, actually being able to see your credit score is a huge help, especially as you can watch it climb over time with good credit management.
Subpar cashback rate: The cash back rate for this card is lower than other cards. However, cards with higher cash back rates often charge foreign transactions fees, not making them ideal for students traveling abroad.
Students who are interested in studying abroad should consider the Bank of America® Travel Rewards credit card for Students. You’ll earn a good cash back rate on all purchases and will not be charge a foreign transaction fee on purchases made outside the U.S.
Cashback program: This card has a feature uncommon to other secure cards — a cashback program. You earn 2% cash back at restaurants or gas stations on up to $1,000 in combined purchases each quarter. Plus 1% cash back on all other credit card purchases.
Cashback match: At the end of your first year as a cardholder, Discover will automatically match all of the cash back you’ve earned. This is a great added bonus that increases your cash back in Year 1.
Automatic monthly reviews after eight months: Discover makes it easy for you to transition to an unsecured card with monthly reviews of your account starting after eight months. Reviews are based on responsible credit management across all of your credit cards and loans.
Security deposit: You need to deposit a minimum of $200 in order to open this card. This will become your credit line, so a $200 deposit gives you a $200 credit line. If you want a higher credit limit, you need to increase your deposit. The security deposit is refundable, meaning you will receive your deposit back if you close the card, as long as your account is in good standing.
The Discover it® Secured Card — No Annual Fee is great for students who want to build credit. This card easily transitions you to an unsecured card when the time is right, and you can earn cash back. With proper credit behavior, you’ll soon be on your way to an unsecured card.
No credit history required: You can qualify for this card without any credit history, making this a great option for students new to credit. You don’t even need a Social Security number when applying.
Reimbursement for Amazon Prime Student*: This card will reimburse you for the cost of a year of Amazon Prime Student (valued at $49). You need to charge your membership to this card to qualify, and you will not be reimbursed for subsequent years’ membership fees.
No foreign transaction fee: Whether you travel abroad or study abroad, you can rest easy: There are no foreign transaction fees with this card.
Low cash back rate: The rewards program has a subpar 1% cash back per dollar spent. You can do better with some of the other cards mentioned in this post. Though as a student, rewards shouldn’t be your primary focus — instead, build your credit so you can qualify for better non-student cards.
The Deserve Edu Mastercard is a great choice for students who are looking to build credit. Deserve markets their cards for those who may have trouble qualifying for credit, and students who fall into this category may more easily qualify for this card than for cards from traditional banks. You can earn cash back, and receive a great promotional offer of a year of Amazon Prime Student for free*.
This credit card offers a snazzy rewards program: rather than accumulate points, you’ll get a cash rebate instead. All you have to do is make a purchase. At the end of the month, you’ll get a rebate of 3% of gas, grocery, and restaurant purchases, and 1% of all other purchases deposited back into your Golden 1 savings account at the end of the month. You can join Golden 1 by joining the Financial Fitness Association for $8 per year and keeping at least $5 in a savings account.
The most important thing to consider when looking for a student credit card is that it charges no annual fee. You should never have to pay to build your credit score. Fortunately, most student cards don’t charge you an annual fee, but it’s still something to watch out for.
The second most important thing you should keep an eye out for are tools that help you learn about credit or even promote good credit-building habits. For example, some student credit cards will give you a free monthly FICO score update. You can use this freebie to see in real time how your credit score changes as you build credit history by keeping the card open, or paying down your credit card balance, for example.
The last thing you should be considering when picking out a student credit card is the rewards program. I know, I know, it seems counterintuitive. But stick with me — I’ll show you why in the next question.
Why shouldn’t I be concerned about maximizing my rewards while in college?
Rewards cards are nice to have. But if you’re a college student, here’s the truth: you probably won’t spend enough to earn meaningful rewards.
Why? With a good rewards program, you can earn points or cash back. A small percentage of your monthly spending can add up quickly. However, given the tight budget that most college students live on, it will probably take a while to earn meaningful rewards. For example, if you earn 1.25% cash back and spend $300 a month on your card, you would earn $45 of cash back during the year.
College students are very good at making good use of $45. And our favorite card offers a great cash back rewards program. Just don’t expect to earn a lot of cash back, given the tight budget of a college student.
Why should I get a credit card as a college student?
There are a lot of great reasons why you should get a credit card, as long as you can commit to using it responsibly.
The single biggest reason why you should get a credit card as a college student is because you can start establishing a credit history now. When you graduate from college, you will need a good credit score to get an apartment. And your future employer will likely check your credit report. Building a good credit history while still in college will help prepare you for life after graduation.
Getting a credit card while in college can also train you to develop good credit habits now. But you need to be honest with yourself. If you find that you can’t avoid the temptation of maxing out your credit card, you might want to switch to a debit card or cash.
Finally, getting a credit card now can be the motivation you need to start learning about credit. These skills aren’t hard to learn, and they could save you thousands or even hundreds of thousands of dollars later in life (when you want a mortgage, for example).
What is the CARD Act and why should I care about it?
Many years ago, credit card companies would market on college campuses. You could get a free beer mug or t-shirt in exchange for a credit card application. And you would be able to qualify for a credit card without having any income. The Credit Card Accountability Responsibility and Disclosure (CARD) Act was signed into law in May 2009 to change a number of practices.
How did the CARD Act change student credit cards?
The CARD Act made a lot of changes in how credit card issuers do business with students. One of the biggest changes was requiring students to be able to demonstrate an ability to pay. If you are under 21 and do not have sufficient income (a campus job, for example), you would need to get a co-signer.
In addition, colleges must now limit the amount of credit card marketing on campus. The days of free t-shirts and pizzas in exchange for credit card applications are gone. But that doesn’t mean it is impossible for a college student to get a credit card. Some highly reputable banks and credit unions still offer student cards. And building a good credit score while still in college is still highly recommended.
How can I protect myself from racking up debt?
When used properly, credit cards are a very convenient method of repayment. However, when not used properly, you can end up deep in credit card debt. It is important to establish a healthy relationship to credit now, with your first credit card.
You should try to ensure that you pay off your credit card bill in full and on time every month. Ideally, you should set up an automatic monthly payment. And to keep yourself on track, take advantage of alerts offered by most credit card companies. You can even get daily text messages reminding you of your balance.
How can I automate my credit card usage?
If all of this sounds confusing, don’t worry. There’s actually a way you can automate your payments so you never even have to bother with the hassle of using a credit card. All it takes is a few minutes of upfront work.
First, you’ll need at least one recurring monthly bill of the same amount, such as Netflix or Spotify. Log in to your account and set up an automatic payment each month using your credit card. Make a note of how much your monthly bill costs.
Next, log in to your bank account. Set up a second automatic payment to go to your credit card each month for the same amount as the bill. If your bank doesn’t offer the option to set up automatic payments, you may also be able to set up your credit card to automatically withdraw the amount of the bill from your bank.
