Credit Cards, Featured, Pay Down My Debt

Guide to Credit Counseling: 7 Key Questions to Ask

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It’s no secret that financial education is sorely lacking in the U.S. However, this does not mean that you can’t seek financial education from reputable sources. If you have little to no knowledge on the topic of personal finance and are struggling with your finances, then you may consider credit counseling.

Credit counseling can involve a variety of services including educational materials and real-world application to your finances. Credit counselors can help you to set a budget and advise you on how to manage debt and your money in general.

According to the Federal Trade Commission (FTC), reputable credit counseling organizations have certified counselors who are trained in consumer credit, money and debt management, and budgeting. Credit counselors will work with you to come up with an individualized plan to address the money issues you are facing.

Seeking credit counseling is typically voluntary but can be required when filing for bankruptcy. In this guide, we’ll answer some key questions you might have about credit counseling and whether it’s right for you.

How Do You Find a Credit Counselor?

Before settling on a credit counseling organization, do your homework to make sure they are not only reputable but will also be the most helpful for your particular financial circumstances. Check with your state’s attorney general and the consumer protection agency present in your state to see if there have been any complaints filed.

When looking for a good credit counseling agency, first ask about what information or educational materials they provide for free. Organizations that charge for information are typically more interested in their bottom line than helping you. Also, ask about the types of services they offer. Limited services can be a red flag. The fewer services they offer, the fewer solutions they may provide you.

You do not want to be pushed into a debt management plan simply because that is their top service. And make sure you understand the organization’s fee system, not only how much services will cost but also how employees are paid. If employees make more based on the number of services you receive, look for another credit counseling organization.

MagnifyMoney has come up with a list of some of the best credit counseling options, which are a great place to start. If you are looking for credit counseling as a pre-bankruptcy measure, the U.S. Trustee Program has a list of approved credit counseling agencies that can provide pre-bankruptcy counseling.

How Much Does Credit Counseling Cost?

Credit counseling can involve both start-up and monthly maintenance costs. The Department of Justice has said that $50 per month is a reasonable fee. Further, the National Foundation for Credit Counseling (NFCC) has suggested that a start-up fee should not exceed $75 and monthly maintenance fees should not be more than $50 per month.

Credit counseling agencies may offer fee waivers or fee reductions, depending on your income levels. Where credit counseling is required, the DOJ requires that if the household income is less than 150% of the poverty line, then the client is entitled to a fee waiver or reduction. While the poverty line varies depending on household size, it ranges from $11,880 for a single person family household to $24,300 for a family of four.

Other regulations, such as when fees can be collected and circumstances that would warrant fee reduction or waiver, may also be set forth by your state.

How Long Does Credit Counseling Last?

While the length of your credit counseling session depends on the complexity of your financial problems, sessions typically last 60 minutes. After the initial session, credit counselors will then follow up to ensure you understand the actions you needed to take and that you have been able to get started on the plan they developed. Another session may be necessary if you see a significant change to your financial situation.

What Do You Accomplish with Credit Counseling?

According to the NFCC, reputable counseling involves three things. First, a review of a client’s current financial situation. You cannot move forward unless you know where you are starting. Second, an analysis of the factors that contributed to the financial situation. You don’t want bad habits to undermine your progress. Lastly, a plan to address the situation without incurring negative amortization of debt. This gives you a place to start in improving your financial situation.

What Is the Difference Between Credit Counseling and Debt Management Programs?

A debt management plan is just one solution a credit counselor may recommend based on your financial situation. Having a debt management plan is not the same as credit counseling.

A debt management plan involves the credit counseling organization acting as an intermediary between you and your creditors. Each month you will deposit an agreed upon amount of money to your credit counseling agency, which will, in turn, apply it to your debts. The credit counseling agency works with your creditors to determine how the amount will be applied each month as well as negotiates interest rates and any fee waivers. It’s important to call your creditors directly to check whether they are open to negotiating interest rates or offering waivers for fees. In some cases, a credit counseling firm may promise to negotiate those things for you but be stonewalled when they discover a creditor isn’t even open to the discussion.

Before agreeing to a debt management plan, make sure you understand any fees associated with the debt management plan and any choices you might be giving up. For example, some debt management plans may have you agree to give up opening up new lines of credit for a specified period of time. Remember that a debt management plan is just one of many solutions a credit counselor may advise you to consider.

How Does Credit Counseling Impact Your Credit Score?

Not directly. While the fact you are in credit counseling may show up on a credit report, that fact does not affect your score. The actions you take as a result of credit counseling can impact your score. For example, if you don’t choose a reputable credit counseling agency, the agency may submit the payment on your behalf late to your creditors, which can damage your credit score. So even though you submitted your payment on time to the credit counseling agency, it is possible that the credit counseling agency will issue a late payment on your behalf. This is why it is important to make sure you use a reputable credit counseling agency.

Who Should Consider Credit Counseling and When?

While credit counseling is sometimes required, like in instances of bankruptcy, you always have an ability to seek credit counseling. Bankruptcy attorney Julie Franklin, based in Boston, Mass., explains, “For bankruptcy purposes, there are two course requirements — a debtor must complete the first credit counseling course prior to filing and obtain a certificate that is filed with the court in their initial bankruptcy petition documents. Post bankruptcy filing, the debtor is required to take a second course, and upon completion, the certificate that is issued must be filed with the court in order for the debtor to obtain an order of discharge.”

Anyone struggling with personal finance should consider credit counseling as a viable option so long as they use a reputable credit counseling agency. Franklin also notes that “the first credit counseling course is a tool for debtors as it compels the individual taking the course to closely examine the household assets, income, liabilities, and spending habits to determine if there’s a way to ‘save’ the debtor from having to file bankruptcy.” If you are considering bankruptcy, you will have to attend some credit counseling anyway, but it could also help you to avoid filing for bankruptcy.

Voluntary credit counseling might not help if you are already being sued to have a debt collected. However, you may be able to negotiate terms with the debt collector that result in a withdrawal of the suit if you agree to enroll in credit counseling and possibly a debt management program. Not all creditors will agree to such terms, but it is possible.

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Credit Cards

Best Credit Cards for People with Fair Credit

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People with fair credit now have plenty of credit card and borrowing options available. Just because your credit score is not perfect, you shouldn’t have to pay the high annual fees or servicing fees associated with subprime credit card issuers.

But until your score is perfect, you want to avoid dinging your score with applications for cards you don’t have a decent shot at being qualified for. Keeping that in mind, here is MagnifyMoney’s recommendation on how to find a credit card while you still have fair credit:

Step 1: See if you are pre-qualified for a credit card

Although credit inquiries do not have a big negative impact on your credit score, they can take 5-10 points off your score. And when you are in that 640-699 range, every point counts.

Before applying for credit cards, you should check to see if you can get qualified without hurting your credit score. A number of credit card issuers have pre-qualification pages, which take some of your personal information and check to see what cards you’re qualified for without having an inquiry hit your report (and your score).

You can find out how to check what cards you’re pre-approved for here. Credit card companies are changing their qualification criteria all the time, so you might be surprised to be qualified for a card you thought was out of reach.

Step 2a: If you are not pre-qualified, work on building your credit score

If you can’t get pre-qualified for a credit card, you should take out a secured credit card to build your credit score. With a secured credit card, you provide a deposit and receive a credit limit that is tied to your deposit. As you can imagine, this is not a way to borrow money. Instead, it is a way to build your score.

There are plenty of secured credit cards with no annual fee. You can find the best secured credit cards here.

Step 2b: You are not pre-qualified — and you really need to borrow money — take out a personal loan

If your score is not perfect and you need to borrow money today, a personal loan is the best way to get the lowest interest rate. Many personal loan companies will approve people with scores in the 500s. However, you will need to verify your job and income in order to get the money — so be prepared.

If you want to see what type of personal loan you can qualify for without hurting your credit score, use the MagnifyMoney personal loan tool.

Our Credit Card Picks for People with Fair Credit

If you don’t want to try the pre-qualification route, there are some credit cards that you may qualify for without perfect credit, but have some of the features you typically find in cards for people with good or excellent credit.

To make the process of choosing an ideal credit card for fair credit less daunting, we’ve rounded up five of the best to consider.

1. Capital One Platinum Credit Card

The Capital One Platinum Credit Card can be great for people who have a fair credit score. It has no annual fee, a variable interest rate of 24.99%, and fraud protection if your card is ever lost or stolen.

After at least three months of on-time payments, you may have access to a higher credit limit, helping you continue to build your credit score. As long as you pay your monthly bill in full, the variable interest rate won’t affect you. Also, the fact that there is no annual fee can prompt you to keep your account open so you can continue building a positive credit history for years to come.

2. Aspire Credit Union Platinum

Aspire Credit Union Credit CardAspire is a Credit Union anyone in the country can join – and in fact you don’t even have to be a member to apply. They explicitly state ‘fair or good credit is required’ for the Aspire Platinum Card, which is a great choice because the rates and fees are reasonable.

There’s no annual fee, an intro APR of 0% on purchases and balance transfers for 6 months, and after that a reasonable rate of 8.65% – 18.00%, which is less than many other cards that are available if you just have fair credit. They also offer generous credit limits to get started.

3. USAA Classic Visa Platinum Card

The USAA Classic Visa Platinum card is another option if you are looking to build credit and are affiliated with the military. This card has a $35 annual fee, and the APR ranges from 18.15% to 24.15%, depending on your creditworthiness.

They offer a lower APR and other benefits if you are an active-duty member, and don’t charge a foreign transaction fee. While the active-duty member benefits make this card attractive, you should also consider their $35 late and returned payment fees.

It’s also worth noting balance transfers and cash advances are not available with this card.

4. QuicksilverOne from Capital One

The QuicksilverOne is another leading Capital One credit card that you may qualify for if your credit score is at least in the mid 600s. While this card has an annual fee of $39, it’s lower than most other credit cards with annual fees, and all new cardholders get 0% APR for the first nine months. Then, the APR goes up to a variable rate of 23.24%.

Like the Capital One Platinum Credit Card, there is fraud coverage, and users may have access to a higher credit limit after making at least their first three monthly payments on time. One major perk that comes with using the QuicksilverOne card is that you can earn 1.5% cash back on every purchase. Just beware to make up the $39 annual fee with cash back rewards you’ll need to spend at least $200 a month on the card to earn enough.

What Is Fair Credit?

The term “fair credit” is used often, but its meaning is not always clear. In general, your credit is “fair” if you have a FICO score or VantageScore between 640 and 699. If you do not know your FICO score or VantageScore, it is easy to find out for free:

Check your official FICO score for free with the Discover Credit Scorecard or Chase Credit Journey.

Remember: Credit card companies will use their own proprietary scores to determine whether you are approved or declined. The credit score range is much more important than the actual number itself. In general, once your score crosses 700, your chances of getting access to the best credit card offers increase dramatically.

But just knowing your credit score is not enough. Ask yourself the following question:

Why do I have a score below 700?

There are a few reasons why your score might be below 700:

  • You have a short credit history: If you have a perfect (but short) credit history, your score is likely below 700. Over time your score will improve. Unless you really need access to credit, it might make sense to wait a few more months until your score is above 700 so that you can take advantage of the best credit cards in the market.
  • Your utilization is too high: Maybe you have had a perfect (and long) credit history, but your total credit card utilization is far too high. (Utilization is the percentage of available credit that is being used. You start to get punished above 50% — and punished brutally above 90%). In this situation, you should try to pay down your debt and reduce your utilization before looking for the next card. Or, consider a personal loan to pay off your debt and naturally reduce your utilization.
  • You have missed payments in the past: Some missed payments in the recent past might be the reason your score is low. Just one late payment of 60 days or more can take more than 100 points off your score. Credit card companies tend to be tougher on missed payments than age of credit history.

