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Credit Cards: Find the Best Credit Card Offers & Deals – May 2018

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

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

 

Top Credit Card for 2018

The Amex EveryDay® Credit Card from American Express

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Terms Apply

Rates & Fees

Read Full Review

Annual fee

$0

Intro Purchase APR

0% for 15 Months

Intro BT APR

0% for 15 Months

Balance Transfer Fee

$0 balance transfer fee.

Regular Purchase APR

14.49%-25.49% Variable

Rewards Rate

2x points at US supermarkets, on up to $6,000 per year in purchases (then 1x), 1x points on other purchases.

New for February 2018, The Amex EveryDay® Credit Card from American Express ranks as our top credit card for 2018. This card offers a combination of benefits that are unmatched among other cards in the market, including 0% intro periods, rewards, and great cardholder perks — all at a $0 annual fee.

Cardholders can utilize the intro periods for both balance transfers and purchases by taking over a year to pay off debt without accruing interest. The balance transfer offer has a $0 balance transfer fee. The transfers must be requested within 60 days of account opening, which saves you the typical 3% transfer fee most other cards charge.

Beyond the intro periods, there is a rewards program where cardholders can earn 2x points at US supermarkets, on up to $6,000 per year in purchases (then 1x), 1x points on other purchases. This rate is beneficial for people who spend $500 a month at U.S. supermarkets, since this spending allows you to maximize rewards at the higher rate.

The Membership Rewards® points you earn can be redeemed for a variety of options, and a great option for travelers is the ability to transfer points to participating frequent flyer programs including Delta SkyMiles, JetBlue True Blue, Virgin America Elevate, and British Airways Avios. Often these transfers are on a 1:1 rate, with some programs requiring more or less points. Additional redemption options include booking for travel, gift cards, merchandise, pay with points at checkout and statement credit. This card also has a wide range of additional perks that vary from shopping and entertainment benefits to travel and purchase protections.

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

Tip: Make any large purchases or balance transfers as soon as you can so you can benefit from the 0% intro period.

Read our full review of the The Amex EveryDay® Credit Card from American Express here.

How to Choose and Use a Rewards Card

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

How to Choose

Best Cash Back Credit Cards

Cash back credit cards are a great way for you to earn money back from everyday purchases. There are two types of cash back credit cards — flat-rate and category. Flat-rate cards offer the same cash back rate for all purchases, while category cards offer higher rates for certain purchases like gas, grocery, travel, and dining. Below we break down the best cash back credit cards.

Best Flat-Rate

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

Citi<sup>®</sup> Double Cash Card – 18 month BT offer

1% When You Buy + 1% When You Pay

Citi® Double Cash Card – 18 month BT offer

The Citi® Double Cash Card – 18 month BT offer offer is the best overall cash back credit card. So long as you pay your statement balance in full and on time every month, you will earn 2% cash back. You earn 1% cash back when you buy and 1% cash back as you pay for those purchases. The bonus cash back can take up to two billing cycles to post.

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

Key Information

Credit Score Required : Excellent, Good

Purchase Interest Rate : 14.99% - 24.99%* (Variable) APR

Annual Fee : $0*

Sign-on Bonus : None

Intro Purchase APR : None

Intro Balance Transfer : 0%* for 18 months on Balance Transfers*

BT Fee : 3% of each balance transfer; $5 minimum.

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

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on Citibank’s secure website

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Fidelity<sup>®</sup> Rewards Visa Signature<sup>®</sup> Card

Unlimited 2% Cash Back on Every Purchase

Fidelity® Rewards Visa Signature® Credit Card

The Fidelity® Rewards Visa Signature® Credit Card offers Fidelity customers a generous 2% cash back on all purchases, with no limits or category restrictions. The cash back you earn must be deposited into a Fidelity account, but you don’t need to have a Fidelity account to apply for the card. If you do not have a Fidelity account, they will open a Fidelity Cash Management Account to deposit your cash back. It works like a checking account with no minimum balance requirement and no monthly fees.

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

Key Information

Credit Score Required : Excellent Credit

Purchase Interest Rate : 15.49% Variable

Annual Fee : $0

Sign-on Bonus : None

Intro Purchase APR : None

Intro Balance Transfer : None

BT Fee : 3% or $5, whichever is greater

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

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Best Category Bonuses

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

Fort Knox Federal Credit Union Visa<sup>®</sup> Platinum Card

Unlimited 5% Cash Back on Gas

Fort Knox Federal Credit Union Visa® Platinum Card

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

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

Key Information

Credit Score Required : Good

Purchase Interest Rate : 10.75% - 18.00% Variable

Annual Fee : $0

Sign-on Bonus : N/A

Intro Purchase APR : N/A

Intro Balance Transfer : N/A

BT Fee : $0

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

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on Fort Knox Federal’s secure website

Check out other gas credit cards.