Because you know this bill will be for the same amount each month (barring any price increases), you can literally just leave this running in the background each month on autopilot. You don’t even have to carry your credit card in your wallet if you don’t want to. Then, when you graduate, you’ll automatically have an improved credit score!
What happens to my student credit card when I graduate?
Congratulations! You’ve made it to the finish line. But what about your student credit card? You will have a few options once you graduate.
First, you can simply keep it. You will want to keep the credit card open, because it helps you build a long credit history. However, you might want to call your credit card company and ask if you can migrate to a standard (non-student) credit card.
But if you have been using your credit card properly, you will have an excellent credit score when you graduate – and you will be able to get any credit card that you want.
Any opinions, analyses, reviews or recommendations expressed in this articles are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any lender or provider of the products listed.
Are you a super saver? Sure, anyone can save money in a typical savings account. A typical savings account often comes packaged or suggested with your checking account from a local bank branch and only pays 0.01%. These savings accounts usually don’t offer the best terms or interest rates, which is why it’s best to keep shopping around.
The best accounts offer perks like no minimum balance, ATM access and much higher interest rates than the average savings account. Here are the best online savings accounts so you can super charge your savings.
1. High Rate: Synchrony Bank – 1.30% APY, No minimum balance (and ATM access)
Synchrony Bank pays a healthy 1.30% APY. There is no minimum balance requirement and no monthly fee. In addition to the great rate, you can get an ATM card. Most internet-only banks require you to transfer funds electronically, which can take a few days. If you ever need quick access to your funds, the ATM card makes access easy. You might not recognize the Synchrony brand, but it is a large, well-capitalized business. Synchrony used to be a part of General Electric (GE), and was spun out as a separate company. Unfortunately the digital experience is not the best, and there is no app.
2. Top Choice: Ally Bank – 1.25% APY, no minimum balance and a free checking account
Ally is a bank without branches that has consistently been paying high interest rates on savings accounts. Ally has no minimum balance requirement and will pay 1.25% APY. Even better, you can open a free checking account (also with no minimum balance requirement). This makes access to your savings account incredibly easy – because you can transfer funds online (or via the app) and have immediate access via checks, debit cards and ATMs.
3. Top Choice: Discover Bank – 1.30% APY, No minimum balance
Discover is famous for cash back credit cards. However, in recent years it has continued to build a solid online bank that offers an online savings account with a market-leading interest rate. There is no minimum deposit and no monthly fee. You can earn a 1.30% APY and deposits are FDIC insured. Discover also has one of the most popular mobile banking apps, which you can use to access your account.
4. High Rate From A Credit Union: Alliant – 1.25%, $5 to open and ATM access.
People love credit unions. Because credit unions are owned by their members, you can get a higher interest rate on your savings (and lower interest rates when you borrow). Alliant is one of the best credit unions in the country, offering some of the best rates on your savings. In addition, Alliant has a great website and digital experience. Anyone can join the credit union and you only need $5 to open the account.
5. Highest Overall Rate – 1.50% APY, No minimum deposit
Dollar Savings Direct is a division of Emigrant Bank. At 1.50% APY with no minimum deposit, this is clearly a good deal. Just one warning: Emigrant has done this before. MySavingsDirect is also a division of Emigrant. For a few months, it paid the highest savings account rate in the market. It then reduced the rate (and is currently at 1.00% APY). Now, with a different name, Emigrant is paying the highest rate at Dollar Savings Direct to attract customers. Just remember: the rate can be lowered at any time, and there is no guarantee this rate will last. We just published an overview of Emigrant Bank’s practices across brands here (if you want to learn more). We add it to the list because 1.50% is hard to beat. But we have a suspicion (hopefully we are wrong) that once a lot of deposits are gathered, the rate could go down.
Runner-Up: Salem Five Direct – 1.50% APY, $100 to open
Salem Five Direct is the online bank division of Salem Five Cents Savings Bank, a community bank based in Salem, Massachusetts. Salem has been around for more than 150 years and all deposits are insured by the FDIC up to the legal limit. You only need $100 to open this account, and there are no monthly maintenance fees. Unfortunately the web and mobile experience is not great. But, if you give them a call (which we have done), you will get friendly service from a community bank.
Take a moment to calculate how much you could earn using our free saving account comparison tool. Enter your zip code and how much you have to save and you’ll see the best savings accounts for you and save more this year. If you have a large balance, the tool might find better options than the no minimum balance options we’ve listed here.
If you are willing to lock your money into a longer term, consider a certificate of deposit. You can find the best CD rates here.
Your money deserves more than 0.01%. At that rate you’re basically giving a free loan to the bank, not a favor they’d return to you!
You can learn more about how our site is financed here.
If you’re someone with good credit you should be able to qualify for a variety of credit cards. There are cards if you want to earn cash back, earn travel rewards or complete a balance transfer. MagnifyMoney has reviewed our database of over 2,000 credit cards to find cards you can qualify for with good credit. Here are our favorite cards for people with good credit.
Cash back credit cards can be great tools to boost your financial position. They basically make your life just a few percentage points cheaper — who wouldn’t want that?
Watch out for the pitfalls with these rewards cards, though. Don’t talk yourself into spending more because you’ll receive cash back. If you opt for a cash back card that offers you up to 5X more points on certain categories, make sure you understand that you often have to activate the bonus categories and set up reminders for yourself if necessary.
High flat-rate cash back You earn the highest flat-rate cash back amount of any card on the market. This allows you to enjoy high rewards on all your purchases.
Simple cash back rewards plan Earn 1% cash back when you make a purchase and then an additional 1% cash back on those credit card payments, as long as you pay the minimum due. No need to deal with changing categories or activation.
First late fee waived You won’t have to pay your first late fee. Instead, if you are tardy, use it as a reminder to sign up for autopay
Must pay in full to earn the full reward The only way to enjoy the 1% + 1% cash back is to pay your bill in full. This is a great incentive to pay your bill on time so you earn rewards faster.
3% foreign transaction fee This is one card to leave home if you travel abroad a lot — but it’s great as long as you stay within the borders. The foreign transaction fee will negate any cash back you earn from purchases made abroad.
This is one of the highest flat-rate cash back rewards credit cards on the market. It’s a great choice for those who want peace of mind that they’re getting good rewards without fussing with variable rewards categories.
Up to 5% cash back in rotating categories You will earn 5% cash back in rotating categories each quarter, like gas stations, Amazon.com, restaurants, wholesale clubs, and more, up to the quarterly
maximum each time you activate. All other purchases will earn 1% cash back.
Cash back match your first year Discover will match ALL the cash back earned at the end of your first year, automatically. This is a great additional bonus for new cardholders that will significantly increase your cash back.
No foreign transaction fee Bring your card with you on your adventures abroad. It won’t cost you anything extra. This is one of the only cash back rewards cards to not charge you for using your card abroad.
Free FICO score Your FICO score is the most common credit score used by creditors, and getting your official score helps you keep tabs on your good credit. Monitoring your score can also help alert you of any fraudulent activity on your card.