You can still get a credit card, even with fair credit. However, you should understand why your score isn’t excellent and take steps to improve your score. The steps to a good credit score are fairly simple: Keep your utilization low and pay your bills on time, every month. If you do this consistently, your credit score will improve.

 

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Building Credit, Credit Cards, Featured

Where to Get Your Credit Report for Free

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Where to Get Your Credit Report for Free

If you haven’t checked your credit report lately, you’re not alone. A 2016 survey conducted by Princeton Survey Research Associates International found more than half — about 54% — of Americans hadn’t even checked their credit score — the number constructed from factors in your credit report — within the past year. What’s worse, almost a quarter of respondents had never checked their score, making them extremely vulnerable to financial crime. Checking your credit report may seem like any other financial chore, but you shouldn’t keep placing it on the back burner. Similarly to getting a check-up at the doctor’s office, checking your credit report is a preventative measure you should take at least once a year with a bonus: it’s free.

What Is a Credit Report?

Your credit report paints a financial picture of your life. It is a complete history of your use of credit going back at least seven years, good and bad. This includes credit card accounts, student and personal loans, and mortgages, and information about how you use them such as payment history or accounts that have gone to collections. It may also include any utility and other bills that have gone unpaid and were sent to collections. There are three main companies that track your credit report: Experian, Equifax, and TransUnion.

Don’t confuse your credit report with your FICO credit score. Your credit score is a numerical figure that is calculated by using the information from your credit reports. Banks and lenders weigh information from your credit report to create a credit score to gauge how responsible you are when it comes to credit. If your credit reports show a solid history of on-time payments and a good mix of different types of loans, your score will reflect that. Likewise, if your credit report shows lots of missed payments and debt collection accounts, you can expect a poor score.

Knowing the information that is currently on your credit report can help you stay ahead of fraudsters and give you details about how you can improve your credit score. If you don’t check your credit report annually, you may not be able to accurately track the health of your credit score, or know when someone has used stolen personal information from you. In addition to those benefits, checking your reports annually can be an exciting way to benchmark your financial progress.

Where to Get Free Credit Reports

You should check your credit report annually for yourself, but you may also need a report to apply for a car loan or to rent an apartment, etc. When you do need a copy of your report, you can get one for free from a few sources.

You are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting bureaus. You can order a free copy of your credit report from all three bureaus from AnnualCreditReport.com. Like the name implies, you can only order each report once a year for free.

Since you only get one free report from each of the three bureaus per year, stagger them throughout the year. For example, once every four months, request a report from one of the bureaus.

If you want to get an update on your credit report more than once a year, but you don’t want to pay for it, there are a bunch of tools out there that offer credit monitoring for free.

Credit.com offers a Credit Report Card tool to monitor your Experian credit report. All you need to do is go to credit.com, and click “Free Credit Report Card” under the “Credit Cards & Score” tab to create an account. The report card updates every 14 days.

Credit Karma gives you access to your TransUnion and Equifax credit reports for free. You can also sign up for their free credit and account monitoring services. If you do, you’ll receive an email alert whenever your credit score changes, and you’ll be notified whenever a new account is opened. The reports update weekly.

Credit Sesame gives you access to your TransUnion credit report via their credit monitoring service. The service updates your report each month.

Mint.com, a free money-management website and app, gives anyone with a Mint account access to their free Equifax credit report. The report is updated every 30 to 60 days.

Quizzle offers a free VantageScore — a scoring model developed by all three credit bureaus — and a free Equifax credit report, which is updated every six months.

Once You Have Your Report

Once you see your credit report, you should check it carefully for any wrong or negative information impacting your credit score. Double check to make sure the open accounts reported all belong to you. Check that the payment information is accurate and all of the account balances are correct. If you find any errors, you should dispute them directly through the bureau websites. MagnifyMoney has a more in-depth guide about how to do that here.

You might not see any errors, but realize that you need to work on rebuilding your credit. A healthy credit score can be very helpful to you when making a large purchase like a car or first home. MagnifyMoney’s complete guide to help you rebuild your credit can be found here.

You may also notice that you’ve been a victim of identity fraud. That may take a few more steps to clear up, but you can find what to do here.

 

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Building Credit, College Students and Recent Grads, Credit Cards, Featured

Here’s the Right Way to Use a Student Credit Card

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Here's the Right Way to Use a Student Credit Card

Credit cards can be a great way to build your credit while in college. But if you aren’t careful, they can quickly turn into a seductive debt trap, sending you down a path to poor credit.

If you are an inexperienced borrower, you could easily spend more than you are able to comfortably pay back each month and end up in delinquency or being hounded by debt collectors. You also run the risk of ruining your credit score before you really need it for important purchases after college.

If you’re ready to start building your credit, then that’s great. Before you do, you should get a good idea of what you’re getting yourself into before you apply for a credit card.

What Is a Student Credit Card?

A student card is a credit card specially designed by a lender to get college students started with credit. It helps them build a relationship with customers early on and helps you build your credit score.

The major difference between a student credit card and a regular credit card is that the student card will likely have a higher interest rate. That’s because the bank has no way to prove you are a reliable borrower yet since you have little to no credit history. Regular cards tend to average about 15% annual interest. In a recent MagnifyMoney study, we found the average student credit card carries an interest rate of 21.4%.

Why Should I get a Student Credit Card?

Your goal with your student credit card is to build your credit so that by the time you graduate, you have a healthy credit score in the high 600s to mid 700s. That way, when you graduate, you’ll be in a great position to make larger purchases like a new car or your first home. At that point you may actually want to earn rewards, and you’ll qualify for the best cards because you have a great score.

Many people look to credit when they need extra money.

However, you should only get a credit card if you want to build your credit score, not because you need extra money to make ends meet. This is important, so we’re going to repeat it again: You should only get a credit card if you want to build your credit score, not because you need extra cash to make ends meet.

If you can’t afford your monthly expenses as it is, a credit card might only make things worse. When you take out a credit card, you are paying a company to lend you money for a short while. If you can’t afford to pay the full balance on your card before your bill is due, the bank or credit card company will charge you interest.

Let’s say you charged $300 to your student card for books at the start of the semester. If you made a minimum monthly payment of $9, it would take four years and four months to pay off a card with a 21.4% annual percentage rate (APR). At that point you would have paid a total of $460, assuming your books were your first and only charge on the card.

Choosing Your First Credit Card Wisely

Because you likely have little or no credit history, your main goal with a credit card should be to build your credit score. There are two main criteria you should look for when shopping for your first credit card:

  1. No annual fee

Choose a card that has no annual fee, first and foremost. You shouldn’t worry about finding a card with the best rewards or even the best interest rate. You’re not getting a card for the perks, and since you don’t have much credit history, a low APR isn’t really an option for you right now.

You just need to make sure that the card won’t cost you anything annually to build your credit. Carefully read the fine print. Some lenders may waive the fee for a period, then start charging you.

  1. Easy to set up auto-pay

This next point is almost as important: look for a card that has an online platform that makes it easy to set up automatic payments. This will make it easy to make sure you pay your bill each month.

Three no fee options with well rated smartphone apps for easy payments are The Discover it for Students Card,  Citi ThankYou Preferred Card for College Students, and Capital One Journey.

Discover even gives you your free FICO credit score and offers perks like $20 back annually for customers who maintain a 3.0 GPA.

Your limit may not be very high as a student, but that’s fine because this card is for practice and to build your score. Your limit will likely land somewhere between $500 and $2,000.

The key is to make all your payments on time, and in full each month, which is why having a reliable smartphone app from your credit card provider is so important. Otherwise, penalty interest rates on these card are 29% or more.

You may also want to check with your parent’s credit union to see if they have a student credit card. The mobile apps aren’t always as easy to use for payments, but they can have lower rates in case things go wrong and many credit unions allow parents to cosign for students under 21.

Justice Federal Credit Union’s student card has a 0% rate for 6 months, and a  fixed 16.9% APR afterward with no annual fee. It allows parents to co-sign and anyone can join Justice credit union by becoming a member of the Native Law Enforcement Association for $15. You can apply for the card before you take care of membership formalities.

Since the implementation of the Credit CARD Act in 2010, lenders have been barred from promoting student credit cards on college campuses. As a result, the number of student credit card accounts have fallen by more than 60%. The Consumer Financial Protection Bureau found in its 2016 Campus Banking Report that lenders and institutions have shifted their partnerships to checking accounts or prepaid debit cards loaded with fees instead.

Using Your First Credit Card

Focus on making consistent, on-time payments, and keeping your credit utilization — that’s how much of your total credit limit you use — as low as possible. You should aim to use no more than 20% of your total limit. For example, if you have a credit card limit of $500, you should never charge more than $100 at a time to your card.

On-time payments and utilization make up 60% of your credit score, so it’s a big deal to miss a payment or max out your card.

Automation makes it very, very easy to achieve both these goals.

  1. When you get your card, figure out what 20% of your credit limit is. Example: 20% of $200 is $40.
  2. Find something that you pay for each month that costs less than that. This might be a payment for a streaming service such as Hulu, Netflix, or Spotify.
  3. Set up your account to take the payment from your credit card each month.
  4. Set up your checking account to pay your credit card balance each month.

After you set up all of the payments, you can forget about using your credit card. The automation is doing all of the work for you. Stash it somewhere safe (not your wallet) so that you won’t be tempted to use it.

Sit back and watch your score grow with free tools such as Credit Karma or the Discover Credit Scorecard. By the time you graduate, you should easily see your credit score in the high 600s or mid-700s.You’ll also have demonstrated your self-discipline and responsibility to banks, and will have an easier time getting a loan for a car or mortgage.

5 Other Ways to Build Your Credit Score

There are plenty of other ways to build your credit score if you aren’t quite ready to take on the responsibility of a credit card.

Become an authorized user on your parent’s credit card

Ask your parent to add you as an authorized user on one of their credit cards. If you are an authorized user, the behavior on that card (spending, payments, etc.) will be reported on your credit report as if it were your own, helping you build your credit. This strategy could also backfire. If your parents don’t use credit responsibly, it could hurt your credit score in turn. Negative behavior — even if it isn’t yours — will be reported as if it were yours as well.

Get a secured credit card

A secured card is a simple way to start building your credit history. This card can help prove to lenders you can be responsible without a lender having to take much risk. You’ll put down a deposit, and the lender will give you a line of credit. Typically, your line of credit will equal the amount of your deposit.

Get a co-signer

If for any reason you don’t qualify for a credit card on your own, you might be able to ask someone to co-sign the agreement with you. Big banks generally don’t offer this, but some credit unions like the Fort Knox Credit Union allow parents to cosign for students under age 21.

That means that they will be responsible for the payments if you can’t pay them. If you go this route, you’ll need to be very careful to only charge what you can afford to pay off each month. If you miss payments, it will negatively affect both of your credit scores.

Get a credit-builder loan

A credit-builder loan is similar to a secured credit card, but it requires no down payment. These loans are typically only offered by community banks and credit unions. When you are approved, the bank will deposit your loan in a savings account for you. You can’t access it until you’ve paid the loan back, however.

Build credit with rent payment

Paying your rent on time can help you build your credit score if it’s reported to the bureaus. Ask your property management company or landlord if they report rental payment data to Experian, TransUnion, or Equifax rental bureaus.

If they don’t, you can ask them to either start reporting or you can sign up for a rent payment service like PayLease or RentTrack that will let you pay for your rent online and give you the option to report your payments to the bureaus. The rent payment information will be included on your standard credit report and can help you build a score without a credit card.