Blue Cash Preferred® Card from American Express

6% Cash Back at U.S. Supermarkets (Up to $6,000 of Spend, then 1%)

Blue Cash Preferred® Card from American Express

The unparalleled 6% cash back rate at U.S. Supermarkets makes this one of the best cards on the market for heavy grocery shoppers. Even with the $95 annual fee, most grocery shoppers will come out ahead. You will also earn 6% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%). 3% cash back at U.S. gas stations and at select U.S. department stores. 1% cash back on other purchases. You’ll earn a $200 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.

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  • Simple, easy to understand Welcome Offer
  • There is an Annual fee

Key Information

Credit Score Required : Excellent/Good

Purchase Interest Rate : 14.49%-25.49% Variable

Annual Fee : $95

Welcome Offer : $200 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.

Intro Purchase APR : 0% for 12 months

Intro Balance Transfer : 0% for 12 months

BT Fee : Either $5 or 3% of the amount of each transfer, whichever is greater.

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

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on American Express’s secure website

Terms Apply

Rates & Fees

FULL REVIEW 

Check out other grocery credit cards.

Uber Visa Card

4% for Dining Out

Uber Visa Card

This card appears to have millennials’ interests at heart, offering higher rewards rates for eating out and credits toward streaming subscriptions. The Uber Visa Card offers 4% back on dining purchases, from restaurant and bar purchases to takeout and UberEATS. Also offered: 3% back on hotel and airfare including vacation home rentals; 2% back for online purchases covering everything from Uber and online shopping to video and music streaming; and 1% on everything else.

As mentioned, dining purchases are defined as spending at restaurants, bars, on takeout or via the UberEATS service. Points can be redeemed for Uber credits, gift cards or cash back.

Another perk: There is no annual fee with this card. And there’s a terrific sign-up bonus that requires you to spend $500 within 90 days from account opening to earn $100. Also, you can earn up to a $50 credit for online subscription services after you spend $5,000 or more on your card per year.

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  • Good disclosure: they tell you what you need to know
  • Simple introductory bonus
  • Impossible to know your interest rate until you apply

Key Information

Purchase interest rate : 16.24% – 24.99% Variable

Annual fee : $0

Sign-on bonus : Earn $100 after spending $500 on purchases in the first 90 days.

Intro purchase APR : None

Intro balance transfer : None

BT fee : $10 or 3%, whichever is greater

Tip: Use this card for all dining, hotel and airfare purchases to maximize your rewards at the higher rate.

FULL REVIEW 

Check out other dining cards.

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

Best Travel Credit Cards

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

Best Credit Cards for U.S. Travel

Bank of America® Travel Rewards Credit Card

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

Bank of America® Travel Rewards Credit Card

With this card, you Earn 1.5 points per $1 spent on purchases. There are no restrictions and no blackout dates. Every 100 points can be redeemed for $1 worth of travel. The rewards get even better if you have “Preferred Rewards” at Bank of America®. If you’re a Preferred Rewards client, you could increase your points earned with a bonus of 25% – 75%.

There is a $0 annual fee and no foreign transaction fees. You can use your points for a wide range of travel options, including flights, hotels, vacation packages, cruises, rental cars and even pesky baggage fees.

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

Key Information

Credit Score Required : Excellent/Good

Purchase Interest Rate : 16.49% - 24.49% Variable APR

Annual Fee : $0

Sign-on Bonus : 20,000 online bonus points if you make at least $1,000 in purchases in the first 90 days of account opening

Intro Purchase APR : 0% Introductory APR on purchases for 12 billing cycles

Intro Balance Transfer Offer : None

BT Fee : 3% of the amount of each transaction or $10, whichever is greater.

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

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Best Credit Cards for International Travel

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

Platinum Rewards MasterCard® from First Tech FCU

No Annual or Foreign Transaction Fee + Chip and Pin Functionality

First Tech Credit Union Platinum Rewards MasterCard®

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

It’s easy to join the credit union —membership is free if you work for a sponsor technology company, work for the state of Oregon or live in Lane County, Oregon. Otherwise, you just need to join the Financial Fitness Association with a one-time fee of $8. There is a sub-par rewards program: 1 point for every $1 you spend.