You need to opt in for bonus categories Bonus rewards aren’t automatic; you’ll need to remember to log in and manually activate them each quarter. Set a reminder on your phone so you don’t forget.
$1,500 quarterly cap on 5% cash back rewards You won’t get any extra cash back rewards if you spend more than $30,000 on bonus categories each quarter. It’s a high bar, but one to be aware of nonetheless.
The Discover it® – Cashback Match™ offers great rewards-earning potential with no annual fee, making this card a good way to earn rewards. Just remember to opt in to the quarterly-changing cash back programs.
This card is a great choice for forgetful people who want cash back rewards. It’s one of the only cards offering revolving categories each quarter that you don’t have to opt in for; you will get these rewards automatically. This card would also be a great choice for those who want cash back rewards and don’t mind working with a credit union.
Best for big spenders in gas
Commuting can be a huge cost, especially if you live far away from your work and don’t use public transportation. If you spend a lot of money on gas each month, consider getting a cash back rewards card that gives you higher rates of return for these purchases. It’s like having an instant coupon for gas with you all the time.
5% back on all gas station spending, 1% on all other purchases
Magnify Glass Pros
5% cash back rewards on gas This is one of the best cash back rewards bonuses we’ve seen on any card. It does not change quarterly like with most cash back rewards — you will always earn cash back rewards at this rate.
Fair APR If you need to carry a balance from month to month, rest assured: This card comes with a fair interest rate. Although we recommend paying each statement in full, this card can be a good option if you qualify for the lowest APR.
No annual fee All these great rewards come with no annual fee. If you pay off your bill in full each month to avoid interest charges, it’ll essentially be free money.
1% foreign transaction fee This is a great card to have on hand for road trips, but be aware that if you cross the border, your cash back rewards will be reduced.
Credit union membership required You don’t need to be a member to apply for the card; however, if you are approved, you’ll need to open and fund a savings account with a minimum of $5.
This card offers great value for big spenders in gas. If you frequent the pump, this card can earn you a nice cash back rate. This card offers other great features such as no annual fee and a fair interest rate. If you don’t mind working with a credit union, this card can benefit your needs.
Best for big spenders in groceries
Groceries can be one of your biggest budget-busters, especially if you have a large family, a specialized diet, or live in certain parts of the country. The good news is there are certain credit cards that offer great rewards for grocery purchases. Here’s our top pick for a credit card to maximize your grocery cash back rewards.
6% at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 3% at U.S. gas stations and select U.S. department stores, 1% on other purchases
Magnify Glass Pros
0% intro APR If you make a purchase and can’t pay it off immediately, you have a full year of reprieve from paying any interest.
6% cash back at U.S. supermarkets You’ll earn a whopping 6% cash back on supermarket purchases — the highest level of cash back rewards we’ve heard of. Sadly, you’ll only earn this much on the first $6,000 worth of purchases each year. Remaining purchases will still earn 1% cash back.
3% cash back at U.S. gas stations and certain U.S. department store purchases There’s no limit to the amount of cash back rewards you can earn at U.S. gas stations and at stores like Macy’s, Kohl’s, and Nordstrom. That means you can enjoy the higher cash back rate all year long.
$95 annual fee This card charges an annual fee, but it will still be worth the fee if you buy at least $1,583 in groceries or $3,166 in gas each year.
2.7% foreign transaction fee If you use your card outside of the country, it’ll cost you unless you’re buying gas or groceries — then you’ll either be breaking even or earning 3.3% cash back rewards on groceries. It’s best to leave this card at home if you travel abroad.
This card offers a fantastic cash back rewards program for grocery spenders. By using this card for grocery purchases, you will see the most rewards. Although it carries an annual fee, this card will easily pay for itself with big spenders in groceries.
Best travel rewards credit card
Travel can seem like a pipe dream to a lot of people. Even if you do have the cash, it still stings to see that much hard-won money leaving your bank account. But with a travel rewards credit card, you can have a sort of de facto savings account specifically for travel. And with a sign-on bonus like the one for our top pick, you can be jet-setting somewhere fun and interesting as soon as a few months from now.
The information related to the Chase Sapphire Preferred® Card has been collected by MagnifyMoney.com and has not been reviewed or provided by the issuer of this card.
2 points on travel and dining, 1 point on all other spending
Magnify Glass Pros
Rewards are worth more when redeemed for travel You will receive a 25% bonus on points that are redeemed via Chase Ultimate Rewards. This raises the effective rate of rewards to 1.25 and 2.5 points.
Higher rewards for dining and travel You’ll effectively see 2X rewards on restaurants and travel, compared to 1X rewards on all other purchases. This is a great bonus for travelers and foodies.
1:1 point transfer to frequent flyer programs You can transfer points to partner frequent flyer programs at a 1:1 ratio. This is a great way to accumulate points faster at your favorite airline.
Travel protections This card comes with trip cancellation/interruption insurance, travel and emergency assistance services, auto rental collision damage waiver and more. These features add a layer of protection when traveling abroad.
Points are worth slightly less when transferred to partners You’ll miss out on the 25% bonus if you transfer points to travel partners like airlines and hotels. The points will still transfer on a 1-to-1 basis, but they won’t be worth as much as using the Chase Rewards portal.
Annual fee After year one you will be charged an annual fee, which is typical of travel rewards cards. However, if you spend enough on this card, you will come out ahead.
This card is the gold standard for travel junkies. The Chase Ultimate Rewards portal helps you maximize your rewards even further and get you closer to covering the cost of a flight or hotel stay using rewards. If you're a frequent traveler, this card will earn you a great rate.
Best airline credit cards
One of the biggest travel expenses is airfare. Even if you don’t have specific goals to travel regularly, surprises like cross-country family emergencies or get-togethers can take a big bite out of your budget.
Before signing up for an airline-specific card, it’s helpful to know what airline options you have near you. Different airlines tend to congregate more in different parts of the country; you won’t see any Alaska Airlines planes if you live in Maine, for example.
The information related to the Southwest Airlines® Rapid Rewards® Plus Card has been collected by MagnifyMoney.com and has not been reviewed or provided by the issuer of this card.
Flexible points redemption options You can use your points to book hotel stays and car rentals and to buy gift cards or merchandise.
3,000 bonus points every year You’ll get a bonus 3,000 points tacked onto your account each year on your card’s anniversary. This is a great added bonus that makes this card exceptional.
Travel protections This card comes with lost luggage reimbursement, baggage delay insurance, travel accident insurance, auto rental collision damage waiver and more. These features add a layer of protection when traveling abroad.
Annual fee Many travel credit cards will waive their annual fee for the first year — but not this one. Otherwise, the fee is typical and the rewards you earn will outweigh the fee.
3% foreign transaction fee It’s ironic that a travel card would charge you for purchases made abroad. If you can, leave this one at home if you travel outside of the country. Also consider other airline cards that don’t charge a foreign transaction fee.
We recommend this card for people who frequently fly on Southwest Airlines and want to earn a higher rewards rate on those purchases. This card will allow you to earn more points on Southwest flights that will allow you to maximize your rewards. If you don’t fly Southwest and often fly abroad, this card isn't for you.