A Final Word of Advice

We had to add this, because we know you just love it when a professor keeps talking after the lesson is over. But really, this is important so pay attention.

If you don’t think you have the self-discipline to handle a credit card right now, then don’t get one. College is full of opportunities to be a present hedonist — to say YOLO — and having a credit card can make it tempting to spend money you don’t really have.

Rebuilding your credit takes a long time and can get very expensive. It’s not worth ruining your credit score, and it will make it a lot harder to make those larger purchases when you graduate. If you can’t be disciplined enough to keep your utilization low and make your payments on time, then don’t get a credit card. You will have plenty of opportunities to build your credit after college.

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Credit Cards

How to Use Your New Contactless Payment Card

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How to Use Your New Contactless Payment Card

If you’ve gotten a new debit or credit card lately, you might have received one that is able to be used as a contactless payment card. You’ll know you’ve gotten a new contactless card if there is a telltale contactless symbol somewhere on the card. It’s often mistaken for a WiFi signal symbol.

But before you use your new contactless payment card, there are a few things you need to know.

What Is a Contactless Payment Card?

“Tap and pay” technology isn’t new, having been around since about 2007, but it is becoming more popular worldwide with countries in Europe relying heavily on the technology more so than in the United States.

Similar to Apple Pay, Android Pay, and Samsung Pay, contactless payment cards are a faster way for customers to make small purchases, usually under $25 or $50, without the need for a PIN or signature. Contactless debit, credit, and prepaid cards can simply be tapped or waved on or near a payment terminal or register.

While most people might enjoy this new convenience, it can seem annoying to some. After all, you probably got a new “chip” debit or credit card after recent security breaches at major chain stores, such as the Target scandal, and now you’re being forced to learn another new system. If this seems like a hassle, keep in mind that these new security features are being introduced to help keep your money safe. As hackers learn new ways to steal your information, credit card companies are working hard to introduce new security features to thwart their attempts.

This symbol indicates it is a contactless payment-enabled credit card.

Because the cards feature either a radio-frequency identification (RFID) signal or a near-field communication (NFC) signal to make a secure payment at close proximity, they are slightly different from the payment apps on your phone, like Apple Pay. These mobile payment apps use WiFi or cellular data and do not have to be physically close to a sales terminal to work.

Fraud and Security Concerns

According to Visa payWave questions and answers, you must wave your card within 1-2 inches of a terminal and be correctly oriented for transactions to go through, so there is no risk of contactless payment cards being accidently read from your purse or pocket.

This also cuts down on the risk of fraud from someone reading your financial information simply by passing an enabled card reader near you in a crowded street, which is a widely publicized fear internationally.

MasterCard’s website indicates that safeguards are in place to bill you only once for your purchase, even if you accidentally tap twice.

Contactless payments made by NFC are “just as secure” as payment made with chip-enabled cards, and probably more secure than payments made with stipe-enabled cards that must be swiped, according to both American Express and Visa payWave.

In fact, the risk of fraud is also reduced by using contactless payment cards because your payment device remains in your control during payment, rather than having to hand it to a store clerk to be swiped.

If you are a victim of fraud, your contactless transactions are covered by the same fraud protection as chip and PIN transactions.

Where Can You Get a Contactless Payment Card?

Most major credit card companies, including Visa, MasterCard, and American Express, have contactless payment technology available; however, your financial institution may or may not yet offer contactless payment enabled cards. Contactless payment enabled cards do not have to be turned on or off, they are always on.

Where Can You Use Contactless Payment Cards?

Contactless payment cards can be used anywhere that has enabled terminals with the contactless symbol at checkout. This includes many popular restaurant chains, gas stations, big box stores, and more. But keep in mind that most locations have a small limit of $25 or $50 for contactless purchases. You won’t be able to make a large purchase with a contactless credit card anytime soon.

Contactless payment cards can still be used by inserting your chip or swiping if terminals are not enabled for contactless payments.

Who Can Benefit from Contactless Payment Cards?

Before you decide to get and use a contactless payment card, be certain you have a handle on your budget and finances. The ease of “tap and go” payments reduces the psychological pain you might feel if you were paying with cash or even having to sign or enter your PIN for a transaction. Merchants are counting on you using contactless payment cards to make transactions more quickly, without giving yourself time to think about your purchases.

If you are someone who’s constantly on the go, and you have your spending under control, you might benefit from contactless payment cards.

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Credit Cards

Live Richer Challenge: The MagnifyMoney Guide to Secured Credit Cards

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

guide-to-secured-credit-cards

If you have a low credit score or no credit history, it can be difficult to get approved for a line of credit. One of the best ways to build up your credit score is to sign up for a secured credit card. Secured cards are a way to prove to a lender you can be responsible with credit.

How Secured Credit Cards Work

With a secured card, you have to put down a deposit with your own money. When you give the bank your deposit, they’ll issue you a line of credit that will most likely be equal to the amount you deposited. Sometimes, however, your secured card limit may be a bit higher than your deposit. Think of that deposit as collateral. If you stop making payments on your card, the bank will simply keep your deposit.

How Should I Use a Secured Card?

Your goal with the secured card is to demonstrate how responsible you can be. This will in turn improve your credit score. You should focus on (1) keeping your credit utilization low and (2) making full, on-time payments each month. Those two factors alone make up 60% of your credit score.

  • Use the secured card. If you don’t use the card, it won’t improve your score by much. Charge a small amount to the card each month and pay it off in full. Aim to carry a balance that is no more than 20% of your available credit limit. That keeps your utilization low and will in turn help your score.
  • Pay your balance in full each month. You can make sure you do this by signing up for automatic monthly payments. This also helps you avoid accruing interest by carrying a balance each month.
  • Sign up for a credit monitoring service such as Credit Karma, Discover’s credit scorecard, or another service that lets you check your report monthly, for free. You can also get a free annual credit report from all three bureaus at AnnualCreditReport.com.
  • Check your credit report monthly to make sure the bank is reporting your secured card behavior to the credit bureaus. If the bank doesn’t report your behavior to the bureaus, you’re missing out on the main benefit of having a secured card.
use secured card

How Long Until I See Results?

No matter what your reason for using a secured card, you should understand that the credit-building process will be slow. It may take a year or longer to lift your score by 100 points.

Choosing the Right Secured Card

The secured card you choose will ultimately depend on a personal assessment of your fiscal habits and a careful review of the card’s terms. Your best bet will be to look for a card with no annual fee, a low minimum deposit, and the lowest annual percentage rate (APR).

What to Watch Out For

The Interest Rate

Choose the card with the lowest rate possible. Secured cards usually have higher interest rates than regular credit cards. For example, you’d pay about 23.49% APR on the Discover it Secured Card and 22.24% on the Citi Secured MasterCard compared to 15% on average for regular credit cards. But remember your goal is to use the secured credit card to build your credit rather than borrow money. Pay your balance in full every month and the interest rate will not matter.

The Deposit

Find out how much you have to put down to get the limit that you want. Sometimes the deposit is only a fraction of the card’s credit limit. If you get a card with a limit that is higher than your deposit, have a heart-to-heart with yourself to be certain that you can manage the limit responsibly.

You’d also want to know how long the bank will keep your deposit after you close the secured card as it might not give it back to you right away. Some banks will keep the deposit to cover any charges to the card for a couple of months after you close the account.

Fees and Charges

Like credit cards, secured cards can also come loaded with hidden fees and other charges. These can eat away at your security deposit and your card limit if you’re not careful. The Consumer Financial Protection Bureau has a great example of a credit card agreement that highlights what you should look out for. A couple of the most important items to check are if the card has an annual fee and if it has a period after which the interest rate you’re paying will increase.

Perks

Most secured credit cards don’t offer any rewards, but a few, like the Discover it® Secured Credit Card, let you earn rewards for your purchases. You shouldn’t focus solely on the perks when choosing a card, but they are nice to have.

There are a few reasons Discover is our top recommendation. First, there is no annual fee. Second, you get to see your credit score for free. And (most importantly), Discover starts automated reviews of your account after 7 months to see if you can be converted to a standard card. When you are converted, you will get your deposit reimbursed. Also, if you have previously filed bankruptcy, Discover will still consider your application.

MagnifyMoney Recommends

Our top three secured card recommendations are the

Each card carries a $0 annual fee.

Use our comparison tool to find the best secured credit cards.

Transitioning from Secured Card to Credit Card

After you demonstrate dependability by making full, consistent, on-time payments for a given amount of time — usually about a year or so — your credit score should have improved greatly.
Once you are ready to move on from the secured card, you can close your account and you will be given back your security deposit.

You’ll likely be in a position at that time to apply for a regular credit card. You can apply for a regular card with the same bank that issued your secured card, but you don’t have to.

There’s a decent chance that the bank will want to keep you as a customer and may offer to upgrade your secured card to a regular credit card. But in some cases you’ll have to ask for an upgrade.

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Credit Cards, Reviews

Chase Sapphire Preferred Review: What To Know Before You Apply

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travel train

The information related to Chase Sapphire Preferred credit card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card.

If you want a rewards credit card, Chase Sapphire Preferred is worth considering. However, the card is not right for everyone.

Here are the highlights:

  • A great sign-up bonus of 50,000 points if you spend $4,000 on purchases in the first three months from account opening.
  • No annual fee during the first year. There is an annual fee of $95 in subsequent years.
  • Earn 2 points for every $1 spent on travel and dining. If you spend a lot of money on travel and dining, this is a great way to boost your earnings.
  • If you redeem your points for travel using the Chase Ultimate Rewards portal, your points are worth 25% more. For example, that 50,000 point sign-up bonus could be worth $625 of travel purchases.
  • You can also transfer your points to leading airlines (like United and Southwest) or hotels (like Marriott or Hyatt) on a 1:1 basis.

The most value goes to people who spend a lot of their money on travel or dining and want to redeem their points for travel. If you are a foodie and traveler looking to get free trips faster, this card is a great tool to earn free travel fast. Depending upon how much you spend on travel, you might even want to consider the Chase Sapphire Reserve instead. The Reserve was just recently introduced and is Chase’s most exclusive card yet. You get a 100,000 point sign-up bonus (instead of 50,000 points). You earn 3 points for every $1 spent on dining and travel (instead of 2 points). But you have a $450 annual fee (instead of $95), and it is not waived during the first year.

The least value goes to people who spend very little or no money on travel or dining and want to redeem for cash back or gift cards. Spending on all other categories (outside of travel and dining) only earns 1 point per $1 spent. And every 100 points is worth $1 of cash back. That means you would only be earning 1% cash back, which is a very low rate. Using our guide to the best cash back credit cards, you should be able to earn at least 2% on your spending.

How to Earn Points

You can earn 2 points on every dollar spent on travel (from cabs to airplane tickets) and dining. In order to get 2 points, the merchant needs to be classified as a “restaurant” or “travel.”

Dining is a relatively simple classification. All restaurants should classify as dining. Many bars (even those that don’t serve food) can be classified as “dining.” And even most popular food delivery services are categorized as dining (although there have been some reports of GrubHub not always earning 2x points). Here is the exact definition from the Chase website:

  • Merchants in the restaurants category are merchants whose primary business is sit-down or eat-in dining, including fast food restaurants as well as fine dining establishments. Please note that some merchants that sell food and drinks located within larger merchants such as sports stadiums, hotels and casinos, theme parks, grocery and department stores will not be included in this category unless the merchant has set up such purchases to be classified in a restaurant category.