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

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : as low as 11.24% Variable

Annual Fee : $0

Sign-on Bonus : $100 bonus cash back after you spend $2000 on purchases in the first 2 months from account opening.

Intro Purchase APR : None

Intro Balance Transfer APR : 0% for 12 months

BT Fee : None

Tip: Use this card for foreign travel, not for rewards since you earn a very low rate.

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on First Technology Federal Credit Union’s secure website

Capital One® QuicksilverOne® Cash Rewards Credit Card

Best Foreign Travel for Fair Credit

Capital One® QuicksilverOne® Cash Rewards Credit Card

This card is designed for people with Average/Fair/Limited credit. If you have defaulted on a loan in the past five years (but not more than once), or if you have had limited credit history (at least one account for less than three years), you would be considered “average.” With this card, you can earn unlimited 1.5% Cash Back on every purchase, every day. There is also no foreign transaction fee, but be aware of the $39 annual fee.

You can use this card to build your credit score by keeping your utilization low (ideally below 20%) and make your payments on time and in full every month. Capital One® provides free access to your FICO score so you can track your score and see when you are eligible for an upgrade to a no-fee card.

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

Key Information

Credit Score Required : Average/Fair/Limited

Purchase Interest Rate : 24.99% (Variable)

Annual Fee : $39

Sign-on Bonus : None

Intro Purchase APR : None

Intro Balance Transfer Offer : None

BT Fee : None

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

 

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How to Use

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

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

Best Luxury Card

The Platinum Card<sup>®</sup> from American Express

Airline perks, entertainment benefits, rewards and more

The Platinum Card® from American Express

The Platinum Card® from American Express is the best overall luxury card on the market, offering numerous benefits for cardholders. To name a few perks, you can receive: up to $200 in annual savings on Uber rides, Preferred Seating for select entertainment events, access to the American Express Global Lounge Collection with over 1,000 airport lounges across 120 countries, a $200 Airline Fee Credit per calendar year in baggage fees and more at one qualifying airline, and numerous other benefits.

There is a rewards program great for frequent travelers — you get five Membership Rewards® points per dollar spent on flights booked directly with airlines or with American Express Travel and five Membership Rewards® points per dollar spent on eligible hotels booked on amextravel.com.

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  • Good disclosure: they tell you what you need to know
  • Simple introductory bonus
  • High annual fee

Key Information

Credit Score Required : Excellent/Good

Annual Fee : $550

Sign-on Bonus : 60,000 Membership Rewards® points after you use your new Card to make $5,000 in purchases in your first 3 months.

Tip: To earn the most Membership Rewards® points, be sure to purchase flights directly with airlines or with American Express Travel and book hotel stays directly on amextravel.com.

 

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Terms Apply

Rates & Fees

Best Low Rate Cards

If you’re someone who carries a balance month-to-month, a low rate credit card can be a great way for you to save money. Whether you want to complete a balance transfer, finance a large purchase, of simply have a low rate card in your wallet, there is a card for you. See below for our top picks.

How to Choose and Use a Low Rate Credit Card

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

How to Choose

Best Balance Transfer Credit Cards

With a balance transfer credit card, you can transfer debt from a high interest rate credit card to a 0% introductory promotional rate. You can find no fee balance transfers for up to 15 months. If you are willing to pay a fee, you can find balance transfers for 18 or 21 months. The fee is usually worthwhile – if you want to do the calculation, you can use the calculator on our interactive tool.

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

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

Chase Slate<sup>®</sup>

No Fee – introductory 0% on transfers for 15 months

Chase Slate®

With the Chase Slate® credit card you can enjoy an introductory balance transfer offer of 0% Intro APR on Balance Transfers for 15 months and pay an Intro $0 on transfers made within 60 days of account opening. After that: Either $5 or 5%, whichever is greater. The intro $0 transfer fee is a great way to save money when completing your transfer. In addition to the balance transfer offer, you pay 0% Intro APR on Balance Transfers for 15 months — great for those who want to pay off a large purchase over time without accruing interest.

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  • Interest is not deferred during the balance transfer period, which means if you do not pay off your balance by the end of the promo period, you will not be charged the interest that would have accrued during the deferral period.
  • Interest rate is not known until you apply.

