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Reviews, Student Loan ReFi

Review: LendKey Private Student Loan

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.

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Updated July 13, 2017

Most private student loans can’t compete with Federal loans when it comes to interest rates. Private loans are typically more expensive, especially if longer repayment periods are offered. (You’ll pay more in interest over the life of your loan.)

However, LendKey provides a different solution. It’s a marketplace that offers you a chance to browse private student loans offered by credit unions and community banks. These institutions usually have better interest rates than big banks. As another bonus, credit unions offer a more personalized banking experience, and tend to be more lenient when it comes to credit history.

If you’ve had a rough time finding a private student loan lender who will work with you, then you should give LendKey a shot.

How Does LendKey Work?

It’s important to understand that LendKey itself is not a lender. It’s a portal you can use to find a lender. Filling out one application (on LendKey’s website) enables you to view all the private loans you’re eligible for from community banks and credit unions that have partnered with LendKey.

Unfortunately, because there are hundreds of banks listed with LendKey, it’s impossible to say what the specifics of each loan are. On its website, LendKey says interest rates start as low as 2.98% APR.

Eligibility Requirements

You must be a U.S. citizen or permanent resident to apply for a private student loan through LendKey. You must also be pursuing an undergraduate or graduate degree at an eligible school. You can check to see if your school is eligible in the first section of the application.

Be prepared to join a credit union or community bank if you choose to move forward with a loan offered. Most institutions require that you become a member during the application process. This is standard for credit unions and community banks that have specific membership requirements.

Application Process

The LendKey application process has three steps:

  1. Check your eligibility: You can fill in preliminary information to see if you’re eligible to apply for a loan.
  2. Apply for a loan: If you want to move forward with any loan option presented, you can do so in this step. This requires you to fill out personal information such as your Social Security number and identification information.
  3. Submit documents: LendKey requires you to submit proof of identity (photo ID, such as a Driver’s License), your school transcript, and other documents as needed.

Overall, the application process should take around 15 minutes or less to complete. LendKey will then review the information you’ve provided and give you a decision.

If your credit history isn’t the best (or isn’t very lengthy), you can apply with a cosigner. This gives you a better chance of getting the best interest rates possible on your private student loan. Some lenders affiliated with LendKey may actually require you to apply with a cosigner. Be aware that a hard credit inquiry will be used when you apply.

[What happens when a borrower defaults on a co-signed loan?]

The Fine Print

LendKey claims that there are no origination fees associated with any of the private loans offered by the credit unions or community banks it has partnered with. That doesn’t mean there aren’t any fees; late fees may still apply.

Additionally, a search for credit unions that use the LendKey application revealed one that does charge an origination fee. On The Great Lakes Credit Union page, a 2.5% fee is listed. It states there is an “upfront fee” which “is charged one time at loan disbursement.” As you can see on the page, “Powered by LendKey” is at the bottom.

We strongly recommend reading through the fine print of the organization you choose should you find a loan through LendKey. Don’t be afraid to ask about fees before signing anything.

The disclaimers are also nearly hidden at the bottom of LendKey’s site as you need to click on “Some Disclaimers” to review them.

Pros and Cons of LendKey

There are many advantages to applying for a loan through LendKey:

Pro: After paying back 10% of your loan principal, you’ll be eligible for a 1% interest rate reduction. This is only applicable to those who have entered full repayment status (after your grace period has ended).

Pro: You’re also eligible for a 0.25% interest rate deduction if you enroll in automatic payments. Most lenders offer this.

Pro: Most of the lenders that partner with LendKey don’t charge origination fees for private loans.

Pro: If you apply with a cosigner, a release is available after a certain amount of consecutive payments have been made. For most lenders, this period is between 24 to 48 months.

Pro: Most loans offered through LendKey seem to come with a 30-day return if you decide you don’t want to take the money. No fees or interest will be charged.

Pro: The application process is simple. Instead of having to shop around for loans individually, you have one company that will do it for you. This is much more convenient for you and takes less time.

Pro: LendKey has extensive customer service hours. You can call 888-549-9050 Monday through Friday from 9AM – 8PM ET.

There are several disadvantages to LendKey as well:

Con: You’re dealing with a number of different lenders, and it may be difficult to choose the best from a large list. You should do your own research on the banks LendKey matches you with.

Con: There are possible origination fees even though LendKey claims its lenders don’t charge upfront fees. You should call and confirm if you go with a loan that says its origination fee is 0%.

Con: Many of the individual lenders have loan pages that state the only options for repayment are interest-only or a minimum of $25 per month while in school. This means your loans are never in deferment, unlike Federal student loans.

Con: One large negative to consider with any private student loan is the lack of inherent benefits that come with them. Federal student loans give you more options when it comes to repayment plans and flexibility during tough financial times. It’s worth calling and asking if repayment assistance is offered before you go through with any of these loans.

Con: Some institutions may not offer fixed rates. Variable rates may be lower, but they’re subject to change, which can make it difficult to budget for your student loan payment in the future. Fixed rates offer stability as they’re locked in for the life of your loan.

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Other Private Student Loan Alternatives

Some states may not have as many private student loan choices as others. If you can’t find a loan that fits your needs, you may have to look elsewhere.

Citizen’s Bank: Fixed APRs range from 5.76% to 11.51%, and variable APRs range from 2.69% to 9.15%. You can choose to repay your loans on terms of 5, 10, or 15 years, and the maximum amount you can borrow is $90,000.

citizens-bank (1)

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SunTrust Custom Choice Loan: Fixed APRs range from 4.751% to 10.415% and variable APRs range from 3.21% to 8.672%. A 7 and 10 year repayment term is available, and if you borrow over $5,000, you can choose a 15-year term. The minimum amount required to borrow is $1,001 and the maximum amount is $65,000. SunTrust also offers a 1% reduction on your principal loan balance if you graduate with (at minimum) a Bachelor’s degree.

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It’s worth mentioning that you should exhaust your federal loan options before considering private student loans. Fill out the FAFSA and see how much you’re eligible for. Private student loans should only be used to bridge the gap if federal loans aren’t enough to cover your tuition.

Conclusion

LendKey is a great tool to use if you want to see what your local credit unions and community banks can offer you in terms of private student loans. There’s no application fee, but you should double check origination fees on any loan recommended to ensure you’re not left paying extra for a loan.

It’s also a good idea to shop around for private student loans as you want to get the best rates available. As long as you apply to multiple lenders within a 30-day period, the credit bureaus will count those inquiries as one inquiry. There’s no reason not to apply with more than one lender as one could offer you better rates, saving you thousands of dollars over the life of your loan.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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Building Credit, Credit Cards, Reviews

Georgia’s Own Visa Classic Review: Good Choice for Rebuilding Credit

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.

The Georgia’s Own Visa Classic card is made for those with low credit scores and helps you rebuild and re-establish your credit. If you’ve struggled in the past with getting approved for other credit cards due to poor credit, you may qualify for this card. By using this card, coupled with proper credit behavior, you will be able to improve your credit score.

Visa® Classic from Georgia's Own Credit Union

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on Georgia's Own Credit Union’s secure website

Visa® Classic from Georgia's Own Credit Union

Annual fee
$0 For First Year
$0 Ongoing
APR
12.99%-17.99%
Credit required
bad-credit
Bad
  • No annual fee
  • 2% foreign transaction fee
  • There is a balance transfer fee of 3% of the balance transfer; $10 minimum
  • Due date is 25 days after the close of each billing cycle. No interest if full balance is paid. Interest on cash advances and balance transfers begins on the transaction date.

How the Card Works

This is a relatively straightforward credit card. There is no annual fee and no rewards. Lack of a rewards program makes this card predominantly for rebuilding credit. Look at it this way — there are no tempting rewards to lead you to overspend, allowing you to focus on rebuilding your credit.

The APR for this card is a fair 12.99% to 17.99%. Other cards charge upward of 20%, so this is reasonable. However, a lower APR shouldn’t encourage you to accrue a balance month to month. Always make it a point to pay your balance in full and on time.

A good way to start rebuilding your credit with the Georgia’s Own Visa Classic is to add a recurring payment, like Netflix or Spotify. You can solely have your monthly Netflix or Spotify charge on your credit card statement and increase your credit score as long as you pay your bill in full and on time. This will give you a low utilization (the amount of your credit limit you use), which is a key factor in determining your credit score. For example, if you have a credit limit of $100 and charge your recurring $7.99 Netflix bill, then you will have a utilization of 8% (below 20% is ideal).

How to Qualify

In order to qualify for this card, you need to have a stable source of income, so a job is needed. This will prove that you can afford to make your monthly payments on time and are responsible.

In addition, since this card is provided by a credit union, you have to join Georgia’s Own Credit Union. Don’t worry if you reside outside of Georgia; anyone can become a member regardless of residence. There are four free eligibility options that can qualify you for free membership. Otherwise you will have to join the GettingAhead Association, with a $5 annual membership fee. The best bet is to speak to a Georgia’s Own loan officer (404-874-1166) and see if you’re pre-approved for the credit card. If pre-approved, you can join the GettingAhead Association while completing your credit card application. All members will also need to keep $5 in a savings account that must remain in the account while you have the card open.

A note on the application process for Georgia’s Own — when you apply for a credit card on Georgia’s Own website, you are directed toward an application that is for all the credit cards they offer. This means that depending on your creditworthiness, you may not be directed to the Visa Classic as an option. Therefore if you want to apply directly for the card, the best bet is to speak with a loan officer, who will tell you if you’re pre-approved for the Visa Classic card.

What We Like About the Card

Good chance of getting approved

Georgia’s Own tailored this credit card toward those needing to rebuild or re-establish their credit history. This gives those with bad credit a greater chance of being approved. Also, if your score is above 620, you are more likely to be approved.

Fair APR

This card has a fair APR ranging from 12.99% to 17.99%. This is significantly lower compared to other cards targeted to people with less than perfect credit, with APRs as high as 23.99%. Although your goal is to pay every bill in full and on time each month, if you keep a balance this low, APR won’t accrue as much interest as other cards.