The “travel” category is actually a lot broader than you might imagine. Paying for airplane tickets and hotel stays definitely counts as travel. But Airbnb, New York taxis, and even highway tolls will also count as travel. Here is the exact definition from Chase:

  • Merchants in the travel category include airlines, hotels, motels, timeshares, car rental agencies, cruise lines, travel agencies, discount travel sites, campgrounds and operators of passenger trains, buses, taxis, limousines, ferries, toll bridges and highways, and parking lots and garages. Please note that some merchants that provide transportation and travel-related services are not included in this category; for example, real estate agents, in-flight goods and services, on-board cruise line goods and services, sightseeing activities, excursions, tourist attractions, merchants within hotels and airports, and merchants that rent vehicles for the purpose of hauling. In addition, the purchasing of points or miles does not qualify in this category.

You will earn 1 point per $1 spent on all other spending with your Chase Sapphire Preferred card.

There is no maximum to the number of points that you can earn.

How Much Are the Points Worth?

When you earn points with the Chase Sapphire Preferred card, you are earning “Ultimate Rewards” points. There are a number of ways that these points can be used. How valuable each point is depends on how you choose to use it.

Here’s a summary:

  • When you redeem points for cash, a statement credit, or a gift card: every 100 points earned = $1
  • When you redeem points for travel using Chase’s Ultimate Rewards travel portal: every 100 points = $1.25
  • When you transfer points to travel partners: It depends upon the award that you are able to get in the program. For example, you could get a round-trip ticket to Europe on United Airlines for as few as 115,000 miles round trip or as many as 300,000 miles. You just have to shop on the United Airlines website to see how many miles they are charging for the flight. Unfortunately, the number of miles is determined by the airline and is at their discretion.

Who the Chase Sapphire Preferred Card Doesn’t Work For

If your objective is to earn cash back on all your purchases, Chase Sapphire Preferred is not the best option for you.

Why? Every 100 points you earn is only worth $1. That means you will get a 2% return on restaurant and travel spending, and only 1% return on everything else. You can do a lot better with a cash back credit card like the Citi Double Cash, which offers 2% cashback on all purchases.

Redeeming Points for Travel Rewards

As a Sapphire cardholder, you can book travel using the Ultimate Rewards travel portal. You can book flights, hotels, car rentals, and other activities using the portal. The travel portal is like your own online travel agency:

who-the-chase-sapphire-preferred-card-doesnt-work-for

To pay for the travel, you can use Ultimate Reward points, your Chase card, or both. Your Ultimate Rewards points carry even more value when you book using the portal. You only need 80 points to cover $1 of travel expense. For example, if an airfare is $500, you would only need 40,000 points to pay for the ticket. If you only had 30,000 points, you could apply those toward the balance and use cash or your credit card to cover the rest. The 30,000 points would deduct $375 from the purchase price, and you could pay for the remaining $125 out of pocket.

Booking travel through the portal really boosts the value of your credit card. That means you are actually earning:

  • 2.5% on every $1 you spend on restaurants and travel
  • 1.25% on every $1 you spend on everything else — and you can boost this by using Chase Freedom Unlimited (see below)

Transfer to Travel Partners You have the opportunity to earn the best possible return when you transfer your points to a travel partner. Ultimate Rewards has an amazing coalition of travel partners where you can transfer your points 1:1. These include: =

  • Airlines: United Airlines, Southwest Airlines, and a number of foreign carriers (including British Airways, Air France, Korean Air, Singapore Airlines, and Virgin Atlantic)
  • Hotels: Hyatt, IHG, Marriott, and Ritz-Carlton

The value of your points when transferred depends upon how you redeem them. You will get some of the best returns (and the most fun) when you can you nab a coveted “saver” travel award through one of Chase’s partner airlines. Most airlines have different tiers of fares that are reserved for people who are booking using miles or points. “Saver” awards are often the most deeply discounted and that’s when you get the most bang for your buck when it comes to redeeming points.

For example, we recently looked up a trip to London from Newark on the United Airlines website for a four-day weekend in April. Using our award points, we found a round-trip “saver” award fare for just 115,000 points for business class flight. That same flight cost nearly $5,000 in cash.

If you use those 115,000 points to book travel on the Chase Ultimate Rewards portal, it is worth $1,725. And if you want to convert those points into cash deposited into your bank account, it would be worth $1,150.

With some advance planning, you can get the biggest returns on your Chase points by transferring your points to Chase airline partners and finding deals on international business class flights. But you have to plan in advance and have a flexible travel schedule if you want to get the best business class redemption opportunities.

Remember: You can transfer points from Ultimate Rewards to your existing frequent flier accounts. If you have 40,000 miles in your United Airlines account already and need more miles for an award, you can easily (and instantly) top up your existing account by transferring at a 1:1 ratio.

Boost Your Earning with Chase Freedom Unlimited

One of the weaknesses of the Chase Sapphire Preferred credit card is that you only earn 1 point on all of your spending outside of the restaurant and travel categories. Fortunately, there is a way to boost your earnings.

Chase recently introduced the Chase Freedom Unlimited credit card. With this credit card, you earn 1.50 Ultimate Rewards points for every $1 you spend. The good news is that you can combine those Ultimate Rewards points with your Chase Sapphire Reserve Ultimate Reward points. Even better: There is no annual fee on the Chase Freedom Unlimited credit card.

To get the best value, use:

  • Chase Freedom Unlimited for all purchases except dining and travel, and
  • Chase Sapphire Preferred for all dining and travel purchases, and
  • Use your points to redeem for travel on the Ultimate Rewards portal or get a great deal redeeming frequent flier miles with one of the travel partners

If you do that, you will be earning at least:

  • 2.5% on dining and travel (using Chase Sapphire Preferred), and
  • 1.875% on everything else (using Chase Freedom Unlimited)

The returns could be even higher if you transferred your points to a travel partner and snagged a great reward ticket.

What Are the Fees and Charges Associated with the Card?

Here are some of the key fees and charges that come with the Chase Sapphire Preferred card:

  • Annual Fee: $0 Introductory fee for the first year. After that, $95
  • Foreign Transaction Fee: None
  • Late Fee: Up to $15 if the balance is less than $100; up to $27 if the balance is $100 to less than $250; up to $37 if the balance is $250 or more

Having no foreign transaction fee is an excellent benefit, especially if you are a frequent traveler. There are still cards out there charging a hefty 3% on all foreign purchases.

Figuring out whether or not to pay the annual fee does take a little extra work. Remember that you can easily earn 2% cash back with the Citi Double Cash credit card, which has no annual fee. That is the baseline return. If you spend $2,000 a month, you could earn $480 a year in cash back. Can you beat that return?

If you are a foodie and world traveler, and you spend all $2,000 a month in the dining and travel categories, you can be much better off with Chase. If you use your card to redeem for travel or transfer to partners, you should be able to earn at least a 2.5% return. That means $20,000 of spend in the dining and travel categories would get you $600 of value before the annual fee. After the annual fee of $95, you would get $505 of value during the ongoing years — which is a better deal than the flat 2% card. And there is a reason the Chase Sapphire Preferred card is such a great option for travelers: you can get even better returns when you use your miles strategically, and the more you spend in dining and travel categories (above $20,000 a year), the better the card.

This card is not ideal for people who:

  • Do not spend a lot of money in travel and dining categories
  • Do not want to redeem their points for travel (would rather have the cash)

Other Card Benefits

In addition to earning points, there are a number of other benefits that come associated with the Chase Sapphire Preferred card. You can tell that this card is targeted toward the traveler because some of the richest (and, in our opinion, best) benefits are travel related. Make sure you understand them because if you are a regular traveler, you will likely have the opportunity to take advantage of them.

Car Rental Insurance

With this card, you get a primary auto rental collision damage waiver benefit. If you decline the auto rental company’s collision insurance and charge the entire rental cost to your card, you can receive coverage that provides reimbursement for up to the actual cash value of the vehicle for theft and collision damage for most rental cars in the U.S. and abroad. Having primary coverage is a big deal — it means you don’t have to submit a claim to your own auto insurance company first (which could result in higher insurance rates after a claim).

The insurance provided on the credit card only deals with collision. You need to have a strategy in place for other risks. Auto insurers typically sell four types of policies. They are:

  • Collision (Loss Damage Waiver): Your Sapphire card can replace this.
  • Liability: If you damage someone else’s property or person, you could be held liable (and the amount of the liability could be significant). You should check to see if your existing auto insurance provides liability coverage on your rental. If it doesn’t, or if you don’t have an auto insurance policy, consider buying that protection at the counter.
  • Personal Effects: This policy protects any items that are damaged while in the rental car. Depending upon your situation, you might not need this coverage.
  • Personal Accident Insurance: This is typically a health care policy that is not necessary if you have sufficient coverage from your existing health insurance.

If you are renting a car overseas, be sure to check with your credit card before traveling to make sure you are covered in that country.

Trip Delay

Remember when airlines used to provide you with a free hotel room if you got stuck somewhere overnight? Not any longer. Thankfully, Chase Sapphire Preferred steps in to the rescue.

If your common carrier travel is delayed more than 12 hours or requires an overnight stay, you and your family are covered for unreimbursed expenses, such as meals and lodging, up to $500 per ticket.

Baggage Delay

You can get reimbursed for essential purchases like toiletries and clothing for baggage delays over six hours by passenger carrier up to $100 a day for five days.

Trip Cancellation

If your trip is canceled or cut short by sickness, severe weather, and other covered situations, you can be reimbursed up to $10,000 per trip for your prepaid, nonrefundable travel expenses, including passenger fares, tours, and hotels.

Other Benefits

The Chase Sapphire Preferred card also offers purchase protection, price protection, return protection, and extended warranty protection benefits.

How to Get Approved

As you can tell from the details of the Chase Sapphire Preferred card, it comes rich with rewards and benefits. And it targets people with excellent or good credit.

If you have a low credit score (below 650) or you have missed a lot of payments historically, you will likely be rejected.

People with the best chance of being approved have scores well above 700.

If you have a bad credit score and are looking for a credit card, you can review our guide here.

An Example of Who Gets the Most from the Chase Sapphire Preferred Card

Here is a profile of an ideal Chase Sapphire Preferred customer:

Mary lives in New York City. She doesn’t have a car (because she uses the subway), and she spends a ton of money eating out and traveling. She has a good job and a good credit score but would love to travel even more.

This card is ideal for Mary because:

  • So much of her spending is on dining and travel, which earns at the highest level.
  • She wants to earn free travel, and the redemption opportunities are richest when redeemed for travel.
  • She doesn’t have primary auto insurance (because she doesn’t have a car) so the primary auto rental benefit is ideal.
  • She has excellent credit.

If that sounds like you, Chase Sapphire Preferred is a great addition to your wallet or purse.

An Example of Who Gets the Least from the Chase Sapphire Preferred Card

Here is a profile of someone who might be better off with a different card:

John is a father of three. He spends a lot of money on groceries (to feed his growing family) and gas (to drive to all of his children’s events). He just doesn’t have the money to eat out, and hopes to do some traveling later in life — once he funds three college educations.

There are other options that would be much better for John. Because none of his spending would be in dining or travel, he would only be earning 1 point for every $1 spent. Because he would not be redeeming his points for travel, he would likely be earning only 1% on his spending. John would be better with a cash back credit card that better rewarded his spending patterns.

Should I Consider the Chase Sapphire Reserve Instead?

In the last year, Chase also introduced the incredibly popular Chase Sapphire Reserve credit card. Here are the key differences between Sapphire Preferred and Sapphire Reserve:

  • There is an annual fee of $450. It is not waived during the first year. However, you can receive up to $300 in statement credits annually as reimbursement for travel purchases such as airfare and hotels charged to your card.
  • You earn 3 points on travel and dining, instead of 2.
  • When you redeem for travel on the Chase travel portal, you get 50% more value (compared to only 25% more value for Sapphire Preferred).
  • Just like the Sapphire Preferred, you earn 1 point for every $1 spent in all other categories (excluding dining and travel).