The information related to the United MileagePlus® Explorer Card has been collected by MagnifyMoney.com and has not been reviewed or provided by the issuer of this card.
2X miles on tickets purchase from United, 1 mile on everything else
Magnify Glass Pros
Priority boarding Snag your seat before everyone else and avoid the rush to get on the plane.
Free checked bag You and one companion traveling on the same reservation will each receive their first standard checked bag free. When calculated as a $25 value for the first checked bag, each way, per person, this will save you $100 roundtrip.
Hotel Benefits This card comes with luxury hotel and resort collection privileges including room upgrades, complimentary daily breakfast for two, early check-in, late checkout and other amenities at more than 900 luxury hotels and resorts worldwide.
Travel protections This card comes with lost luggage reimbursement, baggage delay insurance, travel accident insurance, auto rental collision damage waiver, trip delay reimbursement, trip cancellation/interruption insurance and more. These features add peace of mind when traveling.
Annual fee Many travel credit cards will waive their annual fee for the first year — but not this one. Otherwise, the fee is typical and the rewards you earn will outweigh the fee.
Limited Star Alliance partners You can only use your points to book travel on United Airlines or their partners in the Star Alliance, including such airlines as Lufthansa and Air China. This is a negative if you don't travel on any of these airlines.
This card offers a good rewards program for United Airlines flyers. You will enjoy more miles on United purchases and will also get nice perks that make flying less stressful. We recommend this card if you're a frequent United Airlines traveler.
2 AAdvantage® miles on American Airlines purchases, 1 AAdvantage® mile on everything else
Magnify Glass Pros
Cheaper mile redemptions You’ll pay up to 7,500 fewer miles to fly to certain destinations with America Airlines. This can help you maximize your miles.
10% bonus points each year You’ll get a 10% bonus on all miles you’ve redeemed for flights at the end of each year. This is a great added bonus that will increase your miles earned.
First checked bag free You won’t have to leave the things you really want to bring at home in order to save money. First checked bag is free
on domestic American Airlines itineraries for you and up to four companions traveling with you on the same reservation.
Discount on in-flight purchases You can save money when dining on American Airlines flights. Receive a 25% savings on eligible in-flight food and beverage purchases when you use your card on American Airlines flights.
Travel protections This card comes with lost baggage protection, travel and emergency assistance, worldwide travel accident insurance, worldwide car rental insurance, trip cancellation and trip protection, and more. These features allow you to save money from taking out additional insurances when traveling.
Limited “oneworld” partner airlines You can only book travel on American Airlines or their partner airlines in the “oneworld alliance.” Other member airlines include British Airways and Qantas, for example.
This card offers solid perks and ways to maximize your mile earnings. It’s an important card in any traveler’s wallet and can be a great benefit to frequent American Airlines flyers. Take advantage of the cheaper miles redemption to maximize your miles.
$0 introductory annual fee for the first year, then $95.
2 miles on Delta purchases, 1 mile on everything else
Magnify Glass Pros
Free checked bag Save money and hassle by bringing all the stuff you need with you on your travels in a free checked bag.
Priority boarding Be the first on the plane so you don’t have to worry about luggage space or a long line.
No foreign transaction fee This card does not charge a fee for purchases made abroad. That means you can fly outside of the U.S. and not be charged additional fees like most other cards.
Discounts on Delta purchases You will enjoy several discounts when flying Delta. Receive a 20% savings in the form of a statement credit after you use your Card on eligible Delta in-flight purchases of food, beverages, and audio headsets. Also, you and two traveling companions can enjoy snacks and beverages, Wi-Fi access, satellite TV, newspapers and magazines, personalized flight assistance, private restrooms and more at Delta Sky Club® for a reduced fee of $29 per person.
Travel Protections This card comes with Global Assist Hotline, car rental loss and damage insurance, and more. These features are a great way to have an added layer of safety when traveling.
Limited SkyTeam partner airlines You can also use your Delta miles to book travel within the SkyTeam Alliance, a relatively limited network with other members like Air France and Aeroméxico.
This card offers great benefits for those who fly Delta. You will enjoy a wide selection of perks from lounge access to in-flight savings that make traveling more comfortable and cheaper. We recommend this card for frequent Delta flyers who want added discounts when they travel.
Best luxury credit card
Even though traveling is fun, it can still be a stressful experience. In between fighting throngs of crowds and cramming into airline seats, it can be enough to drive even the most ardent travel-lover insane sometimes.
The good news is you can avoid all of that with a luxury credit card. These credit cards will give you an across-the-board better travel experience, from the moment you arrive at the airport until you make it back home. Here is our top pick for a luxury credit card.
5X Membership Rewards® points on flights booked directly with airlines or with American Express Travel, 5X Membership Rewards® points on eligible hotels booked on amextravel.com
Magnify Glass Pros
60,000 Membership Rewards® points bonus : Earn 60,000 Membership Rewards® points after you use your new card to make $5,000 in purchases in your first three months.
Free access to over 1,000 airport lounges : Get away from the crowds and breathe in premium airport lounges all over the globe.
$200 toward airline fees and incidental purchases each year : Amex will refund you up to $200 per year on purchases from a qualifying airline you select ahead of time. This includes things like meals, checked bag fees, and more.
Fee Credit for Global Entry or TSA Precheck : Amex will refund you every four years for TSA Precheck ($85) or Global Entry ($100) fees.
5X points on eligible airline ticket and hotel purchases : Earn a fantastic rewards rate on airline ticket and hotel stay purchases. It’s more than double what many other travel cards offer.
High annual fee Luxury doesn’t come cheap. If you spend a lot on travel, though, this card can still pay for itself. Make sure this card is right for your needs.
This card is a stand-out favorite for globetrotting jet-setters who prefer a bit of comfort while traveling. Watch out for the high annual fee, though. If you spend a lot on travel each year, however, this card might actually save you money and will allow you to travel in luxury.
0% APR credit cards
If you really need to buy something moderately expensive but don’t have the cash for it yet, 0% APR purchase cards can be a great way to go. They’re basically like free short-term loans. These cards are similar to 0% balance transfer cards, but not all of them also offer you the ability to make new purchases with the free promo rates.
It’s recommended to only use these cards to buy things that you absolutely need rather than a new big-screen TV. For example, I used a 0% APR card to purchase the very computer I’m typing this on. I didn’t have $800 to spend at the time, but within a couple of months I had made enough money to pay it off in full — without having to pay a penny of interest. These cards offer great opportunities to better your life, without the extra cost — if you can pay off the card before the promo period is over.
$5 or 3% of the amount of the transfer, whichever is greater
Magnify Glass Pros
0% intro APR on purchases for 21 months Enjoy a free pass from any interest charges for nearly two years in a row — that’s one of the longest 0% APR intro periods in the business. The intro period also applies to balance transfers.
No late fees Citi offers one of the most unique perks in the credit card world — no late fees. Of course, it isn’t a free pass; you still need to pay your bill on time or risk a huge credit score drop from the negative mark on your credit report.