What We Don’t Like About the Card

Have to join the credit union

In order to get this card, you have to join Georgia’s Own Credit Union. There are four free eligibility options, and if you don’t qualify for free membership, you will have to join the GettingAhead Association, with a $5 annual membership fee. You will also need to keep $5 in a savings account that must remain in the account while you have the card open.

2% foreign transaction fee

Make sure to leave this card at home when you travel abroad as you’ll be charged a 2% foreign transaction fee on all purchases. This is slightly lower than most cards, which charge a 3% foreign transaction fee, yet high enough to increase your bill significantly if you make purchases abroad.

No rewards program

There is no rewards program for this credit card. Georgia’s Own offers a Visa Platinum card that has a rewards program, but you may have a harder time qualifying if you don’t have a good credit score.

Who the Card Is Best For

If you’re someone who has a low credit score and doesn’t mind working with a credit union, this card may be right for you. We recommend this no-frills card for people who want to rebuild their credit with a credit card. While you won’t earn any rewards with this card, if you practice proper credit behavior, you’ll be rewarded by a better credit score.

Alternatives

Secured Card with Rewards

Discover it® Secured Card - No Annual Fee

Annual fee

$0 For First Year

$0 Ongoing

Minimum Deposit

$200

APR

23.99% APR

Fixed

If you don’t want to join a credit union, you might want to consider a secured credit card to help you build credit. With a secured card, you make a deposit – and receive a credit limit based upon that deposit. The good news is that your secured credit card will report to the credit bureaus. That means your good behavior can help you improve your credit score over time. One of our favorite secured credit cards is from Discover.

Rewards Card with Good Approval Odds

Walmart® MasterCard<sup>®</sup>

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

up to 3%

APR

17.65%-23.65%

Store cards are more likely to approve people with low credit scores, and the Walmart MasterCard is known to have approved applicants with scores as low as 520. In addition to promising approval rates for people with bad credit, the Walmart MasterCard has unlimited rewards with up to 3% cash back. Don’t worry if you don’t shop at Walmart since you can earn rewards on any purchase. Be aware that this card has a higher interest rate than the Georgia’s Own card, so compare which card is best for you.

Bottom Line

With no annual fee and fair interest rates, the Georgia’s Own Visa Classic credit card is a good option for those with bad to fair credit who are looking to improve their credit score. If you don’t mind working with a credit union, this card is a good option to rebuild credit.

FAQ

If you don’t qualify for the four free eligibility options, you will have to join the GettingAhead Association, with a $5 annual membership fee. The best bet is to speak to a Georgia’s Own loan officer (404-874-1166) and see if you’re pre-approved for the credit card. If pre-approved, you can join the GettingAhead Association while completing your credit card application. All members will also need to keep $5 in a savings account that must remain in the account while you have the card open.

You should work hard to make sure you make payments on time every month. A missed payment will lead to a late fee and interest accruing on the balance. This will ultimately leave a negative mark on your credit report and lower your credit score. Try not to spend more than you are able to and stick to a budget with these helpful budgeting apps in order to rebuild your credit score.

There is no one way to increase your credit score; rather, there are numerous behaviors responsible cardholders practice to establish good credit history. Good practices include paying all of your statements on time and in full and keeping a utilization below 20%; these will help you rebuild credit.

Alexandria White
Alexandria White |

Alexandria White is a writer at MagnifyMoney. You can email Alexandria at alexandria@magnifymoney.com

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Credit Cards, Earning Cashback, Reviews

Ally CashBack Credit Card Review: Is it Worthwhile if You Don’t Bank with Ally?

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.

Last year, Ally Bank rolled out the Ally CashBack Credit Card with a rewards program that offers 2% cash back on gas and groceries with no cap.

In addition to the cash back you earn from spending, Ally gives you a special 10% Ally Deposit Bonus when you deposit cash back earned into an eligible Ally Bank account.

Ally CashBack Credit Card

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on Ally Financial’s secure website

Ally CashBack Credit Card

Annual fee
$0 For First Year
$0 Ongoing
Cashback Rate
2% on certain categories, 1% on everything else
APR
13.74%-23.74%

Variable

Credit required
excellent-credit

Excellent

  • No annual fee
  • 2% cash back at gas stations and grocery stores
  • 1% cash back on all other purchases
  • Receive a $100 bonus when you make $500 in eligible purchases during the first 3 billing cycles
  • Get a 10% Ally Deposit Bonus when you deposit your cash rewards into an eligible Ally Bank account
  • 13.74%-23.74% purchase APR
  • 0% Intro APR for 12 months from account opening on balance transfers, then a variable APR of 13.74%-23.74%. Balance transfer fee is 4% of the amount transferred, $10 minimum
  • 3% foreign transaction fee

The Ally CashBack Credit Card Offer

1. Earn up to 2.2% cash back at gas stations and grocery stores.

Factoring in the 10% Ally Deposit Bonus, you have the potential to earn a total of 2.2% cash back in the gas and groceries category.

You have to deposit cash back earned into a qualifying account to get the 10% bonus. Qualifying accounts include:

  • Ally Money Market accounts
  • Non-IRA Online Savings accounts
  • Interest Checking accounts

Fine print alert: Discount stores, superstores, and warehouses are not included in the groceries category. Stores like Target, Walmart, BJ’s, and Sam’s Club specifically may be off limits for 2% cash back.

Ally Bank qualifies your purchases for cash back using merchant codes. You can call up a store directly to see if it has a merchant code within one of these eligible 2% cash back categories:

  • Grocery
  • Bakery
  • Dairy
  • Service stations
  • Automated fuel dispensers
  • Fuel dealers

2. Earn up to 1.1% cash back on all other purchases.

Purchases outside of groceries and gas earn 1% cash back. You can earn a total of 1.1% if you add in the 10% Ally Deposit Bonus.

3. Earn an introductory incentive.

There’s an introductory bonus of $100 if you spend $500 within the first three months of having this card.

How to Redeem Cash Back

You can redeem cash back in two ways. As mentioned, you get the extra 10% bonus if you deposit cash back into an eligible Ally Bank account.

The second option is redeeming cash back for statement credit. You need to build a balance of at least $25 before you can redeem cash back.

What We Like About the Ally CashBack Credit Card

You guessed it — we think the most attractive feature of the Ally CashBack Credit Card is the 10% Ally Deposit Bonus. We also like that this card has no spending cap for the 2% categories.

Other benefits are that there’s no annual fee and the interest rate range is reasonable.

The card even has a 0% APR introductory deal on balance transfers, although the 4% balance transfer fee is something to consider before moving your money.

The Ally CashBack Credit Card Fine Print

One of the major drawbacks of this card is the merchant code restrictions.

Don’t get us wrong — the Ally CashBack Credit Card isn’t the only cash back rewards program that uses merchant codes to qualify purchases. Pretty much every niche category card has some fine print related to what you will and will not earn bonus cash back on.

Before shopping at a warehouse or specialty food store with this card (or any category card for that matter), double-check the merchant code to see if the purchase will be eligible for 2%.

One more spot where the Ally CashBack Credit Card has fine print is the program termination policy. If your account is canceled for any reason, by you or Ally Bank, you forfeit the cash back balance. Ally Bank also reserves the right to change terms or cancel the cash back program. If this occurs, you may give up your balance.

To avoid losing out on money, keep the card in good standing and cash out whenever you hit the $25 mark just in case Ally Bank should change terms in the future.

Who the Ally CashBack Credit Card Is For

This card is best suited for current Ally Bank customers, but even people who bank with Ally should explore other options.

For non-Ally Bank customers, the 2.2% on gas and groceries is not worth opening two new accounts (the credit card account and a qualifying savings or checking account) to earn maximum cash back.

There are too many other category cards to consider ahead of this one that can give you more than 2.2% on gas and groceries.

There are even a few cards that offer you 2%+ cash back on all spending with no pesky category restrictions to keep up with.

We’ll share two alternatives with you in the next section.

But first, here’s an example to give you an idea of how much you can earn with the Ally CashBack Credit Card:

Say you spend $4,000 per year on groceries and $2,000 on gas. You can earn up to $132 in cash back for the year. (This includes the 10% Ally Deposit Bonus.)

Keep this scenario in mind because we’ll reference it next when reviewing a competitor.

For eligibility criteria, Ally Bank doesn’t get specific about the type of credit history or score you need to get approved.

However, some applicants have reported getting declined because of too many recent inquiries or new accounts. These are factors to be mindful of that could hurt your chances of getting approved.

Cash Back Alternatives

We have a list of the top cash back cards for all categories in this post. Here are two alternative cards from that roundup to take a look at:

Amex Blue Cash Preferred

The Amex Blue Cash Preferred card is one of our top picks for gas and grocery shopping rewards. This card gives you a huge 6% cash back on groceries and 3% cash back on gas. You get 1% cash back on all other purchases. The Amex Blue Cash Preferred card has a $95 annual fee.

Back to our example scenario from above:

If you spend $4,000 annually on groceries and $2,000 annually on gas, you earn $300 in total cash back from the Amex Blue Cash Preferred. Subtract the $95 annual fee, and you still net $205 in cash back. Remember — the Ally CashBack Credit Card only gives you up to $132 in this same spending scenario. The moral of the story is, rewards cards that have an annual fee can still outperform cards with no annual fee. So don’t let a fee deter you from reviewing an offer.

Alliant Visa Signature

If you do most of your shopping at wholesale stores or you prefer a non-category card, the Alliant Visa Signature card is another option we recommend. The Alliant Visa Signature card gives you an unlimited 3% cash back for the first year with no fee. After the first year, you earn 2.5% cash back on all purchases with a $59 annual fee. If your spending is all over the map, an unlimited cash back card like the Alliant Visa Signature can give you more flexibility than the Ally CashBack Credit Card.

Rewards Cards: Frequently Asked Questions

No, Ally cash back does not expire as long as your account remains open and in good standing. There is no limit to the amount of cash back rewards that may be earned.

Anything over 1.5% cashback is a good deal. There are some cards that offer more — as much as 5 or 6% cash back on purchases. But sometimes those offers are too good to be true. Banks don’t like to lose money, and will pepper the fine print with all sorts of limitations. For example, they may offer 5% cash back on only purchases at certain types of retailers and only for certain periods of time. And those categories may change every quarter, which can make it hard to keep track.