For spending in travel and dining that is redeemed on the Chase travel portal, you get incredible value. Every $1 spent on travel and dining is worth 3 points. And 3 points redeemed for travel on the Chase travel portal would be worth 4.5 cents. That means you could get an incredible 4.5% of value on the Reserve compared to 2.5% on Preferred.

When you decide between the two cards ask yourself the following question:

  1. Do you spend at least $300 a year on travel? If yes, answer the next question. If no, the Reserve card might not be for you.
  2. If you spend at least $300 on travel and more than $3,750 a year in travel and dining combined — you will be better off with the Reserve card.

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Best of, Credit Cards

Credit Cards: Find the Best Credit Card Offers & Deals (0% for 24 mos, 6% cash back)

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Credit Cards: Find the Best Credit Card Offers & Deals

Updated December 10, 2016

The best credit cards can help you earn $2 or more for every $100 you spend – an easy way to make $100s or even $1,000s a year. When done properly, low rate credit cards are also the cheapest way to borrow. You can get 0% interest for up to 2 years. And credit cards are the best way to build, rebuild or maintain an excellent credit score, without paying fees.

But if you get it wrong, you can easily end up buried under a pile of expensive debt. This is a step-by-step guide that will help you find the best credit cards (updated daily) while avoiding expensive traps.

Should You Get a Credit Card?

Credit cards are like knives. Used well, they are great (even essential) tools. But if you start playing with them, you can get into trouble quickly.

There are two big risks associated with swiping plastic:

  • You spend more than you should, because it is just too easy
  • You pay higher interest rates than you should, adding years to your debt repayment

Before using a credit card, you need to answer the following question honestly:

Do I trust myself with plastic? Can I exhibit the necessary self-control to spend only what I can afford to pay in full every month?

If you have the discipline and self-control, keep reading and we will help you find the best credit card for your needs. But, if you don’t, it is possible to live a long and fulfilling life without plastic cards in your pocket.

The CFPB has a good guide on what to be aware of with your first credit card, as does the Federal Reserve.

Which type of card is best for you?

Why do you want a credit card ? The answer to that question will determine which type of card is best for you.

Just remember this critical rule when selecting a credit card:

You should have a Rewards Card for your spending. You should have a Low Rate Card for your borrowing. But you should avoid mixing the two. The best Rewards Cards tend to have higher interest rates. And the best Low Rate Cards often have no (or bad) rewards.

How to Choose and Use a Rewards Card

It is now easy to earn great rewards when you use a credit card for your spending. You should earn at least 2% cash back, and can earn even earn more with a bit of work. The money can add up quickly. If you spend $1,000 a month, you can earn $240 a year. It is not very often you can get something for nothing. But if you make the right choice and follow the rules, it is possible to get something for nothing.

How to Choose

Best Cash Back Credit Cards

These are the top cards offering a flat cash back rate.

Citi Double Cash Card

1% When You Buy + 1% When You Pay

Citi Double Cash Card

The Citi Double Cash Card is the best overall cash back credit card. So long as you pay your statement balance in full and on time every month, you will earn 2% cash back. You earn 1% unlimited cash back on all of your purchases. You then earn an additional 1% on payments based on your purchases. The bonus cash back can take up to two billing cycles to post.

Transparency Score
Transparency Score
  • No caps on how much cash back you can earn.
  • Cash back earning formula is easy to understand
  • There is a range of interest rates. You won’t know yours until after you apply

Key Information

Credit Score Required : Good or Excellent Credit

Purchase Interest Rate : 13.49% – 23.49%

Annual Fee : $0

Sign-on Bonus : None

Intro Purchase APR : None

Intro Balance Transfer : 0% for 18 months with a 3% fee

Tip: Make sure you pay your statement balance in full and on time to maximize your cash back

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Fidelity Rewards Visa Signature Card

Unlimited 2% Cash Back on Every Purchase

Fidelity Rewards Visa Signature Card

The Fidelity Rewards Visa Signature Card offers Fidelity customers a generous 2% cash back on all purchases, with no limits or category restrictions. The cash back you earn must be deposited into a Fidelity account, but you don’t need to have a Fidelity account to apply for the card.

If you do not have a Fidelity account, they will open a Fidelity Cash Management Account to deposit your cash back. It works like a checking account with no minimum balance requirement and no monthly fees. In addition, all domestic ATM fees are reimbursed (unlimited).

Transparency Score 1
Transparency Score
  • Simple cash back earning formula
  • No caps on how much cash back you can earn
  • You need to have a Fidelity account in order to redeem your cash back

Key Information

Credit Score Required : Excellent Credit

Purchase Interest Rate : 14.49%

Annual Fee : $0

Sign-on Bonus : None

Tip: You don’t need to keep your retirement or stock accounts with Fidelity to qualify for this card. Anyone can apply.

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Barclaycard Cash Forward Credit Card

1.575% Cash Back for People with Fair Credit

Barclaycard CashForward Credit Card

You don’t need perfect credit to get a good cash back credit card. Barclaycard has just launched this card, which offers a generous 1.5% cash back rate on all purchases. You can earn a 5% bonus when you redeem, which creates an effective 1.575%.

There is a $100 bonus if you spend $500 in the first 90 days. The card has no annual fee, and there is a special 0% interest rate on purchases for the first 12 months.

Transparency Score 2
Transparency Score
  • Cash back earning formula is easy to understand
  • There is a range of interest rates. You won’t know yours until after you apply

Key Information

Credit Score Required : Fair Credit

Purchase Interest Rate : 15.24%, 20.24% or 25.24%

Annual Fee : $0

Sign-on Bonus : $100 after spending $500 in the first 90 days

Intro Purchase APR : 0% on purchases for the first 12 months

Tip: This card may be available if you have less than perfect credit.

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Best Category Bonuses (Gas, Grocery, Travel, Dining)

Here are the top cash back cards that pay much higher rates in certain bonus categories, which can be a great way to boost your returns.

Fort Knox Credit Union Platinum Visa

Unlimited 5% Cash Back on Gas

Fort Knox Credit Union Platinum Visa

If you spend a lot of money on gas, there is no better card than this. You can earn unlimited 5% cash back on spending at gas stations. You will earn 1% on all other spend. You must be a member of the credit union, but anyone can join. Pay $5 to join the American Consumer Council of Kentucky (you can do that here) and you will be eligible to join.

Transparency Score 3
Transparency Score
  • No limit to the cash back you can earn, even in the bonus category
  • You have to be a member of the credit union to get the card

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 9.50%

Annual Fee : $0

Tip: If you are not yet a member, you can use the non-member application process. Once approved, you can join with your $5 contribution to American Consumer Council.

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Blue Cash Preferred Card from American Express

6% Cash Back on Groceries (Up to $6,000 of Spend)

Blue Cash Preferred Card from American Express

The unparalleled 6% cash back rate on groceries makes this one of the best cards on the market for heavy grocery consumers. Even with the $75 annual fee, most grocery shoppers will come out ahead.

You will also earn 3% cash back on all gas station purchases, 3% at select department stores and 1% on all other purchases. You will earn a bonus offer of $150 after you spend $1,000 in the first three months. And, for a limited time, you can earn 10% back at Amazon.com, up to $200 within the first six months you have the card.

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  • Simple, easy to understand bonus offer
  • There is an Annual fee

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 13.49% – 22.49%

Annual Fee : $95 (no fee for additional cards)

Intro Purchase APR : 0% for 15 months

Tip: If you spend less than $200 a month on groceries, you will earn less than 2% cash back (after taking into account the fee) and would be better with Citi Double Cash or Fidelity American Express. But, if you spend more each year, this is a great option.

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PenFed Premium Travel Rewards American Express

4.25% Cash Back on Airfare Expenses

PenFed Premium Travel Rewards American Express

If you buy a lot of plane tickets every year, this card can be particularly lucrative. You will earn 5 points for every $1 spent on air travel. When you convert those points to a prepaid Visa card, those 5 points turn into a 4.25% earn rate. You earn 1 points per $1 on all other purchases.

There is no annual fee, no foreign transaction fees and 20,000 bonus points when you spend $2,500 within three months.

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  • No annual fee and no foreign transaction fees
  • The conversion from points to $ can be confusing
  • You must be a member of the credit union

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 9.24% – 17.99%

Annual Fee : $0

Intro Balance Transfer Offer : 0% for 12 months with a 3% fee

Tip: Keep an eye open on the redemption opportunities. You can sometimes find better deals than just prepaid Visa cards.

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AARP Credit Card from Chase

3% Unlimited Cash Back at Restaurants

AARP Credit Card from Chase

You do not have to be over 55, or a member of the AARP, to apply for this credit card. When applying, you just need to keep the “AARP Membership Number” field blank. You can earn unlimited 3% cash back on your dining expenses. So, if you are a foodie, this is a great card. You also get a healthy 3% cash back on gas and 1% on all other purchases.

If you are interested in joining the AARP, you also don’t need to be older than 55. Anyone can join.

You can learn more about the offer by visiting AARP.org.

The information related to AARP Visa credit card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card.

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  • No limit to the cash back you can earn
  • You do not need to be an AARP member to get the card

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 16.49%

Annual Fee : $0

Intro Purchase APR : 0% for 12 months

Intro Balance Transfer Offer : 0% for 12 months with a fee of 3% or $5 (whichever is greater)

Tip: Joining AARP at a younger age isn’t as crazy as it sounds. There are a lot of benefits and discounts available to members.

More Dining Credit Cards

Do you spend a lot of money in other categories? You can find the best cash back credit cards for every category here.

Best Travel Rewards Credit Cards

If you would like to earn free travel, there are a number of credit cards designed specifically to help you earn free flights quickly. Here are the best travel rewards credit cards.

BankAmericard Travel Rewards

Best No Annual Fee Travel Card – Miles Can Be Used Anywhere

BankAmericard Travel Rewards

You earn 1.5 points for every $1 you spend. There is no limit to the number of points you earn.

The points can be used on any purchase. There are no restrictions and no blackout dates. Every 100 points can buy $1 worth of travel. The rewards get even better if you have “Preferred Rewards” at Bank of America. You can earn a bonus of between 25% and 75% if you have significant balances at Bank of America or Merrill Lynch.

There is no annual fee and no foreign transaction fees. You can use your points for a wide range of travel options, including flights, hotels, vacation packages, cruises, rental cars and even pesky baggage fees.

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  • Simple introductory bonus
  • No limit to the points you can earn
  • There is a range of interest rates. You won’t know yours until after you apply

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 15.49% – 23.49%

Annual Fee : $0

Intro Purchase APR : 0% for 12 months

Tip: The Preferred Rewards program offers excellent rewards. If you rollover your old 401(k) or IRA to Merrill Edge, you can get up to a 75% credit card bonus and ATM fee reimbursement with a Bank of America checking account.

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Amex Everyday Credit Card

Best No Annual Fee Travel Card – Earn Airline Miles & Hotel Points

Amex Everyday Credit Card

You can earn 2 points for every $1 spent at supermarkets, up to $6,000 per year. You will earn 1 point on all other purchases, including supermarket spend above $6,000. And there is an added bonus. If you use your credit card for 20 purchases per month, you will get a 20% bonus. That means you would get 2.4 points on grocery store spend (up to $6,000) and 1.2 points on everything else.

You will be earning Membership Rewards Points, which have a wide variety of redemption options. You can convert these points into frequent flier miles of airlines. Participating airlines include Delta, Virgin America, British Airways, Virgin Atlantic and more. You also have the option to convert points into hotel programs, including Hilton and Starwood.