Choose your bill due date To make it as easy as possible on your finances, you can choose your own due date. Get paid in the middle of the month? No problem. Prefer to pay it right away? Pay it at the beginning of the month.
3% foreign transaction fee If you’ll be traveling abroad, leave this card at home — otherwise it’ll end up making your trip 3% more expensive.
This is one of the longest 0% APR intro periods in the credit card market and offers a fantastic opportunity for those who need to finance a large purchase — as long as you pay it off before the period expires. Use this card as a means to rid yourself of high interest charges while you pay off your bills.
$0 intro balance transfer fee when you transfer a balance during the first 60 days your account is open. After 5% of the amount transferred, with a minimum of $5.
Magnify Glass Pros
0% Intro APR on purchases for 15 months This is a good offer for an intro 0% APR period, but if you need more, there are other cards available with longer 0% APR intro periods. The intro period also applies to balance transfers.
$0 Intro balance transfer fee This card also offers a good balance transfer option. Make sure to transfer your existing balance during the first 60 days your account is open to avoid a balance transfer fee. Doing a balance transfer is a great way to save interest while you pay your balance.
Free monthly FICO® score and Credit Dashboard Most lenders use your FICO score when determining your creditworthiness. Keep track with this card to monitor your score’s progress.
3% foreign transaction fee This card might save you money if you have a revolving balance for the first 15 months, but not if you take it out of the country.
This card offers a good 0% APR intro period that will help if you need to make a large purchase or even complete a balance transfer. Free access to your FICO® score and Credit Dashboard allows you to keep track of your credit on a monthly basis. If you need a longer intro period, check other cards to see what is best for your needs.
$5 or 3% of the amount of the transfer, whichever is greater
Good / Excellent
Magnify Glass Pros
14-month 0% intro purchase APR You’ll get just over a year to pay your debt back before your balance starts accumulating any interest. Depending on the size of your debt, this can be plenty of time to pay it off. The intro period also applies to balance transfers. The intro period also applies to balance transfers.
Free FICO Score Get monthly updates on the progress of your credit score as you work to pay off your debt. Monitoring your FICO Score is a great way to stay abreast of any changes to your score and allows you to practice responsible credit behavior.
Great cash back rewards potential Earn 5% cash back on rotating quarterly categories, and 1% cash back on all other purchases. Just remember to set a reminder to activate the 5% categories each quarter.
3% balance transfer fee Even though you won’t be charged any interest for 14 months, you’ll pay a 3% fee up front to transfer over your existing balance. Still, it’s cheaper than paying interest each month for 14 months.
This card is a great option if you’re looking to pay off high-interest credit card debt while also earning cash back rewards on new purchases. Just don’t use this as an excuse to keep racking up debt — make sure you pay off any new charges you make each month when the bill is due to avoid racking up a balance.
You don’t need a perfect credit score to qualify for the best financial products. You’ll still get access to virtually all of the things an 850 credit score would unlock as long as you have a credit score of at least 760.
Good credit scores don’t happen by accident. Whether you deliberately aimed for your score or not, you have good financial management skills. However, this isn’t enough to guarantee your approval for a large number of financial products.
It’s actually possible to have a good credit score yet still be a high financial risk. For example, your credit score doesn’t take your salary into account. You could have a perfect credit score yet be unemployed with no income, in some cases.
When you apply for financial products, banks will look at your entire situation beyond just your credit score. Each bank will have their own approval criteria, and you might not pass one of them even if you have a good credit score.
Take heart, however; in general, you will be approved for most good financial products and services if you have a good credit score. But if the bank is very picky or something uncommon has happened to you (such as a recent job loss), it’s not surprising to be rejected.
Potential creditors don’t like to see a string of recent credit inquiries on your report because it might be a sign that you’re going on an out-of-control credit binge. Your score will be docked a few points per credit inquiry. This is a relatively small cut compared to more major transgressions like late payments and foreclosures, however.
When you have a poor credit score (600-648), you need every point you can get. The difference between a poor and a fair credit score is just 48 points; you need to do everything you can to gain those points and move up into the next bracket. Having a hard credit pull on your credit report will set you back even longer.
If you’ve got good credit, though, you don’t need to worry as much. You have 150 points between 700 and the maximum score of 850. That’s plenty of room to pay for small dings on your credit. You can have a hard inquiry on your credit report and still have a good credit score, unless you’re starting with a borderline good score of 700-705.
You’ve worked hard getting your score to this point, now how do you keep it there? Luckily, it’s not hard; basically, continue doing the good things you’re already doing.
Paying all of your statements on time and in full is one of the best things you can do to maintain your high credit score. A single late payment on your mortgage could set you back 60 points or more, downgrading you from good credit to average. Make sure all of your debt accounts are set up on autopay to avoid this potentially costly error.
Credit utilization (the percentage of available credit you’re using) is also one of the biggest factors in determining your credit score. The less available credit you’re using, the better. In general, a credit utilization ratio of 10% or less will boost your score the most. This means that you’ll have a credit card balance of $1,000 or less for each $10,000 of credit you have available to you.
A few minor factors will also boost your credit score, but not as much as having a good payment history and a low credit utilization ratio. Keep credit inquiries to a minimum. In order to avoid a slew of inquiries that will be reflected in your credit score, make sure companies use soft pulls if you need to shop around for the best interest rates.
Also consider keeping your oldest credit cards open and closing any newer ones you’re not using. This will increase your average credit age. In general, an average credit age of five years or more is considered best and will boost your credit score.
You don’t want to be juggling around a ton of cards you’re not using. Closing old cards sounds like a good idea until you consider one factor: It may ding your credit score.
Creditors like to see that you can effectively handle credit accounts over long periods of time. That’s why average credit age is one factor included in credit scoring models.
If you close out an old card, your average credit age might drop. This would cause a corresponding dip in your score. The effect wouldn’t be huge (not as large as a late payment, for example), but it could be there nonetheless, especially if your average credit age is five years or less (over five years is the optimal average credit age).
That’s why most experts recommend keeping your oldest credit card open. If you want to juggle fewer accounts, close any newer ones that you’re not using. Of course, if your oldest credit card charges an annual fee and you’re not using it, then go ahead and close it anyway. Paying an annual fee for a card you’re not using likely outweighs any benefits from keeping the card open for the sake of boosting your average credit age.
Furthermore, if you close your old credit card before you apply for a new card, it’s possible that your credit score will drop enough that your application will be rejected, especially if you have a borderline good credit score. In this case, it’s better to wait until after you’ve applied and been approved for the new credit card before closing your old card, if you decide to do so.
Credit card reward programs come in so many varieties that it can be difficult find the best cards for your spending habits. A basic, flat-rate card that earns you a certain percentage cash back on all purchases is probably the simplest bet out there. Typically, rates range from 1-2%. Not shabby, especially if you use that card exclusively. But it’s not exactly something to call home about either.