Don’t let those cash back promises pressure you into spending more than you can afford. If you don’t pay your statement balance in full each month, you could get slapped with sky high interest charges. That would totally negate any benefit you might get from earning cash back. Cash back cards are only valuable if you can pay your bill in full and capture the entirety of your cash back rewards.

It depends on the card. Some cards allow you redeem cash back dollar for dollar as a statement credit, which can help lower your total balance. Just keep in mind that applying cash back to your card statement does not count as a monthly payment. Other cards will increase the value of your cash back if you spend on certain categories, like travel. Review your terms carefully to be sure you’re getting the most bang for your buck.

Find the card that fits your day-to-day spending needs best, beyond the flashy sign-up bonus offers and cash back promises. Pay your bill in full each month (spend only what you can afford to pay off).

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor at taylor@magnifymoney.com

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Credit Cards, Earning Cashback, Reviews

Alliant Cashback Visa Signature Review: 2.5% Unlimited Cash Back

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.

Few credit cards offer unlimited 2.5% cash back on all spending without caps or complicated category restrictions. Alliant Credit Union recently rolled out its Cashback Visa Signature Card, which may very well be the “holy grail” of unlimited cash back cards.

The Alliant Cashback Visa Signature Card gives cardholders 3% cash back the first year and 2.5% back subsequent years. This card does have an annual fee, but the fee is waived for the first 12 months.

Alliant Cashback Visa® Signature Card

APPLY NOW Secured

on Alliant CU’s secure website

Alliant Cashback Visa® Signature Card

Annual fee
$0 For First Year
$59 Ongoing
Cashback Rate
Unlimited 3% cash back during the first year; 2.5% cash back afterwards
APR
10.99%-23.99%

Variable

Credit required
good-credit

Good

  • Exclusively designed for those spending $50,000+ a year on their card
  • Rates as low as 10.99%APR
  • $59 annual fee, waived the first year
  • No foreign transaction fees
  • A true cashback card: 3% cash back in year one & 2.5% cash back after

How the Alliant Cashback Visa Signature Card works

Alliant Credit Union is an online credit union that anyone can join. If you don’t meet the standard credit union qualifying criteria (being a relative of a member or working for a select organization), you can join by making a $10 donation to Foster Care to Success.

If you choose to apply for this card, be sure to swipe it as much as possible during the first year to make the most of the free 3% cash back. This is a great deal.

The annual fee after the first year is $59. Aside from the annual fee, the Alliant Cashback Visa Signature Card has extra costs within the card terms that are pretty typical of any credit card.

Most notably, there’s a 3% balance transfer fee and no foreign transaction fee.

Redeeming Your Cash Back

You can redeem cash back earned through statement credit when your cash back balance reaches $25. Cash back expires after five years. Cash back also expires if your credit card account is closed voluntarily or involuntarily.

Who This Credit Card Is Best For

We highly recommend the Alliant Cashback Visa Signature Card if you hate keeping up with revolving category cards. Category rules can be a pain. This card makes earning cash back painless.

On the other hand, if you’re someone who likes using category cards (airline, grocery, gas, etc.), this card also partners nicely with others. Keep it in your wallet to maximize rewards in areas that your category cards don’t cover.

Alliant Credit Union has very lenient member-qualifying criteria, so non-members can join today. If you already have an Alliant Credit Union card, call credit card services to request an upgrade.

Cardholders report that you can get approved with a score in the high 600s, although credit card services states qualification is based on more than just your credit score.

For example, you may qualify for this card with less-than-perfect credit if your income is high. Since this is a Visa Signature card, credit limits are higher than traditional cards, and that requires having enough income to support a good-sized limit.

What we like about the Alliant Cashback Visa Signature Card

We like this card a lot because it’s one of few credit cards that give you 2% cash back without a long list of rules on what you can and can’t buy.

Until now, the Citi Double Cash card has been our top recommendation for no-fuss 2% cash back on all spending. However, the Alliant Cashback Visa Signature Card is giving the Citi Double Cash card some stiff competition.

The 3% cash back without an annual fee the first year is very hard to beat. And if you spend at least $1,000 per month on the card after year one, 2.5% cash back with the annual fee still outperforms the Citi Double Cash card.

We’ll discuss why the magic number for spending is $1,000 in our credit card comparison below.

What we don’t like about the Alliant Cashback Visa Signature Card

There’s not too much to discuss that’s negative about this card. The one thing to be mindful of is that it does not have an interest-free intro deal on new purchases or balance transfers.

This means you shouldn’t take out this card intending to go on a crazy shopping spree or to finance big life events like a wedding, relocating, or traveling unless there’s a repayment plan in the strategy.

You’ll get a great deal of cash back from large purchases the first 12 months, but you need to pay off the balance promptly to avoid many interest charges.

Three Alternative 2%+ Cash Back Credit Cards

We started out this post mentioning that there aren’t too many unlimited 2%+ cash back cards available, so let’s dive into the three main alternatives:

  • Citi Double Cash
  • Fidelity Rewards Visa Signature
  • USAA Limitless Cashback Rewards Visa Signature

Citi Double Cash

The Citi Double Cash card is usually our “go-to” pick for unlimited 2% cash back with no category restrictions.

The Alliant Cashback Visa Signature Card clearly has the Citi Double Cash card beat in the first year. Things get a little less clear-cut when the Alliant Cashback Visa Signature Card starts costing $59 annually.

As mentioned, when taking the fee into consideration, you need to spend over $1,000 per month on the Alliant Cashback Visa Signature Card to earn more from it than the Citi Double Cash card.

Here’s the calculation breakdown:

  • Citi Double Cash: $12,000 (spent) x 2% (cash back) = $240
  • Alliant Cashback Visa Signature Card: $12,000 (spent) x 2.5% = $300 – $59 (fee) = $241

The more you spend beyond $12,000 per year, the more the Alliant Cashback Visa Signature Card outperforms the Citi Double Cash card.

Fidelity Rewards Visa Signature

The Fidelity Rewards Visa Signature card is another 2% cash back option with no fee, but this card comes with conditions. You can only earn 2% cash back when you direct deposit rewards into a Fidelity Investment account.

This is still a decent deal for Fidelity Investment customers. If you plan to spend less than $12,000 per year on your rewards card, consider this one or the Citi Double Cash card.

USAA Limitless Cashback Rewards Visa Signature

Lastly, the Limitless Cashback Rewards Visa Signature card from USAA offers an unlimited 2.5% cash back with no annual fee. This card also has restrictions.

You have to keep a certain amount of cash in a connected USAA checking account to qualify for 2.5% cash back. Plus, the card is only made available to select USAA members who live in Alabama, Arkansas, Arizona, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Louisiana, Maryland, Michigan, Minnesota, Montana, North Dakota, New Mexico, Nevada, New York, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, and Washington.

In comparison to these cards, the Alliant Cashback Visa Signature card is a rare bird with its over 2%+ cash back program and very limited fine print.

Rewards Cards: Frequently Asked Questions

Yes, the Alliant cash back rewards expire after 5 years, and you also forfeit your unused rewards if you close your account. It’s important to note that cash back doesn’t expire exactly 5 years from the date you earn it. Cash back rewards expire on a rolling, annual basis; cash back earned in a calendar year will expire on the December cycle date of the fourth calendar year in which it was earned. For example, any unredeemed cash back earned in 2017 will expire on the December cycle date in 2021.

Anything over 1.5% cashback is a good deal. There are some cards that offer more — as much as 5 or 6% cash back on purchases. But sometimes those offers are too good to be true. Banks don’t like to lose money, and will pepper the fine print with all sorts of limitations. For example, they may offer 5% cash back on only purchases at certain types of retailers and only for certain periods of time. And those categories may change every quarter, which can make it hard to keep track.

Don’t let those cash back promises pressure you into spending more than you can afford. If you don’t pay your statement balance in full each month, you could get slapped with sky high interest charges. That would totally negate any benefit you might get from earning cash back. Cash back cards are only valuable if you can pay your bill in full and capture the entirety of your cash back rewards.

It depends on the card. Some cards allow you redeem cash back dollar for dollar as a statement credit, which can help lower your total balance. Just keep in mind that applying cash back to your card statement does not count as a monthly payment. Other cards will increase the value of your cash back if you spend on certain categories, like travel. Review your terms carefully to be sure you’re getting the most bang for your buck.

Find the card that fits your day-to-day spending needs best, beyond the flashy sign-up bonus offers and cash back promises. Pay your bill in full each month (spend only what you can afford to pay off).

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor at taylor@magnifymoney.com

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Earning Cashback, Reviews

Chase Freedom Review: Is 5% Easy?

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.

If you’re on the hunt for a new rewards card, you’ve probably come across the Chase Freedom card during your search. The Chase Freedom card offers 1% cash back on all purchases and the opportunity to earn additional cash back if you spend money within revolving quarterly bonus categories.

Chase Freedom<sup>®</sup>

APPLY NOW Secured

on Chase’s secure website

Chase Freedom®

Annual fee
$0 For First Year
$0 Ongoing
Cashback Rate
5% on certain categories, 1% on everything else
APR
15.99%-24.74%

Variable

Credit required
good-credit

Good

  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
  • Enjoy new 5% categories each quarter like gas stations, restaurants and drugstores
  • Unlimited 1% cash back on all other purchases - it's automatic
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 15.99%-24.74%. Balance transfer fee is 5% of the amount transferred, $5 minimum
  • Cash Back rewards do not expire as long as your account is open
  • No annual fee

How to Earn Cash Back with the Chase Freedom Card

You automatically earn 1% cash back on all purchases as soon as you start using the card.

Every quarter, Chase introduces bonus categories where you can earn 5% cash back. In order to earn 5%, you need to activate the bonus category every quarter. If you don’t activate, you will only earn at the 1% cash back rate. You can only earn 5% cash back on up to $1,500 of spending every quarter.

Here are the current 5% bonus categories for 2017:

July to September

Restaurants

Movie Theaters

The bonus categories for October will be announced in September.