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  • Simple introductory bonus
  • The 2-point bonus on grocery store spending is capped
  • You need 20 transactions each month to get the the 20% bonus

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : Prime + 9.74% – Prime + 18.74%

Annual Fee : $0

Tip: Make sure you use this card for all of your everyday spend. The 20% bonus is based upon the number of transactions made, not the value of those transactions. Even buying a package of gum in the grocery store counts.

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Best Credit Cards for Foreign Travel

These are the best credit cards for use when traveling outside of the country. None of these cards have foreign transaction fees. And some of them even have chip and pin, helping to increase acceptance.

First Tech Credit Union Platinum Rewards MasterCard

No Annual or Foreign Transaction Fee + Chip and Pin Functionality

First Tech Credit Union Platinum Rewards MasterCard

This card is the perfect companion for overseas travel. There is no annual fee or costly foreign transaction fee. Even better, the card offers chip and pin functionality. Most major credit card issuers in America have rolled out chip and signature, which can be problematic overseas. If you try to use your card at a ticket machine or with a waiter’s portable payment device, you have a good chance of being rejected.

The card also offers low credit union interest rates, starting at just 9.99%. It is easy to join the credit union. Membership is free if you work for a sponsor technology company. If you work for the state of Oregon or live in Lane County, Oregon membership is also free. Otherwise, you just need to join the Financial Fitness Association. There is a one-time fee of $8, and you are member. That membership gives you the right to join the credit union and apply for this card.

You will earn 1 point for every $1 you spend. This is not the best rewards program on the market.

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  • No annual fee or foreign transaction fees
  • You have to be a member of the credit union

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : from 10.24%

Annual Fee : $0

Tip: First, join the Financial Fitness Association. Then join the credit union. Finally, apply for the credit card. This can all be done online, and it is an easy process.

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Barclaycard Arrival Plus World Elite MasterCard

No Foreign Transaction Fee + Chip and Pin Functionality

Barclaycard Arrival Plus World Elite MasterCard

With this card, you earn 2 miles for every $1 you spend. When you redeem, you receive a 5% bonus, which gives you a 2.1% earn rate. Your miles can be used on any travel purchase with any airline, hotel or other travel expense. There is an annual fee of $89, which is waived during the first year. If you spend $1,000 a month, you would earn $252 of rewards during the year. After deducting the annual fee, you will have earned 1.4%.

There is a sign-on bonus of 50,000 miles after you spend $3,000 in the first 90 days. But the real strength of this card is for foreign travel. There are no foreign transaction fees and full chip and pin functionality is available.

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  • No limit on the bonus points you can earn
  • There is an annual fee

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 16.49%, 20.49% or 23.49%

Annual Fee : $89 (waived during the first year)

Intro Purchase APR : None

Intro Balance Transfer : 0% for 12 months with a 3% fee

Tip: Given the high annual fee, this card is only worthwhile if you expect to spend a lot on the card.

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Capital One Quicksilver One Rewards MasterCard

Best Foreign Travel for Fair Credit

Capital One Quicksilver One Rewards MasterCard

This card is designed for people with Average/Fair credit. If you have defaulted on a loan in the past five years (but not more than one), or if you have had limited credit history (at least one account for less than three years), you would be considered “average/fair.”

With this card, you can earn 1.5% unlimited cash back. There is also no foreign transaction fee. That combination of no fee and rewards can make this card lucrative. There is an annual fee of $39.

This card can be useful to build your credit score. Just keep your utilization low (ideally below 20% of the available credit) and make your payments on time and in full every month. Capital One provides free access to your FICO score. So, you can track your score and see when you are eligible for an upgrade to a no-fee card.

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  • No limit to the cash back you can earn
  • No confusing categories or limits
  • No annual fee or foreign transaction fee

Key Information

Credit Score Required : Fair or Average

Purchase Interest Rate : 24.99%

Annual Fee : $39

Intro Purchase APR : 0% until September 2016

Tip: Use this credit card to build your score and avoid expensive foreign transaction fees.

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How to Use

In order to maximize your cash back, make sure you follow these suggestions:

  • Use your chosen cash back card for ALL of your spending. Your goal should be to replace cash, checks, automatic debits and debit cards completely. For example, you can automate bill payments (like your cell phone) to be debited from your credit card. This will make your life easier (only one payment to make each month) and it will make budgeting easier (you can set a target for spending and track it easily).
  • Set up automatic monthly payments for the statement balance, not the minimum due. If you set up automatic payments, you will ensure that your payment will be on time every month. And if you set up the automatic payment for the statement balance, you will ensure that you are never charged interest and only charge what you can afford to repay.
  • Avoid cash advances. If you use your credit card to take out cash, most companies will charge a cash advance fee that averages 3%. The interest rate on cash advances is usually above 20%. And there is no grace period, which means interest starts accruing right away.

Brian Karimzad, Co-Founder of MagnifyMoney, explains how to get the most out of cash back credit cards in this video:

How to Choose and Use a Low Rate Credit Card

When done properly, credit cards can be the cheapest way to borrow. Just make sure you choose the right credit card for your situation and automate a plan to pay off the debt as quickly as possible.

How to Choose

Best Balance Transfer Credit Cards

With a balance transfer credit card, you can transfer debt from a high interest rate credit card to a 0% introductory promotional rate. You can find no fee balance transfers for up to 15 months. If you are willing to pay a fee, you can find balance transfers for up to 24 months. The fee is usually worthwhile – if you want to do the calculation, you can use the calculator on our interactive tool.

Remember: you cannot transfer debt between two credit cards of the same bank.

Here are the best 0% balance transfer offers in the market today. All of these credit cards waive interest – which means there is no retroactive interest charge to worry about.

Chase Slate®

$0 introductory balance transfer fee, 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee

Chase Slate®

With Chase Slate®, you can save with a $0 introductory balance transfer fee, 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee. Plus, receive your Monthly FICO® Score for free. At MagnifyMoney, this is our favorite balance transfer offer.

You cannot transfer debt from other Chase credit cards, including their co-brand cards. Chase operates credit cards for companies like United Airlines, Southwest Airlines and Marriott.

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  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is a range of interest rates. You won’t know yours until you apply.

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 15.49% to 24.24% variable

Annual Fee : $0

Intro Purchase APR : 0% for 15 months

Tip: Make sure you complete the balance transfer within 60 days of opening the account.

LEARN MORE Read Our Full Review

Alliant Platinum Visa

No Fee – 0% on transfers for 12 Months

Alliant Platinum Visa

With the Alliant Platinum Visa, there is no balance transfer fee and you pay no interest for 12 months. You can apply for the credit card even if you are not a member of the credit union. If you are approved for the credit card, you can then join

Anyone can join the credit union. You just have to make a contribution of $10 to Foster Care for Success and then you can become a member of the credit union. That is what we love about credit unions: joining requires a donation to a worthy charity.

There is one catch (that we don’t like). Even if you are approved for the credit card, you might not get the 0% offer. Depending upon your credit score, you might be given a much higher introductory interest rate.

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  • Interest is not deferred during the introductory promotional period. It is waived.
  • You might not get the 0% offer, depending upon your credit score
  • You have to join the credit union

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 9.49% – 21.49%

Annual Fee : $0

Intro Purchase APR : 0% for 12 months

Tip: If your credit score is not excellent, you might find it difficult to get the 0% offer. Pay close attention to the offer details once approved.

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Santander Sphere Visa

0% on transfers for 2 Years – 4% Balance Transfer Fee

Santander Sphere Visa

This is the longest 0% offer in the MagnifyMoney database. The only catch: it comes with a hefty 4% balance transfer fee. The fee could still be worthwhile, depending upon how long it takes for you to pay off the debt. You cannot transfer debt from other Santander credit cards.

The card also offers a rewards program, with 1 point for every $1 spent. And if you spend $1,000 in the first 90 days, you earn 10,000 bonus points.

You have 90 days from account opening to complete the balance transfer, otherwise you lose the promotional rate.

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  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is a range of interest rates. You won’t know yours until you apply.

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 12.99% – 22.99%

Annual Fee : $0

Tip: This card is a good option if you think it will take a long time to pay off your debt in full.

GO TO SITE Read Our Full Review

Citi Simplicity

0% on transfers and purchases for 21 Months; 3% Fee

Citi Simplicity

Citibank has a strong balance transfer offer, with a long 21 months and a 3% fee. In addition, Simplicity has some added perks. There are no late fees, no penalty rate and no annual fee. Although you should always try to pay on time, it is nice that this card will not punish you for the occasional mistake.

In addition to the balance transfer offer, you pay no interest on purchases for 21 months.

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  • No late fee, no penalty APR and no annual fee
  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is a range of interest rates. You won’t know yours until you apply.

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 13.49% – 23.49%

Annual Fee : $0

Tip: Make sure you transfer your balance within 4 months of opening the card, otherwise you lose the promotional offer.

GO TO SITE Read Our Full Review

Barclaycard Cash Forward Credit Card

0% Balance Transfer for Less Than Perfect Credit

Barclaycard Cash Forward

The Barclaycard Cash Forward might be an option if your credit isn’t yet excellent.

The balance transfer has a 3% fee, but you will have 0% interest for 15 months on transfer you make in the first 45 days and there is no annual fee.

You interest rate after the transfer can be as high as 24.99%, so this is definitely a card you only want to use for a balance you know you’ll pay off in under 15 months.

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  • No annual fee.
  • A high ongoing rate if your credit isn’t great.

Key Information

Credit Score Required : Fair or Average

Purchase Interest Rate: 15.24%, 20.24% or 25.24% based on your credit worthiness.

Annual Fee : $0


Tip: Watch your credit score closely. As you pay down your debt, your score will improve. Once your score is above 700, you can find a lot of choices for credit cards with better rewards or no annual fee.

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Paying off credit card debt sometimes requires more than one balance transfer credit card. If you want even more choices, check out our full guide to the best balance transfer cards, or use our balance transfer calculator to see which cards will save you most.

Best 0% Purchase Credit Cards

With a 0% introductory purchase offer, you will not be charged interest for purchases made on the credit card during the promotional period. This is a great way to finance a purchase. Even better, none of these top cards charge retroactive interest if you don’t pay off the balance during the promotional period. (A lot of store credit cards offer 0%, but then hit you with a big penalty. But don’t worry – these recommendations don’t do that).

Citi Simplicity

0% on Purchases for 21 Months

Citi Simplicity

If you are looking to finance a purchase, Citibank offers the longest 0% purchase promotion of any credit card in the MagnifyMoney database. The APR on purchases will be 0% for the first 21 months after opening the credit card.

Additionally, Citi Simplicity charges no annual fee, no late fee and has no penalty APR.

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  • No late fee, no penalty APR and no annual fee
  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is a range of interest rates. You won’t know yours until you apply.

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 13.49% – 23.49%

Annual Fee : $0

Tip: The 21 months starts from when you open the credit card, not when you make the purchase. So make sure you time your application with your planned purchase.

GO TO SITE Read Our Full Review

TruWest Visa Signature

0% on Purchases for 18 Months – Credit Union Membership Required

TruWest Visa Signature

TruWest is a credit union with restricted membership. Unfortunately, you need to live in certain regions of Texas or Arizona, or work for a few select employers (like Motorola) to join. You can learn about membership eligibility here.

If you are able to join, you will find a long 0% promotional period. Even better, the credit card has reasonable credit union interest rates after the promotional period ends. There is no annual fee on the card.

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  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is a range of interest rates. You won’t know yours until you apply.

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 8.15% – 9.15%

Annual Fee : $0

Tip: Make sure you check your membership eligibility before you apply.