There are even better cash back rewards offerings out there, some as high as 5%. But with these high rewards cards, there’s almost always a catch. Most of the cards don’t offer 5% cash back across the board. Every few months, they pick a few select shopping categories that can earn 5% cash back. Once those few months are up, the categories change. For example, a card could offer 5% cash back on groceries, gas and airfare from January to March, then switch those categories to whole sale stores, restaurants and gyms from April to June.
Additionally, there are sometimes caps on how much of your spending can qualify for the 5% reward. So if the cap is $1,500, for example, everything past that amount won’t qualify.
The key to maximizing these great cash back card offers is to find the cards that offer cash back in categories you use the most. We can help there.
We dug around and found 10 cards that offer at least 5% cash back in some of the most common spending categories including: gas, groceries and entertainment.
How it works: The Chase Freedom® card offers 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. This translates to a maximum return of $75 per quarter on the 5% bonus category. You earn an unlimited 1% cash back on all other purchases outside of the bonus categories. You can also earn a $150 Bonus $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.
The 5% category changes every quarter.
Another area where the Chase Freedom® shines is in how it allows customers to redeem their rewards. The cash you’ve earned converts into Chase Ultimate Rewards® points. Every $1 equals 100 points. You can easily use the cash and apply it to your monthly statement. Or you can convert them into points and use them on travel, gift cards, merchandise, and other services through the Chase Freedom® rewards dashboard.
They make it super simple to redeem points on the go through the Chase Freedom® Mobile app. While you’re shopping, you can pick the merchant from the list on of eligible merchants on your app (popular ones include Nike, Regal Cinemas, Lowe’s, Starbucks and Best Buy). Then tell the app how much cash you want to use. You’ll get a custom e-gift card that you can present at checkout to pay for your purchases.
Plus, you can stack the points earned on your Chase Freedom® card with your points on other Chase rewards cards, like the Chase Sapphire Preferred® Card. That just increases the spending power of your points.
The Fine Print: You can’t beat 5% cash back for your spending, especially with no annual fee. The downside is you have to remember to activate the category each quarter by subscribing to the program. But, if you set a reminder to do so, you can earn money without too much effort.
The Original 5% Cash Back Card: Discover it® Cashback Match™
How it works: With the Discover it® Cashback Match™ you earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate. ($1,500 of spend). You need to activate every quarter to get the 5% cash back rate. All other purchases get 1% cash back.
Earn 5% cash back in these categories through the end of 2017:
January to March: Gas stations, ground transportation, and wholesale clubs.
April to June: Home improvement stores and wholesale clubs.
July to September: Restaurants.
October to December: Amazon.com and Target
Using your rewards: Cash back from the Discover it® Cashback Match™ is tracked in dollars and cents. You can immediately apply your cash back earnings to your bank account or as a statement credit toward your bill (note: your minimum payment will still be due).There’s also no minimum rewards value if you want to redeem them for charitable donations.
The fine print: You can only earn 5% cash back on up to $1,500 of spend each quarter you activate. Once you’ve hit that cap, you’ll earn 1% on the rest of your purchases. This adds up to a $75 maximum return on your rotating bonus categories. There is no annual fee.
Extra perks: As an Intro Offer, Discover will match ALL the cash back earned at the end of your first year, automatically..
Best for Gas and Restaurants in 2017: Nusenda Visa Platinum Cash Rewards
$0 For First Year
5% in revolving categories up to $1,500 and 1% on all other purchases
How it works: The Nusenda Visa Platinum Cash Rewards card gives 5% in revolving categories up to $1,500 and 1% on all other purchases. Notably, it offers both gas and restaurants in two quarters. As a bonus in the first 90 days, new cardholders will earn 2% instead of just 1% on purchases outside of the 5% category.
Earn 5% cash back in these categories through the end of 2017:
January to March: Groceries and gas expenses.
April to June: Movies, restaurants and home improvement.
July to September: Gas and education expenses.
October to December: Restaurants, hotels, and airfares.
Using your rewards: This offer stands out as a decent companion card for maximizing cash back. When coupled with the Chase Freedom or Discover it, you can maximize cash back in different areas during one quarter.
For an example, you can turn to the Nusenda Visa Platinum Cash Rewards card for 5% on gas and school expenses in Q3. Then pull out the Discover it for home improvement purchases for another 5% the same quarter.
The Fine Print: Once again, you’ll need to monitor your spending habits to get the most cash back from a revolving category card. If you choose to use this card along with another one, a good practice would be labeling the cards in your wallet to ensure you use the right one for the right purchases in a given quarter.
One final caveat: While there is no annual fee, Nusenda is a credit union, so you will have to go through the process of applying for membership.
Pick Your Own Cash Back Categories: U.S. Bank Cash+ Visa Signature
5% on your first $2,000 in combined eligible net purchases each quarter on two categories you choose, 2% on one everyday category, 1% on all other eligible net purchases
How it works: The U.S Bank Cash+ card has a revolving cash back program that’s unique in comparison to the others above because you get options.
Earning cash back: You can earn 5% cash back in two categories of your choosing each quarter limited to the first $2,000 of spend. Then you can choose another category with no cap to earn 2% cash back. On all other purchases, you earn 1% cash back.
The categories for an unlimited 2% cash back (choose one each quarter) are:
The categories for 5% cash back up to $2,000 (choose two each quarter) are:
Select clothing stores
Gyms and fitness centers
Fast food restaurants
Sporting goods stores
Using your rewards: You can redeem cash back for gift cards, statement credit or a deposit into a U.S. Bank Savings, Checking or Money Market account. The first time you redeem $100 in cash back in a single transaction, you get a $25 Cash+ Bonus.
The Fine Print: Same opt-in revolving category spiel applies here except you must also remember to choose your categories. There is no annual fee. The U.S. Bank Cash+ is another good example of a card you may want to couple with another that gives you higher cash back for necessities i.e. groceries. But, for diverse spenders who can benefit from the 5% category options, the U.S. Bank Cash+ is worth considering.
Ideal for Typical Business Expenses: SimplyCash® Plus Business Credit Card from American Express
How it works: The SimplyCash® Plus Business Credit Card* gives 5% cash back on office supply and wireless telephone provider services. You also get 3% cash back on the category of your choice from a list of eight**, including:
Airfare purchased directly from airlines
Hotel rooms purchased directly from hotels
Car rentals purchased from select car rental companies
U.S. gas stations
U.S. purchases for advertising in select media
U.S. purchases for shipping
U.S. computer hardware, software, and cloud computing purchases made directly from select providers
**Terms and Conditions Apply.
Earning cash back: You have to choose your 3% category within two months of signing. If you don’t choose one, the default is gas stations. The combined annual cap for the 5% and 3% categories is $50,000. On all other purchases, you get 1% cash back.
Using your rewards: Cash back will appear as a credit automatically on your statement. This American Express card has no annual fee, so you’ll earn cash back with a generous cap at no cost (see Rates & Fees).