Last Year’s Cash Back Calendar

Since you may have to wait several months for the holiday bonus category to be announced for 2017, here’s a look at the 5% categories for 2016 as a reference of what could be to come:

Keep in mind, the quarters can change annually, so the summer and fall categories for 2016 may not be the same for 2017. Although one thing you can be pretty sure of is the last quarter of the year will be a category that’s holiday shopping friendly. We’ll update cash back categories for 2017 when they’re announced.

How to Activate the Quarterly 5% Cash Back Categories

Now that you know the type of spending that will earn you 5% cash back, let’s touch on how it all works.

To earn 5% cash back each quarter, you must activate the quarterly bonus categories before the deadline. The activation deadline appears on the cash back calendar.

There are six easy ways to activate. Just choose the one that’s best for you.

  1. Online – Once you are a Chase Freedom cardholder, you can activate online at the Ultimate Rewards portal.
  2. Text message – Sign up for Chase Freedom 5% text reminders at online. You’ll get a text reminding you when it’s time to activate.
  3. Email – You can also sign up for email reminders from Chase.
  4. Phone – Call the number on the back of your card to let one of the specialists activate your 5% cash back.
  5. Chase location – Visit any Chase Bank and see a personal banker.
  6. ATM – Chase checking customers can activate their 5% cash back with one click via the ATM while making a cash withdrawal.

The base 1% cash back will always apply first to purchases on your statement. Each quarter you activate, spending that qualifies for an extra 4% cash back will appear in a separate section broken down by category.

What we like about the card

Up to 5% cash back if you are on top of things.

It’s hard to beat 5% back on spending you’re already doing, and if you pay attention and enroll in the categories every quarter, you can earn up to $300 in cash back a year compared to the base 1% cash back you earn on all purchases.

A good selection of 5% categories.

Chase comes up with fresh categories that sometimes include tie-ins with big retailers like Amazon so it’s not hard to find a way to earn 5% on your spending throughout the year.

You can pair it up with other Chase rewards.

If you have another card that earns Ultimate Rewards points, like the Chase Sapphire Preferred, you can combine the rewards you earn from the Freedom with your other Ultimate Rewards points anytime.

What we don’t like about the card

Need to enroll manually.

There’s no automatic enrollment in the 5% categories, so you need to remember to take care of that every quarter. Chase lets you sign up for alerts so it’s not hard to get reminded, and you can enroll right from your phone. This is a card for maximizers, not people who want to set it and forget it.

A cap on 5% earning.

You only earn 5% back on up to $1,500 worth of spending in the designated categories each quarter. That’s $1,500 total across all the categories, not $1,500 for each category.

Right off the bat, you can probably tell a card with changing quarterly categories like the Chase Freedom card isn’t for the passive cash back rewards earner. There’s a lot involved here.

You need to activate the 5% cash back bonus each quarter. The cash back categories can change each year. And you must be a mindful spender who remembers when to swipe the Chase Freedom card to earn 5% back.

There’s a fair amount of fine print that dictates what will and won’t qualify for 5% cash back. As the new categories roll out, you’ll want to pay close attention to the type of purchases that are eligible.

A noticeable category from 2016 that’s not yet on the 2017 calendar is wholesale clubs. The category may be included later, but it’s a notable exclusion that may impact wholesale club shoppers who previously relied on the Chase Freedom card for cash back on that spending.

How Much Are Chase Ultimate Rewards Points Worth?

The Chase Freedom card is part of the Chase Ultimate Rewards program, so the Ultimate Rewards portal is where you go to manage and redeem points. Cash back earned from the Chase Freedom card is tracked in Ultimate Rewards points – $1 in cash back equals 100 points.

When you redeem points for rewards, for the most part, 100 points also equals $1 (and 1 point equals $0.01).

The true value of points earned varies slightly. Here’s the breakdown:

Statement credit or cash deposit redemption: 100 points = $1; you can redeem for cash starting at 2,000 points

Gift card redemption: 100 points = $1

Travel redemption: 100 points = $1; you can use a combination of points and your credit card for bookings

Amazon product redemption: Below is a sample conversion, but it’s subject to change

If you do choose the Chase Freedom card, make sure to redeem your points in a way that you’ll get the most value. Choosing Amazon products may not be the way to go.

Combine with a Chase Sapphire Credit Card

If you have a Chase Sapphire Preferred or Chase Sapphire Reserve credit card, you can combine your Freedom Ultimate Rewards points with your Sapphire Ultimate Rewards points. That means you would have all of the redemption opportunities associated with the popular Sapphire cards, including the ability to transfer your points to frequent flier programs like United and Southwest.

How to Qualify for the Chase Freedom Card

You need to have good or excellent credit in order to be approved for the credit card. In addition to having a good credit score, Chase will consider your employment status and income to ensure that you would be able to afford any new debt.

Overview of Card Benefits

For benefits and protections, the Chase Freedom card offers:

  • Zero liability protection means you won’t be held responsible for unauthorized charges made with your card or account information. This is a fairly common credit card benefit.
  • Chip-enabled card. Just one warning: this is a chip and signature card (and not a chip and pin card). While that should be fine for all of your spending in America, it might make using the card overseas a bit more difficult when only chip-and-pin is accepted.
  • Purchase protection covers your new purchases for 120 days against damage or theft up to $500 per claim and $50,000 per account.
  • Price protection provides that if a card purchase you made in the U.S. is advertised for less in print or online within 90 days, you can be reimbursed the difference up to $500 per item, $2,500 per year.
  • Auto rental collision damage waiver means you can decline the rental company’s collision insurance and charge the entire rental cost to your card. Coverage is provided for theft and collision damage for most cars in the U.S. and abroad. In the U.S., coverage is secondary to your personal insurance.

Alternatives to Chase Freedom

How does Chase Freedom stack up versus the competition? It really depends upon how you use your card. 5% cash back is one of the highest rates on the market, but you need to activate and spend in that category to earn rewards. Otherwise you would be earning a not very exciting 1%.

We will now compare Chase Freedom to three other types of cash back credit cards:

  • Discover it – a credit card that offers rich cash back rewards
  • Flat rate cash back credit cards, where you can earn 2%
  • Bonus category cards

Discover it Cashback Match

There are a lot of similarities between Discover it and Chase Freedom. Both cards have no annual fee and pay a base cash back rate of 1%. Both cards offer 5% cash back in rotating categories. Both cards require you to opt in to the 5% cash back categories and cap the 5% cash back to the first $1,500 of spend. But there are two areas where these cards are different.

The first big difference is the intro bonus. With Chase Freedom, you can earn $150 after spending $500 in the first 90 days. Discover, on the other hand, will match all of the cash back that you earned during the first year – at the end of your first year as a new cardmember. There is no cap to the sign-on bonus. If you are a big spender (especially in the bonus categories), you would earn much more during Year 1 with Discover. Here is a comparison of first year earnings:

  • You spend $1,000 a month in 1% categories
  • You spend $500 a month in 5% categories
  • The sign-on bonus at Chase would be $150
  • The sign-on bonus at Discover, at the end of the first year, would be $420

While you get the intro bonus much quicker at Chase – for big spenders, it pays to wait until the end of Year 1 at Discover.

The second big difference is the categories. Each quarter Discover and Chase announce their bonus categories, and they can be different. At Discover, the 5% category until September 2017 is restaurants.

If you are a big spender, the Discover it first year bonus makes it a good choice. If you are constantly looking for good deals, having both cards in your wallet to take advantage of the bonus categories might be a good choice.

Flat Rate Cash Back Cards

If opting into bonus categories every month sounds painful, you might want to consider a card that pays a flat rate on all of your spending. Whereas Chase Freedom offers a combination of 5% on bonus categories and 1% on everything else – you can get 2% flat cash back with some credit cards.

Citi Double Cash

Citi Double Cash pays 1% cash back as you spend and 1% cash back as you pay your bill. If you pay your statement balance in full every month and claim the cash back as a check or deposit into your checking account, you can earn double cash back.

Alliant Cashback Visa

Another new option is from Alliant, a credit union that anyone can join. With the Alliant Cashback Visa Signature card, you can earn 3% cash back during the first year (with no annual fee) and then 2.5% cash back thereafter. Just be warned: after the first year, there is a $59 annual fee. If you spend more than $1,000 a month on the card, the Alliant card will be a better deal than Citi Double Cash.

Bonus Category Cash Back Credit Cards

If you spend a lot of money in a single category every month, you might want to consider a credit card that pays a higher rate on just that category. For example, if you spend a lot of money on gas, you can find a card that pays 5% cash back on gas. If groceries are your biggest expense, you can find a card with 6% on groceries. You can find the best cash back credit cards by category here.

Who the card is best for

Cash back credit cards are great ways to put a little extra money in your pocket. Just remember to pay the statement balance in full and on time every month. Interest and late fees can quickly eat away at the cash back that you earn.

Chase Freedom is a good choice for people who are willing to opt in to the bonus categories each quarter and actually spend a lot of money in the bonus categories. If you don’t take advantage of the generous 5% bonus categories, you will be left with a card paying only 1%, which is not very exciting.

Rewards Cards: Frequently Asked Questions

The Ultimate Rewards points you earn from the Freedom don’t expire as long as you keep the account open. If you close your account, you will forfeit your points, though if you keep another Chase card that earns Ultimate Rewards open you can transfer your points to that account before you close your Freedom, and keep them alive.

Credit card companies rely on merchant codes provided by payment networks to determine the category of a purchase. Some stores might have a merchant code that doesn’t fit what you might think the purchase will be. For example, buying groceries at a Walmart isn’t a grocery purchase because Walmart doesn’t code itself as a grocery store. There’s no way to know for sure in advance what category a merchant falls under, so be aware of that before relying on the cash back for a category from a merchant you haven’t shopped at before.

Don’t let those cash back promises pressure you into spending more than you can afford. If you don’t pay your statement balance in full each month, you could get slapped with sky-high interest charges. That would totally negate any benefit you might get from earning cash back. Cash back cards are only valuable if you can pay your bill in full and capture the entirety of your cash back rewards.

It depends on the card. Some cards allow you redeem cash back dollar for dollar as a statement credit, which can help lower your total balance. Just keep in mind that applying cash back to your card statement does not count as a monthly payment. Other cards will increase the value of your cash back if you spend on certain categories, like travel. Review your terms carefully to be sure you’re getting the most bang for your buck.