Best Low Interest (not 0%) Credit Cards

Having a credit card with a rate that stays low is a good idea. In case of an emergency, you will always have access to a low cost way to borrow. Here are some great low interest rate options:

Barclaycard Ring

8.5% Variable Interest Rate – With Profit-sharing (Maybe)

Barclaycard Ring

Barclaycard Ring was launched as a new type of credit card. Barclaycard has created a “community” that is supposed to provide feedback on product features and share in the profits. Unfortunately, there aren’t many profits to share with community members. According to a recent post, losses are higher than expected and only 2,599 new accounts were booked in a month.

Although you shouldn’t expect any profits to come, you can still enjoy a low interest rate. Barclaycard charges a flat 8% interest rate. That is a nice card to have in your back pocket in case of an emergency.

There are no rewards offered on this card.

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  • One flat interest rate
  • No annual fee

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 8.5%

Annual Fee : $0

Tip: This is a good card to keep in your back pocket in case of an emergency

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Langley Select Visa Platinum Card

As Low as 7.50% from a Credit Union Anyone Can Join

Langley Select Visa Platinum Card

Anyone can join Langley Federal Credit Union by joining an association during the signup process for $5.

If you have excellent credit and just want a place for emergency spending with no rewards, consider keeping this card on hand. Although the rates start as low as 7.50%, not everyone will get a rate that low.

It’s more of a hassle than a regular bank card, but if you insist on the very lowest rate consider this.

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  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is a range of interest rates. You won’t know yours until you apply.
  • You have to join the credit union

Key Information

Credit Score Required : Excellent

Purchase Interest Rate : from 7.50%

Annual Fee : $0

Tip: You need to have an excellent credit score in order to qualify for the lowest interest rate. And unfortunately the online banking is not as good as some of the bigger banks.

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You might get a lower rate from a credit union or bank near you that doesn’t accept nationwide applications, and you can check our full list of low interest credit cards to see if there is one that works for you.

How to Use

If you need to borrow money, credit cards can be an incredibly low cost way of borrowing. Just make sure you pay attention to the following tips:

  • Get that balance transfer done quickly! If you are transferring a balance, make sure you complete the transfer as soon as possible. The introductory offer starts from when you open the card, not when the transfer is completed. And you can lose the offer with most issuers if you wait more than 60 days to complete the transfer.
  • Automate your monthly payments. If you pay late, you can be charged a costly late fee. And, if your payment is 60 days late, you can lose the introductory offer entirely.
  • You cannot transfer debt between two cards of the same bank. For example, if you open a Citibank account you will only be able to transfer debt from credit cards other than Citibank.

Nick Clements is the Co-Founder of MagnifyMoney. He also used to run a large credit card company and explains how to use balance transfers in this video.

How to Choose and Use a Credit Card to Build or Rebuild Your Score

If you are looking to build or rebuild your credit score, a credit card can be the perfect tool.

How to Choose

If you have no credit, or your credit score is below 620, you should consider a secured credit card.

If you have limited credit history (less than three years) or you have only defaulted once on a credit card or loan (not multiple times), you should consider a credit card for fair credit.

Best Secured Credit Cards for People with Bad or No Credit

Secured credit cards are the best option if you need to build or rebuild your credit score. The best secured credit cards have no annual fees. If you’re going to use a secured credit card, it will help you grow your score if you pay your balance on time every month, keep your credit utilization low, and you apply for an unsecured credit card after 12-18 months of regular use.

Need to know more? These are ways that you can build your credit without paying interest and spending just $10 a month, and these are tips for improving your credit score.

Capital One Secured MasterCard

No Fee Secured Card with Free FICO Score; Deposit Between $49 – $200 Required

Capital One Secured MasterCard

This is our favorite secured credit card. There is no annual fee. And Capital One will give you free access to your FICO credit score. You can watch your good behavior being rewarded, and you will know when it is time to convert to a fully unsecured credit card.

In order to open the card, you will need to deposit between $49 and $200, depending upon your creditworthiness. Capital One will assign a credit limit up to $3,000.

Capital One also give you access to the “Capital One Credit Tracker” which has a what-if simulator to help you understand how your credit score will evolve over time.

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  • No annual fee
  • Free FICO credit score

Key Information

Credit Score Required : Anyone can apply

Purchase Interest Rate : 24.99%

Annual Fee : $0

Tip: This product reports to all three credit bureaus. It is a great tool to build your score. But, if you miss payments, you can do damage to your score.

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Community Secured Visa from Coastal Credit Union

No Fee Secured Card; Credit Union Membership and $100 Deposit Required

Community Secured Visa from Coastal Credit Union

This card has no annual fee, and you only need to deposit $100 in a Collateral Savings Account to get started. If you’re not a member of Coastal Credit Union, you can join an organization for $18, which is deducted from your initial deposit, and become a member. So you’ll need $118 to get started.

While the initial deposit is a bit higher than the Capital One card, you get the peace of mind that your interest rate will be more reasonable in case you get into trouble. This one takes more work to open than the Capital One card, since it involves joining a credit union, but you deal with less fine print once you have the card.

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  • A single interest rate that you know up front, before you apply
  • You have to join a credit union

Key Information

Credit Score Required : Anyone can apply

Purchase Interest Rate : 15.50%

Annual Fee : $0

Tip: It is easy to join the credit union. Join an organization for $18 and you will become eligible.

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We also have a list of several other no annual fee secured credit cards from both banks and credit unions anyone can join. Or browse our list of hundreds of secured cards to compare rates, fees, and deposit requirements.

Best Credit Cards for People with Fair Credit

If you have fair or average credit, you might be able to qualify for an unsecured credit card. If you have more than one default in the last five years, you will find it difficult to get approved. In addition, if you are currently delinquent on any of your accounts it will also be hard to get approved, and you should try a secured card instead.

Here are some good cards for people with fair credit:

Barclaycard Cash Forward Credit Card

1.575% Cash Back for People with Fair Credit

Barclaycard Cash Forward Credit Card

You don’t need perfect credit to get a good cash back credit card. Barclaycard has just launched this card, which offers a generous 1.5% cash back rate on all purchases. You can earn a 5% bonus when you redeem, which creates an effective 1.575%.

There is a $100 bonus if you spend $500 in the first 90 days. The card has no annual fee, and there is a special 0% interest rate on purchases for the first 12 months.

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  • Cash back earning formula is easy to understand, with no caps
  • There is a range of interest rates. You won’t know yours until after you apply

Key Information

Credit Score Required : Fair Credit

Purchase Interest Rate : 15.24% – 25.24%

Annual Fee : $0

Sign-on Bonus : $100 after spending $500 in the first 90 days

Intro Purchase APR : 0% on purchases for the first 12 months

Tip: Don’t use more than 20% of your available credit to help improve your score over time.

GO TO SITE FULL REVIEW

Capital One Quicksilver One

1.5% Cash Back for People with Fair Credit – with $39 Annual Fee

Capital One Quicksilver One

Capital One has created a credit card specifically for people with fair or average credit. If you have defaulted on a loan (but not more than one) in the last five years, or you have limited credit history (at least one account for less than three years), you would meet the definition of fair credit.

You will earn 1.5% cash back, unlimited. There is also 0% interest on purchases until September 2016 as well.

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  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is an annual fee

Key Information

Credit Score Required : Fair or Average

Purchase Interest Rate : 24.99%

Annual Fee : $39

Tip: Watch your credit score closely. As you pay down your debt, your score will improve. Once your score is above 700, you can find a lot of choices for credit cards with better rewards or no annual fee.

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You may also want to try and see if you are pre-qualified for a credit card before applying. Banks can perform a ‘soft’ pull on your credit file to give you a sense of whether you might qualify for one of their products. It leaves no mark on your credit score, and you can see a full list of ways to check if you’re pre-qualified here.

A Special Note: Beware Predatory Companies

Many lenders target consumers with FICO credit scores of less than 650. If you have searched for “credit cards for bad credit,” you will probably find offers from companies like First Premier. In addition to high interest rates, these lenders often require application processing fees, maintenance fees and more. You could be given a $300 credit limit and see a big portion of it eaten up with fees.

Stay away from these specialist subprime lenders. Instead, consider the following:

  • If you need to borrow, consider a personal loan instead. You can find much better deals. Search for options here
  • If you want to build your credit score, use a secured credit card instead.
How to Use It

In order to build your credit score with one of these cards, you should follow our tips. By doing this, you should see real improvement in your score.

  • Don’t use more than 10% – 20% of your available credit. For example, if you have a $500 credit limit, never spend more than $50. That keeps your utilization low.
  • Use your card every single month. You should make sure you have a transaction every month, so that positive data is reported to the credit bureaus.
  • Automate and pay your statement balance in full and on time every month. Even just one late payment could crush your score. And by paying the balance in full, you will avoid any interest expense.
  • Watch your score closely. Keep an eye on your credit score. After 12 months, you should really start to see a big improvement. Once your score is above 650, you should try to get your secured card converted or apply for an unsecured credit card.

Other Benefits of Using a Credit Card

Not only can you use a credit card to earn rewards, borrow at low rates or build your credit score for free – but there are many other benefits available. Here are some of the benefits that you can find:

Available on Most Credit Cards

$0 Liability on Fraudulent Activity: Credit cards are the best way to protect yourself from fraud. So long as you report the fraud to your credit card company, you will not be liable for any losses on any major credit card.

Car Rental Collision Insurance: If you waive collision coverage when renting a car, your credit card may provide secondary coverage of $50K or more.

Available on Some Credit Cards

Retail Purchase Protection: Protects you from loss, theft, fire or accidental damage for a limited period of time after your purchase has been made. Not all cards protect you from loss, so look it up in the Purchase Protection Coverage Description Document.

Price Protection: If you buy something in stores and you see an advertised price, you will receive the difference between the two prices.

Extended Warranties: Duplicates both manufacturers and store warranties for a limited length of time and for limited dollar values (varies by card).

Travel Accident Coverage: If you are injured during travel, and you purchased the tickets via credit card, your company fully insures you.

Lost Luggage Coverage: You can receive compensation for lost, stolen or damaged luggage if you purchased flight or travel tickets using your credit card.

Trip Interruption Cancellation Coverage: If travel delays keep you from completing a trip, and you purchased the tickets on your credit card, the full value of the tickets will be refunded

Concierge Services: Certain cards offer free access to local concierge services that can help you make dinner reservations, purchase event tickets, and locate items while you are abroad.

FAQ

The minimum payment calculation differs by credit card issuer. The most common is 1% of the principal balance plus any interest or fees that accrued in the month (or a set amount, like $25, if the minimum due is very low).

If you use your credit card at an ATM to take out cash, a few things will happen. First, you would be charged a cash advance fee, which is usually about 3%. Second, interest would start accruing immediately, because most issuers do not have a cash advance grace period. And the cash advance interest rate is usually much higher than the purchase rate. Don’t be surprised to see interest rates as high as 24% (or higher).

While there is no over-limit fee, having a credit card with a balance that is greater than the credit limit can have a very negative impact on your credit score. In general, you want to keep your credit card balance below 20% (ideally below 10%) of your credit limit.

We do not recommend closing credit cards, because it can reduce your credit score. Closing unused credit cards does two things. First, it reduces your total available credit. That increases your utilization, which is bad for your score. Second, the age of your open credit cards helps your score. If you close old accounts, you can hurt your score over time.

The law requires that any payment amount beyond the minimum due must be applied to the highest APR balance first. The minimum due is at the discretion of the credit card companies. However, it is usually applied to the balance with the lowest APR first. Your goal is to eliminate high APR debt – so don’t be afraid to make much bigger payments on credit cards. The extra amount will always go to the most expensive debt first.