Key Information

Credit Score Required : Excellent/Good

Purchase Interest Rate : 16.49% - 25.24% Variable APR

Annual Fee : $0

Sign-on Bonus : No bonus

Intro Purchase APR : 0% Intro APR on Purchases for 15 months; then 16.49% - 25.24% Variable APR

Intro Balance Transfer Offer : 0% Intro APR on Balance Transfers for 15 months; then 16.49% - 25.24% Variable APR

 

BT Fee : Intro $0 on transfers made within 60 days of account opening. After that: Either $5 or 5%, whichever is greater.

Tip: Compete your transfer within 60 days from account opening to take advantage of the intro $0 transfer fee.

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Citi Simplicity<sup>®</sup> Card - No Late Fees Ever

0% intro APR on transfers and purchases for 18 months; 3% balance transfer fee

Citi Simplicity® Card - No Late Fees Ever

Citibank has a strong intro of 0%* for 18 months on Balance Transfers*. In addition, the Citi Simplicity® Card - No Late Fees Ever has some added perks. There are no late fees, no penalty rate and no annual fee. Although you should always try to pay on time, it is nice that this card will not punish you for the occasional mistake. In addition to the balance transfer offer, you pay no interest on purchases for 18 months.

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  • No late fee, no penalty APR and a $0* annual fee
  • Interest is not deferred during the balance transfer period, which means if you do not pay off your balance by the end of the promo period, you will not be charged the interest that would have accrued during the deferral period.
  • There is a range of interest rates. You won’t know yours until you apply.

Key Information

Credit Score Required : Excellent/Good

Purchase Interest Rate : 15.49% - 25.49%* (Variable)

Annual Fee : $0*

Sign-on Bonus : None

Intro Purchase APR : 0%* for 18 months on Purchases*

Intro Balance Transfer Offer : 0%* for 18 months on Balance Transfers*

BT Fee : 5% of each balance transfer; $5 minimum

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

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on Citibank’s secure website

FULL REVIEW 

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

Best 0% Purchase Credit Cards

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

Citi<sup>®</sup> Diamond Preferred<sup>®</sup> Card– 21 Month Balance Transfer Offer

0% intro on Purchases for 21 Months

Citi® Diamond Preferred® Card– 21 Month Balance Transfer Offer

If you are looking to finance a purchase, Citibank offers the longest 0% intro purchase promotion of any credit card in the MagnifyMoney database. The intro APR on purchases will be 0%* for 12 months on Purchases* after opening the credit card. This is a fantastic length of time for you to pay off your balance. Additionally, the Citi® Diamond Preferred® Card– 21 Month Balance Transfer Offer has an intro 0%* for 21 months on Balance Transfers*. There is also a $0* annual fee and the ability to choose your payment due date from any available due date in the beginning, middle or end of the month. After the intro period ends, the APR is 14.49% - 24.49%* (Variable).

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  • Interest is not deferred during the balance transfer period, which means if you do not pay off your balance by the end of the promo period, you will not be charged the interest that would have accrued during the deferral period.
  • Interest rate is not known until you apply.

Key Information

Credit Score Required :Excellent/Good

Purchase Interest Rate : 14.49% - 24.49%* (Variable)

Annual Fee : $0*

Sign-on Bonus : None

Intro Purchase APR : 0%* for 12 months on Purchases*

Intro Balance Transfer Offer : 0%* for 21 months on Balance Transfers*

BT Fee : 5% of each balance transfer; $5 minimum.

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

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TruWest Visa<sup>®</sup> Signature Card

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

TruWest Visa® Signature

TruWest is a credit union with restricted membership. Unfortunately, you need to live in certain regions of Texas or Arizona, or work for a few select employers to join. You can learn about membership eligibility here. If you are able to join, you will find a long 18-month 0% intro APR period. Even better, the credit card has reasonable credit union interest rates after the promotional period ends. There is no annual fee on the card.

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  • Interest is not deferred during the balance transfer period, which means if you do not pay off your balance by the end of the promo period, you will not be charged the interest that would have accrued during the deferral period.
  • There is a range of interest rates. You won’t know yours until you apply.

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 9.40% – 10.40%

Annual Fee : $0

Sign-on Bonus : Earn $100 when you spend $100 in the first 90 days of account opening.