Find the card that fits your day-to-day spending needs best, beyond the flashy sign-up bonus offers and cash back promises. Pay your bill in full each month (spend only what you can afford to pay off).

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor at taylor@magnifymoney.com

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Reviews

Amex Blue Cash Everyday Review: Good For Grocery Shoppers

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.

The Blue Cash Everyday Card is an American Express cash back rewards credit card with no annual fee. It gives 3% cash back for supermarket spending, 2% cash back for spending at gas stations and department stores, and 1% cash back on everything else.

Blue Cash Everyday® Card from American Express

APPLY NOW Secured

on American Express’s secure website

Blue Cash Everyday® Card from American Express

Annual fee
$0 For First Year
$0 Ongoing
Cashback Rate
up to 3%
APR
13.99%-24.99%

Variable

Credit required
good-credit

Good

  • $100 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.
  • No annual fee.
  • 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%).
  • 2% cash back at U.S. gas stations and at select U.S. department stores, 1% back on other purchases.
  • Low intro APR: 0% for 12 months on purchases and balance transfers, then a variable rate, currently 13.99% to 24.99%.
  • Expanding merchant acceptance: Over 1 million more places in the U.S. started accepting American Express® Cards in the last year.
  • Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits, gift cards, and merchandise.
  • Terms Apply.
  • See Rates & Fees

How to Earn Cash Back Rewards

For an introductory deal, the Blue Cash Everyday Card offers up to $150 in statement credits. During your first 6 calendar months of card membership, you can earn one $25 statement credit after you spend $250 in purchases on the Card in that month. The rewards program includes a decent amount of fine print for each cash back category.

Here’s what you need to know:

3% cash back at U.S. supermarkets up to $6,000 per year

Fine print: Superstores, warehouses, and specialty stores are not included. So keep in mind, if you visit your local fishmonger or butcher a few times a month, the cash you spend there probably won’t count as grocery shopping. Also, spending money at Amazon, Target, and Walmart specifically won’t earn you 3% cash back.

Here are samples of grocery stores that will earn you 3% cash back:

  • Foodtown
  • Gristedes
  • Meijer
  • Pathmark
  • Shoprite
  • Stop and Shop
  • Vons
  • Whole Foods
  • Winn-Dixie
  • Online supermarkets such as FreshDirect

2% cash back at gas stations and select department stores

Fine print: Superstores, supermarkets, and warehouse clubs that happen to sell gas are not included in the 2% cash back category. American Express gives examples of gas stations and a list of department stores that qualify for 2% cash back.

Here are some examples of gas stations:

  • Exxon
  • Gulf
  • Hess
  • Mobil
  • Murphy Express
  • Murphy USA
  • Shell

Here are the department stores:

  • Bealls
  • Belk
  • Bloomingdale’s
  • Bon Ton Stores
  • Boscov’s
  • Century 21 Department Stores
  • Dillard’s
  • J.C. Penney (JCP)
  • Kohl’s
  • Lord & Taylor
  • Macy’s
  • Neiman Marcus
  • Nordstrom
  • Saks Fifth Avenue
  • Sears
  • Stein Mart

1% cash back on all other purchases

Fine print: The 1% cash back applies to all purchases that don’t qualify for 2% or 3% and grocery shopping you do beyond the $6,000 annual cap.

How does American Express determine cash back for each purchase?

American Express uses merchant codes to determine how much cash you earn for each purchase. Merchant codes (or MCCs) are four-digit codes assigned to merchants that classify their business. You need to buy gas and groceries from stores that have an eligible merchant code to get 2% or 3% cash back. For full cash back category terms, head here.

The cash back you earn can also be impacted by the way you choose to process your payments. According to the American Express terms and conditions:

“Purchases made through a third-party payment account or on an online marketplace (with multiple retailers) will not receive a higher percentage reward. A purchase may not receive a higher percentage reward if the merchant submits the purchase using a mobile or wireless card reader or if you use a mobile or digital wallet.”

By “higher percentage reward,” American Express means more than the basic 1% back. The best bet at making sure you get the highest reward possible from your spending is keeping things super simple.

Focus on shopping at the supermarkets, gas stations, and department stores American Express has on the example lists above. At checkout, swipe your Blue Cash Everyday Card the old-fashioned way to pay for your shopping haul.

The Amex Blue Cash Everyday Card vs. The Amex Blue Cash Preferred Card

At first look, the 3% cash back on groceries seems legit because you’re earning cash back with no fee. However, shoppers who spend any more than $3,000 per year on groceries should take a look at the upgraded Amex Blue Cash Preferred Card instead to see if it offers a higher reward.

The Blue Cash Preferred Card gives 6% cash back on groceries and has a $95 annual fee, but you shouldn’t let that cost deter you.

If you spend just $3,200 on groceries per year with the Blue Cash Preferred Card, the 6% cash back minus the $95 fee offers a greater amount of cash back than what you would earn spending the same amount on the free Blue Cash Everyday Card.

Here’s how it works out:

  • Blue Cash Everyday – $3,200 x 0.03 = $96 cash back
  • Blue Cash Preferred – $3,200 x 0.06 = $192 – $95 annual fee = $97 cash back

Yes, the difference initially may seem small.

But as you spend more on groceries, the cash back earned from the Blue Cash Preferred Card surpasses the Blue Cash Everyday Card at a higher margin. Plus, the Preferred card offers a higher 3% cash back on gas and department stores as well.

How I got $3,200.

In this review, we’ll first explain the basics of the Blue Cash Everyday rewards program. Then, we’ll give you a scenario of when it still makes sense to apply for the Blue Cash Everyday Card instead of other cash back cards, including the Blue Cash Preferred Card.

How Cash Back Works

Cash back earned from the Blue Cash Everyday Card is tracked in Blue Cash Rewards Dollars. You can redeem cash back through the account dashboard for statement credit in increments of 25. You can’t use cash back to make your monthly minimum payment.

How to Qualify for the Blue Cash Everyday Card

American Express is one of several credit card issuers that offers a pre-qualification screening. The benefit of this feature is you can find out whether you have a good chance of getting approved for an American Express card without impacting your credit score.

To see if the Blue Cash Everyday Card is one you pre-qualify for, go here. Then, scroll down to about the middle of the page where you’ll see the pre-qualified offers section. Here’s what it looks like:

Who the Blue Cash Everyday Card Is Best For

Your goal with the Blue Cash Everyday Card is to spend enough in the higher cash back categories to beat the flat 2% on all purchases you can get with a card like the Citi Double Cash Card.

To throw another variable in the mix, if you plan to shop big in the grocery category, you should compare the Blue Cash Everyday Card against the Blue Cash Preferred Card before making a decision.

So, how do these cards stack up against each other?

Here’s a real-world example of when the Blue Cash Everyday Card will benefit you more than the Blue Cash Preferred Card or the Citi Double Cash Card.

For a quick recap:

  • Blue Cash Everyday – 3% cash back on groceries up to $6,000 annually, 2% cash back on gas and department stores, 1% cash back on all other purchases
  • Blue Cash Preferred – $95 annual fee, 6% cash back on groceries up to $6,000 annually, 3% cash back on gas and department stores, 1% cash back on all other purchases
  • Citi Double Cash – 2% cash back on all purchases with no cap

The sample scenario

Marc is a family of one and lives a simple life. He commutes 30 minutes to and from work each day. He’s not a big credit card user. He uses the card primarily to feed himself, to fill up his gas tank, and to take his partner out to an affordable dinner at a place of her choosing once or twice a month.

Here are Marc’s spending specs:

  • $2,000 per year on groceries
  • $2,400 per year on gas
  • $1,500 per year on miscellaneous purchases

This is the cash back he would earn from the Blue Cash Everyday Card, Blue Cash Preferred Card, and Citi Double Cash Card:

Marc is a pretty reserved spender, so he’ll earn more cash back with the Blue Cash Everyday Card compared to the Blue Cash Preferred Card because there’s no annual fee eating away at his earnings.

Cash back from the Citi Double Cash Card comes close to the Blue Cash Everyday Card, but the 3% on groceries is more of a benefit to him than unlimited 2% cash back because of his spending habits.

Now, let’s say Marc had his partner move in and the grocery bill increased to $3,000 per year.

Here’s the updated specs:

  • $3,000 per year on groceries
  • $2,400 per year on gas
  • $1,500 per year on miscellaneous purchases

The Blue Cash Preferred Card with the $95 annual fee would take the earnings edge away from the Blue Cash Everyday Card in this second scenario. So, again, the Blue Cash Everyday Card may not be the best cash back deal available for someone who spends in the $3,000 range on groceries per year.

Although, every situation is unique, and small fluctuations in spending habits can make a huge difference in cash back potential. Do a similar cash back comparison on your own before settling on a rewards card.

Other Card Benefits

Besides cash back rewards, American Express cardholders get to take advantage of the following premium benefits:

  • Car rental loss and damage insurance
  • Roadside assistance
  • Global assistance hotline
  • Travel accident insurance
  • Extended warranties
  • Return protection
  • Purchase protection
  • Fraud protection

If you decide to apply for the Blue Cash Everyday Card, know that American Express is a card that you may have difficulty getting accepted by smaller retailers and abroad. However, American Express having limited acceptance may not be too problematic for Blue Cash Everyday cardholders.

Mom-and-pop corner markets that don’t accept American Express may not have a merchant code that qualifies for 3% cash back anyway. Plus, the Blue Cash Everyday Card has a 2.7% foreign transaction fee, so it’s probably not a card you’re going to take abroad frequently as your travel companion either.

That said, consumers who will benefit the most from this cash back card are ones who plan to shop primarily stateside at major supermarkets, gas stations, and department stores that qualify for the highest reward.

Rewards Cards: Frequently Asked Questions

No, Blue Cash points do not expire as long as your account is open and in good standing. So, you can save your points for higher value rewards including electronics and travel.