Each application for new credit can take 5-10 points off your credit score. If you are planning on applying for a mortgage or auto loan in the near future, you have to be very careful. Even just 5 points can be painful. However, if you are not going to be applying for a mortgage or auto loan in the next 6-12 months, you should not worry too much about your credit score. Instead, focus on getting out of debt quickly.

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Credit Cards, Earning Cashback, Reviews

USAA is Secretly Testing a New 2.5% Limitless Cashback Credit Card — And It Could be a Game Changer

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Two best friends sitting in a cafe and gossiping,

A cashback rewards card that gives you more than 2% cashback on every single purchase with no annual fee, no spending cap, and no category restrictions is fairly rare. That’s why the new USAA Limitless Cashback Rewards Visa Signature card could be a game changer.

Rumors of the card’s existence first surfaced on Reddit last month. The card was featured briefly on the USAA website in mid-October but quickly disappeared.

MagnifyMoney reached out to a USAA spokesperson, who said they could confirm the card is in pilot mode but could not say when it will be released to the broader USAA membership.

“We believe this new product can provide our members better value and reward them for their loyalty to USAA,” said Gloria Manzano, senior communications partner for the company.  “If we determine this potential new product can help us better serve our members, we’ll make it available to all of our members as soon as possible.”

Manzano declined to offer more details on the terms and benefits that the card will offer.

Because of the exclusivity of this pilot product, there was very little information on the offer until recently. In this post, we’ve put together what we know about the card so far, based on customer testimonies online and the brief glimpse of the cards terms when it was featured on USAA.com in October.  We will update this post as new information is published.

  • The credit card basics
  • How to apply for the card and redeem cashback
  • USAA eligibility criteria
  • The fine print details
  • The pros and cons

The Basics of the USAA Limitless Cashback Rewards Visa Signature Card

  1. Earn unlimited 2.5% cashback.

All purchases get 2.5% cashback with no cap.

  1. A USAA bank account with a monthly $1,000+ direct deposit is required to earn 2.5% cashback.

The 2.5% cashback deal does come with one catch. You must have an open USAA bank account and maintain a monthly direct deposit into that account of over $1,000 every 30 days to earn 2.5% cashback.

  1. Earn unlimited 1.5% cashback without direct deposit.

If you don’t meet the $1,000 direct deposit condition, all purchases get 1.5% cashback instead.

Applying for the Card and Using Cashback Earned

usaa1 (1)USAA members can log in to their USAA account to review all credit card products. Because the card is in pilot mode, you can apply for the card only if the USAA Limitless Cashback Rewards Visa Signature card shows up as an available offer. You can also call USAA and give member services your member number to find out if you’re eligible.

Redeeming cashback rewards with USAA is simple. Cashback can be redeemed at any time in increments of $1. You can request a cash deposit into a USAA checking or savings account. The other option for redemption is statement credit.

USAA Eligibility Criteria

USAA credit cards are only open to USAA members. USAA serves customers who meet certain eligibility criteria. Those who don’t fall into any of the qualifying groups will not be able to take advantage of the 2.5% cashback opportunity.

USAA offers membership to active military currently serving in the U.S. Air Force, Army, Coast Guard, Marines, and Navy. You can also apply for membership if you’re a former military service member who’s retired or has been honorably discharged.

Family of USAA members, including children, widows, widowers, and un-remarried former spouses, are eligible for membership as well. Cadets and midshipmen at U.S. service academies, in advanced ROTC, or on ROTC scholarship and officers within 24 months of commissioning are eligible for USAA services.

You can review the eligibility criteria and apply for membership here.

The Fine Print and Fees

Keep in mind there may be changes to the terms of this card in the future since it’s currently a pilot program.

Right now, the card has no annual fee or foreign transaction fees. The only fine print is that you must have $1,000 to direct deposit into a primary bank account with USAA every 30 days to get the unlimited 2.5% cashback. This may or may not be possible based on your job, financial situation, and where you prefer to bank.

Pros and Cons

Pro: Earn 2.5% cashback. Getting unlimited 2.5% cashback without having to worry about a spending limit or changing your spending habits each quarter is a sweet offer.

Con: The $1,000 direct deposit requirement for 2.5% cashback. Even though this isn’t a difficult requirement to satisfy, it’s still another hoop you must jump through beyond becoming a member to unlock the 2.5% cashback. We’ll cover another cashback card below that offers double cash without stipulations.

Pro: USAA has a straightforward redemption process. You can use your cashback at any time as long as you redeem it in $1 increments. 

Con: It may still be a waiting game. The rollout of this card was pretty “hush-hush.” The card wasn’t even shown on the USAA website until recently. At first, only targeted members were getting a special invitation and sneak peek of the offer. Now the terms appear on the site, and you can log in to your USAA account to see if the pilot program is available to you. 

Pro: No fees. This card has no fees across the board. You earn an unlimited amount of cashback while avoiding annual and foreign transaction fees. There’s also no fee to open up a USAA bank account to set up your monthly direct deposit for the 2.5% cashback.

Other Cashback Cards to Consider

Since the USAA Limitless Cashback Rewards Visa Signature card is a bit heavy on the qualifying conditions, let’s cover two cards that will give anyone cashback.

The Citi Double Cash Card may be the biggest rival to the USAA Limitless Cashback Rewards Visa Signature card because you can earn double cashback without having to meet any special conditions. This card has no caps or category restrictions. You get 1% cashback when you make a purchase and then another 1% cashback when you pay off the statement. There’s also no annual fee, and you can redeem cash earned for a check, statement credit, or gift card.

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For another quick cashback comparison, the Capital One Quicksilver card offers 1.5% cashback unlimited with no annual fee. There are no category restrictions on the cashback, which is consistent with the Citi Double Cash Card and USAA Limitless Cashback Rewards Visa Signature card. Cashback also never expires, and you can redeem cashback at any time with a statement credit or check. Although you’re getting a little less cashback here, it’s another option that has limited fine print conditions. 

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Who Will Benefit the Most from the USAA Limitless Cashback Rewards Visa Signature Card?

The USAA Limitless Cashback Rewards Visa Signature card is one that any USAA member who’s on the hunt for a cashback card should consider. Earning unlimited 2.5% cashback with no fees or category restrictions is a unique offer and one that’s worth jumping on.

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Credit Cards, Earning Cashback, Reviews

Discover it Chrome Review: 2% Cash Back on Gas and Dining

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Discover it Chrome Review

There are plenty of credit cards that will reward you for spending at gas stations and restaurants, so choosing one from the bunch can present a challenge.

The Discover it Chrome card has two stand out selling points. It offers a dollar-for-dollar cash back match the first year, and you can redeem the cash back you earn at any amount.

In this post, we’re going to cover the details of this program, including:

  • The basics of the Discover it Chrome
  • How to redeem cash back
  • The fine print details
  • The benefits and protections
  • The pros and cons

The basics of the Discover it Chrome

  1. 2% cash back at gas stations and restaurants.

Earn 2% cash back on gas and dining. The cap for the 2% category is $1,000 in combined purchases per quarter. New quarters begin on Jan. 1, Apr. 1, July 1, and Oct. 1.

  1. 1% cash back on all other purchases. Earn 1% cash back on purchases outside of the 2% category excluding transactions like cash advances and balance transfers. Spending at gas stations and restaurants beyond the $1,000 quarterly cap also earn 1% cash back.
  2. A dollar-for-dollar match the first year plus other bonus cash back deals.

Cash back earned by new cardholders the first year is automatically doubled after 12 months.  You also have the opportunity to earn cash back bonuses when you shop with select retailers online through Discover Deals.

Here are just a few examples of the available online retailers:

  • Apple – 5% cash back
  • Walmart – 5% cash back
  • Nike – 15% cash back
  • Carnival Cruises – 5% cash back

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LearnMore

How to redeem cash back earned

As mentioned, you won’t have to wait for your cash back balance to reach a certain threshold before you can put it to use. You can redeem cash back starting at 1 cent for:

  • Statement credits
  • Cash deposits into an account
  • Charitable donations
  • Products and services through Amazon and Discover Deals

There are two exceptions to this rule. If you want to redeem cash back for gift cards or eCertificates, you have to wait until your balance reaches $20.

The cash back bonus is calculated at the end of each quarter and added to your bonus account within two billing periods. So, although there’s no redemption threshold, there is a waiting period involved before you can use the cash.

Cash back earned never expires. If your account is closed or goes inactive for 18 months, whatever cash back you earned will be credited to your account.

Introductory APR and balance transfers

The Discover it Chrome has an introductory deal for new purchases and balance transfers as well. There’s 0% APR on balance transfers and new purchases for the first 14 months. Afterward, interest is 11.49% to 23.49% APR. The balance transfer fee is 3%.

If you need to make a large purchase, the cash back dollar-for-dollar match promotion coupled with the 0% APR deal could be useful. You can slowly pay off the balance of your purchase for 14 months without interest and get the cash back match at the end of the year.

The fine print

The Discover it Chrome has no annual fee or other hidden fees you need to be aware of. You won’t be charged a late fee on your first late payment. If you’re late more than once, the fee is up to $37. The Discover it Chrome also has no penalty APR and no over-the-limit or foreign transaction fees.

One piece of fine print you do want to pay close attention to is that the 2% category has some restrictions besides the $1,000 spending cap per quarter. Specifically, spending at warehouses, wholesale stores, and discount stores won’t qualify for 2% cash back. This could be a deal breaker if you usually fill up on gas at any of these stores.

Benefits and protections

FICO Credit Score
Discover it Chrome cardmembers get a TransUnion FICO score on each credit card statement. This benefit is worth highlighting since getting a FICO score directly from myFICO.com isn’t cheap.

A single credit score and report costs $19.95 and the starting price for the credit monitoring plan is $19.95 per month. Since the FICO score is commonly used to determine creditworthiness, this Discover it Chrome feature is a valuable one.

Freeze It
You can freeze your account if your card is lost or stolen. Discover won’t authorize purchase transactions until you request to unfreeze it.

Zero Liability Protection
You won’t be held liable for unauthorized purchases on your card.

Pros and cons

Pro: The cash back match during the first year. You can look forward to twice the amount of cash back for your spending.

Con: 2% category cap. The $1,000 max for the 2% category may be limiting depending on your spending habits. You have room to spend a little over $330 per month on gas and groceries combined to stay within that cap. If you shop for groceries often or have a long commute each day, this cap may only scratch the surface of your monthly gas and food budget.

Pro: Easy redemption. The Discover it Chrome has an uncomplicated redemption program. You can turn your cash back into actual cash through statement credit and cash deposits. Or choose to redeem for products, gift cards, and charitable donations.

Con: Shopping restrictions. If you usually get gas at discount stores that are ineligible for the 2% category, compare the store savings against what you can potentially earn in 2% cash back at a regular gas station to see which will benefit you the most.

Pro: Low on fees. There are no annual fees, foreign transaction fees, penalty fees, or over-the-limit fees. It’s safe to say the Discover it Chrome card is not going to nickel and dime you.

Who will benefit the most from the Discover it Chrome?

The Discover it Chrome could be a good choice for someone who wants a simple cash back program. There are no revolving categories to manage and you can use cash back earned at any amount.

But, for a bigger spender, this card may not be the best deal because of the $1,000 quarterly cap in the 2% category. Instead, you may get better overall value from a card that gives more than 1% cash back on spending with no limits like the Citi Double Cash. With the Citi Double Cash, you earn 1% cash back when you make a purchase and another 1% cash back when you pay off the balance.

Review your spending habits before choosing the Discover it Chrome to make sure spending within the category cap is realistic for your family.

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