Intro Purchase APR : 0% for 18 months

Intro Balance Transfer Offer : 0% for 18 months

BT Fee : 3%

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

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on TruWest Credit Union’s secure website

Best Low Interest Credit Cards

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

Langley Select Visa Platinum Card from Langley FCU

As Low as 8.00% APR from a Credit Union Anyone Can Join

Langley Select Visa® Platinum

Anyone can join Langley Federal Credit Union by joining an association during the signup process for $5. If you have excellent credit and just want a place for emergency spending with no rewards, consider keeping this card on hand. Although the rates start as low as 8.00% Variable, not everyone will get a rate that low. It’s more of a hassle than a regular bank card, but if you insist on the very lowest rate you may get it with this card.

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  • Interest is not deferred during the balance transfer period, which means if you do not pay off your balance by the end of the promo period, you will not be charged the interest that would have accrued during the deferral period.
  • There is a range of interest rates. You won’t know yours until you apply.
  • You have to join the credit union.

Key Information

Credit Score Required : Excellent

Purchase Interest Rate : as low as 8.50% Variable

Annual Fee : $0

Sign-on Bonus : None

Intro Purchase APR : None

Intro Balance Transfer Offer : None

BT Fee : None

Tip: You need to have an excellent credit score in order to qualify for the lowest interest rate.

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on Langley Federal Credit Union’s secure website

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

How to Use

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

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

Best Cards to Help Build or Rebuild Your Credit Score

If you’re someone who is new to credit or has poor credit history, there are credit cards designed for you. These cards are a great way to begin your credit journey, or to improve your credit score. See below for our top picks.

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

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

How to Choose

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

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

Best Secured Credit Cards if You Have Bad or No Credit

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

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

Discover it<sup>®</sup> Secured Card - No Annual Fee

No Annual Fee Secured Card with Free FICO Score; $200 Deposit Required

Discover it® Secured Card - No Annual Fee

This is our favorite secured credit card. There is a $0 annual fee and you will get free access to your credit score. In order to open the card, you will need to deposit at least $200, depending upon your creditworthiness. If you have previously filed bankruptcy, you still have the chance to be approved. With this secured credit card, you will earn 2% cash back at restaurants or gas stations (on up to $1,000 in combined purchases each quarter) and 1% cash back on all other purchases.

Our favorite part of this card is the automatic monthly reviews starting at 8 months to see if you can be transitioned to an unsecured card. If you qualify, you will be graduated (and get your deposit back).

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  • No annual fee
  • Free FICO credit score

Key Information

Credit Score Required : Please refer to issuer's website

Purchase Interest Rate : 24.49% Variable APR

Annual Fee : $0

Sign-on Bonus : Get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically (new cardmembers only).

Intro Purchase APR : None

Intro Balance Transfer Offer : 10.99% for 6 months

BT Fee : 3%

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

APPLY NOW Secured

on Discover Bank’s secure website

Rates & Fees

FULL REVIEW 

Rate Advantage Secured Visa by Coastal FCU

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

Rate Advantage Secured Visa

This card has no annual fee, and you only need to deposit $100 in a Collateral Savings Account to get started. If you’re not a member of Coastal Credit Union, you can join an organization for $18, which is deducted from your initial deposit, and become a member. So you’ll need $118 to get started. While the initial deposit is lower than the Discover it® Secured Card - No Annual Fee, you lose out on the rewards. This card takes more work to open, since it involves joining a credit union, but anyone can apply.

Transparency Score 27
Transparency Score
  • A single interest rate that you know up front, before you apply
  • You have to join a credit union

Key Information

Credit Score Required : Anyone can apply

Purchase Interest Rate : as low as 16.50% Variable

Annual Fee : $0

Sign-on Bonus : None

Intro Purchase APR : None

Intro Balance Transfer Offer : None

BT Fee : 3% or $5, whichever is greater

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

APPLY NOW Secured

on Coastal Federal Credit Union’s secure website

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

Best Credit Cards if You Have Fair Credit

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

Here are some good cards for people with fair credit:

Capital One® QuicksilverOne® Cash Rewards Credit Card

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

Capital One® QuicksilverOne® Cash Rewards Credit Card

Capital One® has created a credit card specifically for people with Average/Fair/Limited credit. If you have defaulted on a loan (but not more than one) in the last five years, or you have limited credit history (at least one account for less than three years), you would meet the definition of average credit. With this card, you will earn unlimited 1.5% Cash Back on every purchase, every day
with no limit on how much you can earn, and no changing categories.