Anything over 1.5% cash back is a good deal. There are some cards that offer more — as much as 5% or 6% cash back on purchases. But sometimes those offers are too good to be true. Banks don’t like to lose money and will pepper the fine print with all sorts of limitations. For example, they may offer 5% cash back on only purchases at certain types of retailers and only for certain periods of time. And those categories may change every quarter, which can make it hard to keep track.

Don’t let those cash back promises pressure you into spending more than you can afford. If you don’t pay your statement balance in full each month, you could get slapped with sky-high interest charges. That would totally negate any benefit you might get from earning cash back. Cash back cards are only valuable if you can pay your bill in full and capture the entirety of your cash back rewards.

It depends on the card. Some cards allow you to redeem cash back dollar for dollar as a statement credit, which can help lower your total balance. Just keep in mind that applying cash back to your card statement does not count as a monthly payment. Other cards will increase the value of your cash back if you spend on certain categories, like travel. Review your terms carefully to be sure you’re getting the most bang for your buck.

Find the card that fits your day-to-day spending needs best, beyond the flashy sign-up bonus offers and cash back promises. Pay your bill in full each month (spend only what you can afford to pay off).

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor at taylor@magnifymoney.com

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College Students and Recent Grads, Reviews, Student Loan ReFi

LendKey Student Loan Refinance Review

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.

LendKey Student Loan Refinance Review

Updated July 13, 2017

Could you imagine trying to find the best student loan refinancing rate from community banks and credit unions on your own? How would you do it? Would you call every bank and credit union and ask for help? What a nightmare.

LendKey has relationships with 300+ community banks and credit unions all over the United States. LendKey* can issue loans to residents in any of the 50 states. This keeps you from having to pound the pavement by your lonesome. LendKey’s website will show you the best rate for refinancing your student loans.

Since 2007, LendKey has been a one stop shop for student loan refinancing. It also offers other types of loans. But for the sake of this review we’ll be focusing on how LendKey takes care of graduates looking to improve their debt situation. Fixed APRs range from 3.25% – 7.26%. Variable rates start as low as 2.66%. (All of these rates include the auto-pay discount). LendKey is one of the top four lenders in MagnifyMoney’s survey of where to refinance your student loan.

Who can benefit from using LendKey? Anyone hoping to refinance their student loans should consider LendKey. It is easy to apply:

If you’re on the fence about refinancing, here are some of the benefits to be gained:

Lower Payments

Refinance your way to a more manageable monthly payment.

Lower Rates

Spend less on interest by getting a lower rate than the aggregate of all individual student loans.

Simplified Finances

Making payments on multiple loans to multiple institutions at different times of the month can be quite the hassle. It’s much easier to remember just one payment. Many lenders even let you consolidate both private and federal loans.

Different Repayment Options

Different lenders offer different repayment options. It’s wise to explore all the options to determine what makes the most sense for your particular situation.

Pros of Using LendKey

A Unified Application Process

This is hugely important. With LendKey, you’re not shuffled through tons of screens on different domains – all using different logons and different (confusing!) user interfaces. Within 5 minutes, a person can navigate through LendKey’s application process. This means after 5 minutes, you can see how much you can save by refinancing. You can even choose what loan you want.

Cosigner Release Available

Yes, you can secure a low interest rate and then cut loose your cosigner. Once you prove you are responsible – LendKey no longer needs a cosigner tied to your account. This may help convince a cosigner to work with you initially. They won’t need to be on the hook for long. Once you’ve made 12 full and consecutive on-time payments, your cosigner may be released. LendKey does a credit check and examines your income to see if you are free to go it alone.

No Origination Fee

This is helpful since it means you are free to shop around without feeling committed.

Further Interest Rate Reduction

1% interest rate reduction once 10% of the loan principal is repaid during the full repayment period. This is subject to the floor rate.

0.25% ACH Interest Rate Reduction

Many lenders reduce interest rates by a quarter percent for borrowers who agree to automatic payments.

Federal and Private Loans Can Be Consolidated Together

However, you lose some federal benefits in doing so. Things like free insurance (provided with federal loans if you are killed or severely disabled), public service forgiveness and military service forgiveness as well as income-based repayment plans. Grace periods will likely be omitted when writing the new consolidated loan.

Over 40,000 Borrowers Serviced

As of January 2016, 40,000 people have used LendKey’s services.

Excellent Customer Support

According to cuStudentLoans (which LendKey owns so take this with a grain of salt), 97% of customers are satisfied. Customer support comes out of New York and Ohio. Phone support is available each day from 9AM to 8PM EST.

For what it’s worth, I called into support 5 times at random. The support I received from the sales team was really great. Even the gentleman with only 6 months of experience was quite knowledgeable.

Eligible Schools

This list of eligible schools is 2,200 and growing. Chances are your school is on the list. However, LendKey doesn’t encourage students to submit eligibility requests as other student loan refinancers do.

Return Policy

Yes, you can ‘return’ your loan. LendKey offers a 30 day no-fee return policy to allow you to cancel the loan within 30 days of disbursement without fees or interest. That’s pretty incredible.

Cons

LendKey Doesn’t Give You the Complete Picture

LendKey doesn’t help a lot with stacking institutions against each other. I suppose this is meant to not to play favorites. However, it would be nice to be able to read about each institution within the LendKey interface. I’d still advise opening up another tab to research the banks you are considering.

The Fine Print You May Miss

Since LendKey is a loan matchmaker, there isn’t a lot of fine print on the site. This means a person still needs to review the fine print of each institution before finalizing his or her loan as mentioned before. LendKey does a fantastic job of getting you 90% of the way. But that last 10% of fine print is between you and your lending institution. Read through everything before signing up for a new loan.

I read the Better Business Bureau complaint log for LendKey. There are only 11 complaints in the past 3 years. SoFi (a competitor) has 18 and another competitor, Earnest, has no complaints. These complaints were mostly small misunderstandings between the LendKey support team and the borrowers.

The Application Process

There are four steps to the simple application process. Step 1 is for estimating monthly payments for a private student loan. It’s simple. You identify the amount you’d like to borrow and fill in a radio button indicating your credit is fair, good, or excellent. The last part is where you enter which state you live in. This is because many programs are state specific. Step 1 takes 1 minute.

Step 2 takes 2 minutes. This is the step where you compare the rates and offers available to you. Choose what works best for your unique situation.

Step 3 again only takes 1 minute. This is the actual application. As mentioned earlier in this article, this process is done through the LendKey interface. And don’t worry, information inputted into LendKey is safe (privacy policy).

Step 4 takes 10 minutes. This is the step where a person verifies identity, school, and income (screenshots/pictures work so there’s no hassle with scanning!). You will know if you are approved during this step.

As with any company, there are competitors. Here are two worthy rivals also worth considering:

Alternatives to LendKey

SoFi

SoFi stands out with a job placement programs, free wealth management for borrowers and even a dating app. More importantly, SoFi has low interest rates, with variable rates starting at 2.795% and fixed rates starting at 3.35%.

SoFi

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Earnest

If you have a low credit score but have potential to earn a good income, Earnest will treat you well. Earnest looks beyond a simple credit score. The application process examines employment history, future earning potential and overall financial situation.

Earnest seems to take a very personal approach to each customer. A customer states an amount they can pay each month and Earnest will give them a loan, accordingly. Earnest also lets borrowers skip a payment each year. This could come in handy if money gets tight around the holidays. Just keep in mind, this can increase your future payments to compensate for the missed on.

Fixed interest rates start at 3.35% and variable interest rates start at 2.79%.

However, Earnest isn’t available for all US residents.

Final Thoughts

LendKey runs a fantastic student loan refinancing division. The company offers many, many customizable options with very few downsides. With no application fee, it’s worth seeing what this student loan refinancing powerhouse can do for you.

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Will Lipovsky
Will Lipovsky |

Will Lipovsky is a writer at MagnifyMoney. You can email Will at will@magnifymoney.com

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College Students and Recent Grads, Pay Down My Debt, Reviews

CommonBond Student Loan Refinance Loan Review

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.

CommonBond Grad Student Loan Refinance Loan Review

Updated July 10, 2017

CommonBond was founded by three Wharton MBAs who felt the sting of student loans after they graduated. The founders decided to provide a better solution for graduates, as they thought the student loan system was broken and in need of reform. As a result, they strive to make the refinance (and borrowing) process as simple and straightforward for graduates as possible.

CommonBond* began by servicing students from just one school, and has rapidly expanded. Today, CommonBond loans are available to graduates of over 2,000 schools nationwide. Although the business started servicing only students with graduate degrees, today CommonBond is also available to refinance undergraduate degrees as well.

CommonBond is one of the top four lenders identified by MagnifyMoney to refinance student loans.

As you might be able to tell by the name, CommonBond thinks of its community as family. There is a network of alumni and professionals within the community that want to help borrowers. This alone sets it apart from other lenders, as members often meet for events.

While these are all great things, we know you’re more interested in how CommonBond might be able to help you make your student loans more affordable. Let’s take a look at what terms and rates they offer, eligibility requirements, and how they compare against other lenders.

Refinance Terms Offered

CommonBond offers low variable and fixed rate loans. Variable rates range from 2.79% – 6.72% APR, and fixed rates range from 3.35% – 6.74% APR.

Note that these rates take a 0.25% auto pay discount into consideration.

There is no maximum loan amount. CommonBond will lend what you can afford to repay. CommonBond offers fixed and variable rates with terms of 5, 7, 10, 15, and 20 years.

The hybrid loan is only offered on a 10 year term – the first 5 years will have a fixed rate, and the 5 years after that will have a variable rate.

CommonBond has a great chart listing repayment examples based off of borrowing $10,000, which can be found on its rates and terms page.

To pull an example from that, if you borrow $10,000 at a fixed 4.74% APR on a 10 year term, your monthly payment will be $104.80. The total amount you will pay over the 10 year period will be $12,575.90.

The Pros and Cons

CommonBond is available to graduates of 2,000 universities. While that is a very long list, not all colleges and universities are included.

One pro to consider is the hybrid loan option available. It might seem a little confusing at first – why would someone want a variable rate down the road?

If you’re confident you’ll be able to make extra payments on your loan and pay it off before the 5 years are up, you might be better off going with the hybrid option (if you can get a better interest rate on it).