The Fine Print: You must remember to choose your 3% cash back category every year. If you select one this year and forget to do so next year, you’ll be locked into the same 3% category for another 12 months until you make a switch. There is no annual fee.
*The information related to the SimplyCash® Plus Business Credit Card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card.
5% Cash Back for the Amazon Prime Enthusiast: Amazon Prime Rewards Visa® Signature Card
$0 For First Year
5% back on all Amazon purchases, 2% back at restaurants, gas stations, and drugstores, 1% back on other purchases
How it works: The Amazon Prime Rewards Visa® Signature Card is open to Amazon Prime Members, so it’s somewhat exclusive. The perks of this card is 5% cash back on eligible purchases made on Amazon.com. Buying items on other merchant websites that have the Amazon Prime Rewards Visa® Signature Card payment option enabled will not earn you 5% cash back.
Using your rewards: The cash back you rack up will apply as a credit to your statement.
Do the math: If you’re not already an Amazon Prime Member, it’s probably not worth signing up to become one just for the card unless you intend to spend big bucks on the site. You need to spend $1,980 per year at Amazon.com for the 5% cash back to cover the $99 annual membership fee.
The Fine Print: The fine print of what you can and can’t buy to earn 5% is the only gotcha here. But, if you shop on Amazon.com often and stick to the rules, you’ll see a nice return from this card. There’s not an annual fee for the card, but you must be an Amazon Prime member, which costs $99 a year.
Good Fit for the Regular Target Shopper: Target REDcard
How it works: For Target shoppers, there’s the REDcard. It gives you a 5% discount on your purchases at Target (minus any other discounts or promotions). Purchases that won’t earn 5% cash back include:
Target eye exams
Target gift cards and prepaid cards
Target credit account payments, Target Debit Card cash back and cash advances on the Target MasterCard
Gift wrap and shipping and handling on Target.com purchases
Wireless protection program purchases and deposits required by mobile carrier
Earning and using rewards: The program is pretty simple as far as how Target gives you money back. Your 5% will apply to eligible purchases in your shopping cart at checkout. In addition to 5% cash back, this program includes free shipping from Target.com and 30 extra days for returns.
The Fine Print: No red flags with the REDcard other than watching out for the purchases excluded from cash back listed above. For faithful Target shoppers, this no annual fee card with the 5% discount may be a no brainer.
Most Straightforward 5% Rewards Card Just for Gas: Fort Knox Visa Platinum Card
$0 For First Year
5% back on all gas station spending, 1% on all other purchases
How it works: The Visa Platinum Card from the Fort Knox Credit Union makes our list with the most straightforward, no cap rewards program. You can earn an unlimited 5% cash back on gas and 1% cash back on all other purchases.
Using your rewards: Cash back will appear on your statement as a credit.
The Fine Print: This rewards program is offered by a credit union in Kentucky. You’ll have to take a few extra steps to qualify for membership. If you don’t live in Kentucky or have family in Kentucky, membership is open to anyone that joins the American Consumer Council. There is no annual fee for the card, but you will need to become a member of the credit union.
6% Cash Back for the Heavy Grocery Shopper: Blue Cash Preferred® Card from American Express
6% at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 3% at U.S. gas stations and select U.S. department stores, 1% on other purchases
How it works: The Blue Cash Preferred® Card from American Express is our top pick for cardholders that want to maximize cash back on groceries. With this card, you get 6% cash back at US supermarkets excluding superstores and warehouses up to $6,000 per year. You also earn 3% cash back at US gas stations and select US department stores and 1% cash back on everything else.
Welcome offer: $200 statement credit after you spend $1000 in purchases on your new Card within the first 3 months.
Using cash back: Cash back builds as Rewards Dollars you can redeem for statement credit in increments of $25.
The Fine Print: There is an annual fee of $95 per year.
Only Advantageous for Military Service Members Living On-Base: USAA Cashback Rewards Plus American Express® Card
$0 For First Year
5% cash back on gas and military base purchases on your first $3,000 in annual purchases in these purchase categories combined (After that, earn 1% for the remainder of the year), 2% on groceries on your first $3,000 in annual purchases in these purchase categories combined (After that, earn 1% for the remainder of the year), 1% on all other purchases
How it works: The USAA Cashback Rewards Plus American Express® Card gives 5% cash back on gas and military base purchases including commissaries, exchanges, and shopettes. The cap for the 5% category is $3,000 per year.
Earning cash back: In addition to the 5% back on gas and military base purchases, you’ll also earn 2% cash back on groceries up to $3,000 annually. On everything else, there’s 1% cash back. You can redeem cash back in increments of $1 through the USAA Rewards Service Center online or over the phone.
The Fine Print: The USAA Cashback Rewards Plus American Express® Card is light on the fine print. Just remember, the 5% category cap is $3,000 for combined gas and military base purchases per year and not per quarter. There is no annual fee.
The Key to Earning from Any Cash Back Card
In closing, regardless of which cash back card you choose, be sure to pay off your bill in full each month. That’s one underlying trap of any card rewards program. If you carry a balance over time, adding interest into the equation means you may end up paying the credit card company more than what you’re making in cash back.
There are an abundance of no fee rewards credit cards available, so how do you best determine which one to keep in your wallet? Most earn a measly 1% on your spending, while others have no rewards at all. To help, we’ve dug deep into our database of thousands of rewards cards to find the very best no annual fee rewards credit cards of 2017 for each category.
Citi offers you rewards twice. First, you get 1% cash back when you make a purchase. Then, you get another 1% cash back as you pay it off. All with no annual fee and no spending cap. This lets you earn rewards twice as good as standard reward cards. Read our review for more details on the Citi® Double Cash Card.
If you like to maximize things and want to earn more rewards in special spending categories, consider pairing this with one of the no fee cards we list below.
2. Honorable Mention: 2% Fidelity Rewards Visa Signature, NO FEE
Fidelity provides no annual fee 2% cash rewards on purchases if you deposit the cash you earn into a Fidelity account. But you don’t need to have any stocks or investments to have an account. Fidelity has no fee cash accounts where you can deposit your rewards, then withdrawal when you’re ready to spend. Be aware this card is designed for people with excellent credit, while the Citi® Double Cash Card might be easier to get.
Both cards offer you the flexibility to earn double rewards on anything you purchase; so either one of these is a nice addition to a rewards strategy. The advantage of the Fidelity card over the Citi® Double Cash Card is that its foreign transaction fees are just 1% versus 3% for the Citi® Double Cash Card. But setting up the Fidelity card and rewards is more cumbersome than the dead simple Citi® Double Cash Card. Read our review of the Fidelity Rewards Visa Signature card.
If you want to earn more than 2% rewards here’s a rundown of the best no fee rewards credit cards that earn 3% or more in the most popular categories. You can click on each category for our take and details:
If you frequently dine out, the Uber Visa card offers a great 4% back on dining purchases which includes restaurants, takeout, bars and UberEATS. You also get 3% back on hotel and airfare, including vacation home rentals; 2% back for Uber, online shopping, video and music streaming services; and 1% on everything else. To learn more about the Uber Visa card, check out our review.