This is because you’ll end up paying less over the life of the loan with a lower interest rate. If you were offered a 10 year loan with a fixed rate of 6.49% APR, and a hybrid loan with a beginning rate of 5.64%, the hybrid option would be the better deal if you’re intent on paying it off quickly.

What You Need to Qualify

CommonBond doesn’t list many eligibility requirements on its website, aside from the following:

  • You must be a U.S. citizen or permanent resident
  • You must have graduated

CommonBond doesn’t specify a minimum credit score needed, but based on the requirements of other lenders, we recommend having a score of 660+, though you should be aiming for 700+. The good news is CommonBond lets you apply with a cosigner in case your credit isn’t good enough.

Documents and Information Needed to Apply

CommonBond’s application process is very simple – it says it takes as little as 2 minutes to complete. Initially, you’ll be asked for basic information such as your name, address, and school.

Once you complete this part, CommonBond will perform a soft credit pull to estimate your rates and terms.

If you want to move forward with the rates and terms offered, you’ll be required to submit documentation and a hard credit inquiry will be conducted. CommonBond lists the following as required:

  • Pay stubs or tax returns (proof of employment)
  • Diploma or transcript (proof of graduation)
  • Student loan bank statement
  • ID, utility bills, lease agreement (proof of residency)

CommonBond also notes it can take up to 5 business days to verify documents submitted, so the loan doesn’t happen instantaneously.

Once your documents are approved, you electronically sign for the loan, and CommonBond will begin the process of paying off your previous lenders. It notes this can take up to two weeks from the time the loan is accepted.

Who Benefits the Most from Refinancing Student Loans with CommonBond?

Borrowers who are looking to refinance a large amount of student loan debt will benefit the most from refinancing with them.

Keeping an Eye on the Fine Print

CommonBond does not have a prepayment penalty, and there are no origination fees nor application fees associated with refinancing.

As with other lenders, there is a late payment fee. This is 5% of the unpaid amount of the payment due, or $10, whichever is less.

If a payment fails to go through, you’ll be charged a $15 fee.

It’s also noted that failure to make payments may result in the loss of the 0.25% interest rate deduction from auto pay.

Transparency Score

Getting in touch with a representative is simple and there is a chat and call option right on the homepage. Some lenders have this hidden at the bottom, or they don’t offer a chat option at all.

CommonBond also lets borrowers know they can shop around within a 30 day period to lessen the impact on their credit.

It does not list its late fees on its website, unlike other lenders. However, after making a chat inquiry, the question was answered promptly.

CommonBond does offer a cosigner release and is ranked with a A+ transparency score.

Alternative Student Loan Refinancing Lenders

The student loan refinancing market continues to get more competitive, and it makes sense to shop around for the best deal.

One of the market leaders is SoFi. It’s always worth taking a look to see if SoFi* offers a better interest rate.

The two lenders are very similar – CommonBond offers “CommonBridge,” a service that helps you find a new job in the event you lose yours. SoFi offers a similar service called Unemployment Protection.

SoFi’s variable rates are currently 2.795% – 6.720% APR with autopay, and its fixed rates are currently 3.35% – 6.74% APR, which is in line with what CommonBond is offering.

SoFi also doesn’t have a limit on how much you can refinance with them.

SoFi

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Another lender to consider is Earnest. There is no maximum loan amount, and Earnest has a very slick application process. Interest rates start as low as 2.79% (variable) and 3.35% (fixed).

Lastly, you could check out LendKey. It offers student loan refinancing through credit unions and community banks, but only offers variable rates in most states and fixed rates in a select few. The maximum amount to refinance with an undergraduate degree is $125,000, and the maximum amount to refinance with a graduate degree is $175,000.

All three of these options provide forbearance in case of economic hardship and offer similar loan options (5, 10, 15 year terms).

Don’t Forget to Shop Around

As CommonBond initially conducts a soft pull on your credit, you’re free to continue to shop around for the best rates if you’re not happy with the rates it can provide. As the lender states on its website, if you apply for loans within a 30 day period, your credit won’t be affected as much.

Since CommonBond does have strict underwriting criteria, you should continue to shop around and don’t be discouraged if you are not approved. The market continues to get more competitive, and a number of good options are out there.

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Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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College Students and Recent Grads, Credit Cards, Reviews

Altra Federal Credit Union Student Visa Review: Great Savings for Future Auto Loans

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.

The Altra Federal Credit Union Student Visa card is made for college students and helps you build credit while also taking advantage of rewards. You’ll earn 1 point per dollar spent, and double points during the 60 days after opening your card. The rewards points can be redeemed for cash back, travel, merchandise, and more. This card is especially beneficial if you plan on taking out an auto loan in the next few years, as you may be eligible to redeem rewards points for a .25% or .50% interest reduction on an Altra auto loan. The various features Altra provides make this card a good option for students starting their credit journey.

Altra Federal Credit Union Student Visa

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Altra Federal Credit Union Student Visa

Annual fee
$0 For First Year
$0 Ongoing
Rewards
1 point per dollar spent
APR
14.90%

Fixed

Credit required
zero-credit
New to Credit
  • Earn double Reward Points on every dollar of purchases in the first 60 days after opening your new account. After, earn 1 point per dollar spent.
  • Points can be redeemed for cash back, travel rewards and merchandise.
  • Redeem 5,000 CU reward points for a .25% point reduction or 10,000 points for a .5% point reduction off an Altra vehicle loan.
  • Each quarter one random cardholder will have their previous month’s purchases paid (up to $500, $50 minimum).
  • Receive a one-year congratulatory letter rewarding you with $20 for maintaining your account in an “exceptional way.”

How the Card Works

Altra offers a credit card designed with students in mind to help you build credit. There is no annual fee for this card, though you may have to pay a $5 membership fee; but more on that later. In addition to a low 14.90% APR, Visa Checkout, and fraud alerts, Altra offers a rewards program. You will earn 1 point per dollar spent on all purchases and will earn double points during the 60 days after opening your new account. This allows you to get a rewards boost while you’re in the honeymoon phase of being a cardholder. However, this may not be the largest rewards program compared to other cards, but it is better than no rewards.

The reward points that Altra offers do not have a standard value like most rewards programs. Instead, points can be redeemed for merchandise or cash back at CURewards.com. Note that there is only one cash back option of $50, and you need 8,334 points to redeem. So you would need to spend $8,334 to receive $50 cash back.

Although you earn unlimited rewards points, they expire after five years — but on the last day of the year. For example, if you earned points on June 1, 2017, they would expire in five years but on the last day of the fifth year — December 31, 2022. As a result, think twice about saving all your points for a large reward because you may lose them.

In addition to a rewards program, Altra will give you a $20 cash back reward at the end of your first year as a cardholder. All you need to do to qualify is to maintain your account in an “exceptional” manner by having no late payments, no over-the-limit usage, and 6 out of 12 months’ activity. This should be an easy $20 since your goal is to pay every statement in full each month.

If that isn’t enough, Altra will choose one cardholder at random each quarter and pay their previous month’s purchases, with a minimum of $50 and maximum of $500 paid. To qualify for this “lottery” you need to be in good standing, which means you pay your bill on time and in full every month, and wait for your lucky day!

If you plan on taking out an auto loan in the next few years, Altra has a unique offer that can save you significant money. You are able to redeem 5,000 points for a .25% interest reduction or 10,000 points for a .50% interest reduction on your Altra auto loan.

Keep in mind that your primary goal with a student card is to create a positive credit history with the hopes of having a credit score in the 700s upon graduation. Don’t let the prospect of rewards hinder your credit and lead to overspending. Some best practices to promote a positive credit score include paying each statement in full and on time and using no more than 20% of your credit limit — meaning don’t max out your card.

How to Qualify

Altra designed this card with students in mind, which means they don’t expect you to have a great credit history, or any at all. Though they do expect you to have a stable source of income, so a job is needed to apply for this card. This will prove that you can afford to make your monthly payments on time and are responsible.

Another requirement Altra has that is unique to credit unions is that you need to be a member to become a cardholder. No worries, though, since the application process is simple. You can either qualify for membership via various eligibility options or by joining the credit union for $5. In addition, while you’re actively using the card you will need to keep $5 in a savings account.

What We Like About the Card

Low APR.

Altra offers a relatively low 14.90% APR, compared to other cards that offer APRs as high as 24.74%. The low APR is beneficial if you don’t pay your balance in full one month and as a result are charged interest. It helps that Altra has an APR 10% lower than competing cards; however, you should always pay your bill in full every month to avoid interest charges and damage to your credit score.

Earn rewards points.

Altra provides you the opportunity to build your credit while also earning rewards. With this card you can earn 1 reward point per dollar spent. Even better is that during the first 60 days after opening your account you will earn double rewards points. Don’t let this get to your head and spend more than you can to maximize your double points. Remember that your primary goal is to build good credit, and earning rewards is only an added bonus. It’s important to note that Altra rewards points do not have a standard value like typical rewards programs from other credit cards. Point value varies based on each redeemable item.

$20 cash back for good behavior.

If at the end of your first year as a cardholder you have no late payments, no over-the-limit usage, and used your card for 6 out of 12 months, you will receive a $20 cash back reward. This is an added perk for responsible cardholders that makes Altra’s card more appealing.

Random winner each quarter.

An added level of excitement is Altra’s bill pay “lottery.” Each quarter Altra will choose one random cardholder and pay their previous month’s purchases, anywhere between $50 and $500. Make sure you’re in good standing to qualify.

Redeem points for a lower interest rate on an Altra vehicle loan.

If a car is in your near future, Altra provides a great option that can save you money. You will receive a .25% or .50% point reduction on your loan by redeeming 5,000 and 10,000 points, respectively. This may save you a significant amount of cash in the long run.

What We Don’t Like About the Card

Foreign transaction fee.

Be careful if you travel abroad since this card charges a 1% foreign transaction fee. This isn’t as high as some cards that charge 3%; however, you can find other student cards that don’t charge a fee when you’re traveling out of the country, such as the Discover it for Students card or the Capital One Journey Student Rewards card.

Need to join the Altra Federal Credit Union.