4. Travel Spending: AAA Member Rewards Visa Signature® Card – 3% Rewards, NO FEE
3 points for eligible travel & AAA purchases, 2 points on gas, grocery store, and drugstore purchases, and 1 point per $1 for all other purchases
No need to be an AAA member to take advantage of this rewards card. You earn points when you shop at travel merchants including airlines, car rental agencies, hotels, cruise lines and travel agencies. Along with the 3 points for eligible travel & AAA purchases, you earn 2 points on gas, grocery store, and drugstore purchases, and 1 point per $1 for all other purchases. Learn about the AAA Member Rewards Visa Signature® Card here.
5. Gas Spending: Fort Knox Credit Union Visa Platinum – 5% Rewards
$0 For First Year
5% back on all gas station spending, 1% on all other purchases
Spend a lot of cash at the pump? The Fort Knox Credit Union Visa Platinum offers 5% cash back for gas. On all other retail purchases, you get 1% cash back. Anyone can join the Fort Knox Credit Union by becoming a member of the American Consumer Council for $5.
Another option to consider is the NRA Complete Rewards® Visa® Card which also offers unlimited 5% cash back on gas purchases. You do not need to be an NRA member to apply.
6. Supermarket Shopping: Blue Cash Everyday® Card from American Express – 3% Rewards
3% at U.S. supermarkets, on up to $6,000 per year in purchases (then 1%), 2% at U.S. gas stations & select U.S. department stores, 1% on other purchases
The Blue Cash Everyday® Card from American Express offers 3% cash back on U.S. supermarket purchases up to $6,000 per year. You also get 2% cash back at U.S. gas stations and select U.S. department stores. On everything else you earn 1% rewards. Read our review of the card for more detail.
7. Honorable Mention: Golden 1 Credit Union Platinum Rewards – Unlimited 3% Grocery Rewards
$0 For First Year
3% cash-rebate on gas, grocery, and restaurant purchases, plus 1% cash rebate on all other purchases
If you live in California, the Golden 1 Credit Union Platinum Rewards card will give you 3% cash rewards for purchases on groceries without the caps on the Blue Cash Everyday, along with gas and restaurants and 1% rewards on all other purchases. Also in California, the JCB Marukai Premium card offers unlimited 3% cash rewards on all purchases after your first $3,000 in spending each year. The catch is there’s a $15 annual fee on the card.
5% Cash Rewards in Rotating Categories: NO FEE
Cards with a rotating reward program can give you 5% cash rewards with no annual fee, but you’re limited to spending in special categories each quarter and there’s a cap on how much spending earns the 5%. You also have to opt into the 5% cash back rewards program each quarter.
Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases. Check out our review for more benefits of the Chase Freedom®.
With the Discover it® Cashback Match™, earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate. All other purchases get 1% cash back. You can redeem your cash back for any amount at any time. And your cash back never expires. Discover will match ALL the cash back earned at the end of your first year, automatically – only for new cardmembers. Our review explains the other features of this card.
10. Platinum Cash Rewards Visa from the Nusenda Credit Union – 5% in rotating categories, NO FEE
$0 For First Year
5% cash back on purchases in quarterly rotating categories
5% cash rewards on groceries, gas expenses, movies, restaurants, home improvement, education and travel. This quarter, cardholders will earn cash back on restaurants, hotels and airfare purchases. There’s a cash back cap of $1,500 per quarter. Anyone can join the Nusenda Credit Union by donating $10 to the New Mexico Wilderness Alliance; contact a customer representative for details. The advantage of this card is that its categories tend to be more broad, and not store-specific like those on the Chase Freedom® and Discover it® Cashback Match™, so it’s a great way to get you closer to 5% rewards on everything you spend.
If you’re going to go through the effort of enrolling in a rewards program, consider all three cards to see which categories will benefit you the most. But, if you’re looking for freedom to spend without restrictions, sticking with the Citi® Double Cash Card may be your best simple bet.
Honorable mentions for travelers
No foreign transaction fees with plain cash back: Capital One® Quicksilver® Cash Rewards Credit Card – 1.5% Rewards
The Capital One® Quicksilver® Cash Rewards Credit Card gives you 1.5% cash back on all purchases. And like all Capital One credit cards, there are no foreign transaction fees. Even though you earn less rewards than the Citi® Double Cash Card or Fidelity American Express, this card is a better option for your international spending, since you avoid fees of 1 to 3%. To learn more, read our review.
Real airline miles: The Amex EveryDay® Credit Card from American Express
2X points at US supermarkets on up to $6,000 per year in purchases, 1X on other purchases
The Amex EveryDay® Credit Card from American Express is a $0 annual fee rewards credit card that earns Amex Membership Rewards points, which you can turn into real airline miles with several airlines, including Delta SkyMiles, Virgin Atlantic Flying Club, JetBlue True Blue, and Virgin America Elevate. It’s the only no annual fee card you can apply for online that can net you real Delta SkyMiles. When you want to convert points to Delta miles, just go to the Amex site, and transfer your points to Delta or the other participating airline programs any time. Read our review for more information.
Points for travel on any airline: Bank of America® Travel Rewards Credit Card
The Bank of America® Travel Rewards Credit Card earns a base 1.5 points per dollar spent, and you can use the points to erase travel purchases from your statement. Every 10,000 points is worth $100 when you use them for travel, so each point is worth one cent. Where the card gets interesting is if you’re a Bank of America customer with a checking, savings, or IRA account. If you are, you’ll get a 10% bonus on what you earn each year, so the card effectively earns you 1.65x points per dollar. Even better, if you’re a Platinum level member of Bank of America Preferred Rewards (which you get by keeping a lot of your money with them), you can earn up to 2.625x points per dollar, which is an incredible deal. There are also no foreign transaction fees to worry about.
How can you get the most value from a rewards credit card?
In order to best benefit from no annual fee rewards credit cards, follow these tips:
Narrow your focus: Before choosing a no annual fee rewards credit card (or cards), take a look at your budget and several months’ worth of bank statements. Then, pick cards that’ll offer you the most cash back for things you already buy. You shouldn’t change your spending habits to match a rewards program.
Give your rewards cards a job: Don’t spread out your spending onto too many cards without a purpose or you risk making less cash back overall. Choose a few cards and assign them a job so you know what purchases to make on each one to maximize your cash back.
Don’t get overzealous: Rewards shouldn’t justify overspending, especially if you’re struggling with debt. It’s a reward for making legitimate purchases. After all, you won’t make enough back to put a big dent in your monthly statement. For instance, $2,500 spent on the Fidelity American Express card equals a $50 deposit. It’s a great perk, but it shouldn’t be your sole reason for buying something.
Read the fine print: Understand the implications of each rewards program. For the rotating category cards, you get a huge amount of cash back, but you’ll have to strategize your spending each quarter to earn it. And you have to enroll into the program by the deadline to qualify. Set a reminder on your smartphone or calendar if necessary. You don’t want to miss out on a cash back category for an entire quarter.