Unlike credit cards from banks, you have to be a member of the Altra FCU. There are two ways to become a member, and the first option — meet their eligibility requirements — is free. Otherwise you will need to pay a one-time $5 membership fee. All members will also need to have a $5 balance in an Altra savings account that must remain in the account while you have the card open.

Who the Card Is Best For

If you’re a student who doesn’t mind joining a credit union and wants to earn rewards while building your credit score, this card may be right for you. We recommend this card for students who plan on taking out an auto loan since you can benefit greatly from the .25% or .50% interest reduction Altra offers. With numerous cardholder benefits, the Altra FCU Student Visa card is a good choice for students starting their credit journey.

Alternatives

If You Frequently Spend on Gas, Groceries, and Restaurants

The Golden 1 Credit Union Platinum Rewards for Students card is a great card if you want to receive a cash rebate for your purchases. With Golden 1 you will earn a cash rebate instead of rewards points that will be deposited into your account at the end of every month. The cash rebate program also boasts a high 3% rebate for gas, grocery, and restaurant purchases, with 1% for all other purchases. If you frequently spend money in these areas, you’ll be able to maximize your cash rebate. You can become a member of Golden 1 by joining the Financial Fitness Association for $8 per year and keeping at least $5 in a savings account.

If a Credit Union Isn’t for You

Not everyone wants to join a credit union, and there are numerous student credit cards offered by banks. The Discover it for Students card is a great card to help you build credit while earning cash back. With Discover you will earn 5% cash back on quarterly rotating categories and 1% elsewhere — but it doesn’t end there. They also reward students with good grades, match your cash back at the end of the first year, and provide access to your FICO score for free. Overall, Discover is a great card for students who don’t mind tracking rotating categories to maximize cash back.

FAQ

It’s a smart choice to start building your credit while you’re in college so by the time you graduate you have a healthy credit score in the high 600s to mid 700s. As a result, you’ll be in good standing with financial institutions and will benefit from being able to make larger purchases like a new car. Also, if you want to get an additional credit card that offers cash back or rewards, you will be more likely to get approved with a good credit score. Check out our student credit card guide.

To join the Altra Federal Credit Union you may already meet several eligibility options that come at no cost. If not, there is a one-time $5 membership fee. You will also need to have a $5 balance in an Altra savings account that must remain while you have the card open.

You should work hard to make sure you make payments on time every month. A missed payment will lead to a late fee and interest accruing on the balance. This will ultimately leave a negative mark on your credit report and lower your credit score. Try not to spend more than you are able to and stick to a budget with these helpful budgeting apps.

If a credit card isn’t the right product for you, don’t fret, there are other options available. You can build credit by using a secured card or by becoming an authorized user on your parents’ account. A secured card is where you deposit an amount of money that acts as collateral, and the amount you deposit becomes your credit limit. This is a great way to build credit with less risk than a typical credit card. Compare the best secured cards for your needs. Your second option, becoming an authorized user, allows you to piggyback off of someone else’s good credit. You will receive their good credit behavior on your credit report.

Alexandria White
Alexandria White |

Alexandria White is a writer at MagnifyMoney. You can email Alexandria at alexandria@magnifymoney.com

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College Students and Recent Grads, Reviews, Student Loan ReFi

SoFi Parent PLUS Loan Refinance Review

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.

Senior Couple Talking To Financial Advisor At Home

Updated July 3, 2017

Are you a parent who wanted to help your child finance his or her education, and ended up taking out more loans than anticipated? Many parents find themselves in a precarious situation as they try to plan for retirement and while balancing student loan debt.

If you’re looking to save on the amount of interest you’re paying, SoFi’s Parent PLUS loan refinance program may be right for you.

Details of the Parent PLUS Loan

You can refinance a minimum of $5,000 under SoFi. Fixed rates range from 3.35% to 6.74% APR and variable rates range from 2.80% – 6.47% APR (these rates assume you enroll in autopayment).

Terms of 5, 7, 10, and 15 years are available. Variable rates on terms of 5, 7, and 10 years are capped at 8.95%, while the 15 year term is capped at 9.95%.

An example payment looks like this: if you refinance $10,000 on a 5 year term with a fixed APR of 5.49%, your monthly payment will be $190.97 and you’ll pay a total of $11,457.93 over the life of the loan. If you refinance $10,000 on a 5 year term with a variable APR of 4.2%, your monthly payment will be $185.07 and you’ll pay a total of $11,104.43.

How Does the Parent PLUS Loan From SoFi Compare to a Federal PLUS Loan?

The interest rate for Federal Direct PLUS Loans disbursed on or after July 1st, 2015 and before July 1st, 2016 is 6.84%. During much of the 2000s, interest rates were higher. Currently, interest rates are fixed – variable rates are unavailable.

Most people are looking to refinance to save money, and SoFi offers very competitive rates compared with the Direct PLUS Loan, especially on variable rates.

While there are no fees to refinance, you should calculate your estimated savings before going through the process. Be aware if you do refinance, you’ll lose out on certain benefits that come with having Federal student loans, such as deferment, forbearance, and various repayment options.

PLUS loans made to parents are eligible for the Graduated or Extended Repayment Plans, and Direct PLUS loans are also eligible for forgiveness. In some cases, PLUS loans can be discharged due to the death of the borrower (or student).

Private loans often don’t extend these same benefits. In fact, SoFi explicitly states on its legal page that this loan “is not discharged in the event of death or permanent disability of the borrower or student on whose behalf the loan is taken out.”

Eligibility Requirements

You must be a U.S. citizen or permanent resident and employed to be approved. SoFi is unable to lend in Nevada, and variable rates aren’t offered in Illinois, Ohio, or Tennessee. The loans must have been used to obtain at least a Bachelor’s degree with an eligible school as well.

There are no specific credit score requirements as SoFi tries to take a broader view of borrowers. It focuses on income and credit history instead.

Application Process and Documents Needed

The application process to refinance a PLUS Loan with SoFi is easy and can be done completely online. The application takes around 15 minutes to complete, and you’ll know whether or not you qualify by going through the pre-approval process first. During this portion of the application, a soft credit inquiry is used. If you decide to move forward with the loan offered to you, a hard credit inquiry will be used.

You’ll be asked to upload a few documents, so it’s a good idea to have the following ready to go:

  • Proof of residence – ID with matching address, otherwise a utility bill dated within the last 60 days is okay
  • Proof of income – most recent pay stubs
  • Proof of citizenship – a passport or birth certificate can be provided
  • Verification of loans – most recent loan statements for the loans you’re refinancing

Once you submit this documentation, SoFi’s review team gets to work on evaluating your loan. If no other documentation is needed, reviews can take anywhere from 2 to 3 weeks to complete.

The Fine Print

There isn’t an origination fee or application fee, and there are no prepayment penalties. Rates are determined on a number of factors, including the term you choose, your income, and your credit history.

There are late fees associated with the loan. The Parent PLUS Refinance program is currently offered through SoFi’s lending partner, Mohela, and it assesses any fees owed. When you receive the paperwork for the loan, the fees can be found under the disclosures.

Repayment Assistance Options

If you’re struggling to repay the loan after refinancing with SoFi, we recommend you contact a representative and make them aware of the situation. The worst thing you can do with any loan is not make a payment.

SoFi offers unemployment protection on a case-by-case basis, during which payments can be paused for a period of 3 to 12 months.

Pros and Cons of SoFi Parent PLUS Loan

Pro: SoFi offers much better rates than the 6.84% fixed rate that comes with Direct PLUS loans. If you have a higher interest rate – around 8% – you’ll stand to benefit even more.

Con: As we mentioned, refinancing means losing out on benefits associated with Federal student loans. If you’re not as concerned about needing repayment assistance, the savings might be enough to make refinancing worthwhile.

Pro: SoFi also offers variable interest rates, whereas the most recent Direct PLUS loans don’t. Variable rates can be tricky, though – SoFi says rates may change on a monthly basis. If you value stability and peace of mind, variable rates may not be for you. If you’re trying to pay off your balance quicker, and a lower interest rate would help, then it might be worth considering this option. 

Con: You may have to extend the repayment term to get a lower monthly payment, as SoFi offers terms up to 15 years. Unfortunately, this increases the amount of interest you’ll pay over the life of the loan. It’s important to use a calculator to estimate how much your savings will be to make sure refinancing is worth it. For example, if you have less than 5 years remaining on your loan, refinancing may not save you a lot of money.

Pro: SoFi offers unemployment protection, and you can also take advantage of SoFi’s career assistance program. If you or your child is experiencing trouble finding employment, it will connect you with its network of alumni and give you tools and tips to succeed in your job search.

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Other Parent PLUS Refinance Alternative

If you don’t qualify with SoFi, you can try these lenders that also offer refinancing options:

CommonBond: Fixed APRs range from 3.35% to 6.74%, and variable APRs range start at 2.79%, and terms offered are 5, 10, 15, and 20 years. CommonBond also has hybrid APRs. Only a 10 year term is offered with this choice; it starts off as fixed for 5 years, and changes over to variable for 5 years. There are no origination fees or application fees, no prepayment penalty, and CommonBond actually allows you to transfer your loan to your child (which isn’t allowed with Federal loans). You can borrow a maximum of $110,000.

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Citizens Bank: Citizens Bank refinances Parent PLUS and Direct PLUS loans through its Education Refinance program. The minimum amount you can refinance is $10,000 and up to $90,000 for Bachelor’s degrees and below, $130,000 for graduate and doctoral degrees, and $170,000 for professional degrees. For a Bachelor’s degree and above, you must have made 3 consecutive monthly payments to refinance. For anything less than a Bachelor’s degree, you must have made 12 consecutive monthly payments. The loan you’re refinancing must be in repayment status and can’t be enrolled in an Income-Based Repayment plan. Fixed APRs start at 6.24%. Terms of 5, 10, 15, or 20 years are offered. You need a minimum income of $24,000 to qualify.

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Be sure to shop around as there are other lenders out there that will refinance PLUS loans – you want to make sure you’re getting the best rates and terms available to you so you can save the most. Shopping around within 30 days will only count as one credit inquiry, so your credit won’t get penalized heavily. Take advantage of this and lessen the burden of student loan payments so you can focus on saving for your future.

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Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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