Transparency Score 30
Transparency Score
  • Interest is not deferred during the balance transfer period, which means if you do not pay off your balance by the end of the promo period, you will not be charged the interest that would have accrued during the deferral period.
  • There is an annual fee

Key Information

Credit Score Required : Average/Fair/Limited

Purchase Interest Rate : 24.99% (Variable)

Annual Fee : $39

Sign-on Bonus : None

Intro Purchase APR : None

Intro Balance Transfer Offer : None

BT Fee : None

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

APPLY NOW Secured

on Capital One’s secure website

FULL REVIEW 

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

How to Use It

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

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

A Special Note: Beware Predatory Companies

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

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

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

Other Benefits of Using a Credit Card

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

Available on Most Credit Cards

  • $0 Liability on Fraudulent Activity: Credit cards are the best way to protect yourself from fraud. So long as you report the fraud to your credit card company, you will not be liable for any losses on any major credit card.
  • Car Rental Collision Insurance: If you waive collision coverage when renting a car, your credit card may provide secondary coverage of $50K or more.

Available on Some Credit Cards

  • Retail Purchase Protection: Protects you from loss, theft, fire or accidental damage for a limited period of time after your purchase has been made. Not all cards protect you from loss, so look it up in the Purchase Protection Coverage Description Document.
  • Price Protection: If you buy something in stores and you see an advertised price, you will receive the difference between the two prices.
  • Extended Warranties: Duplicates both manufacturers and store warranties for a limited length of time and for limited dollar values (varies by card).
  • Travel Accident Coverage: If you are injured during travel, and you purchased the tickets via credit card, your company fully insures you.
  • Lost Luggage Coverage: You can receive compensation for lost, stolen or damaged luggage if you purchased flight or travel tickets using your credit card.
  • Trip Interruption Cancellation Coverage: If travel delays keep you from completing a trip, and you purchased the tickets on your credit card, the full value of the tickets will be refunded
  • Concierge Services: Certain cards offer free access to local concierge services that can help you make dinner reservations, purchase event tickets, and locate items while you are abroad.

Should You Get a Credit Card?

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

There are two big risks associated with swiping plastic:

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

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

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

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

Which type of card is best for you?

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

Just remember this critical rule when selecting a credit card:

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

FAQ

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

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

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

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

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

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

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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Advertiser Disclosure

Best of, Earning Interest

The Top 6 Month CD Rates for May 2018

Editorial Note: 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 prior to publication.

The top 6 month CD rates
Source: iStock

Short-term certificate of deposit (CD) accounts offer investors a safe opportunity to squirrel away money for a future expense. If you’re looking for a brief solution for storing your cash and want to earn more interest than a typical savings account will offer, a 6 month CD can make a lot of sense. (It’s also a good place to start if you’re building a CD ladder.)

Using information from DepositAccounts.com, another LendingTree company and a database of offerings at more than 17,100 banks and credit unions, we found the five banks and five credit unions with the top 6 month CD rates. If there was a tie, we chose the institution with the smaller minimum-deposit requirement. We pulled these rates on May 15, 2018, and we excluded promotional offerings. The national average APY on 6 month CDs (among banks and credit unions) is 0.51%, according to the DepositAccounts.com database. These options outperform that average by a long shot. (You may also want to view our picks for the overall best CD rates.)

Banks with the best 6 month CD rates

6-Month CD from Limelight Bank

Limelight Bank

6 month CD APY: 2.05%
Bank information: Although Limelight Bank is located in Utah, they are an online bank that serves customers nationwide. They are environmentally conscious and originate loans for solar projects from customers’ various deposit accounts.
Where to open CD account: Online
Minimum balance to open: $1,000
Maintenance fees: $0
Early withdrawal penalties: Determined by bank.

LEARN MORE Secured

on Limelight Bank’s secure website

6 Month Popular Direct CD from Popular Direct

Popular Direct

6 month CD APY: 2.05%
Bank information: Popular Direct is an online bank that services customers in the U.S., Puerto Rico, and throughout the Caribbean. They currently have some of the most competitive rates in the market – not only in their CD products, but with their savings account as well.
Where to open CD account: Online
Minimum balance to open: $10,000
Maintenance fees: $0
Early withdrawal penalties: 120 days of simple interest

LEARN MORE Secured

on Popular Direct’s secure website

Member FDIC

6 Month CD from AloStar Bank of Commerce

AloStar Bank of Commerce

6 month CD APY: 1.90%
Bank information: AloStart is an online division of State Bank & Trust Company. They currently operate out of Birmingham, Alabama, but service customers nationwide.
Where to open CD account: Online
Minimum balance to open: $1,000
Maintenance fees: $0
Early withdrawal penalties: Determined by bank.

LEARN MORE Secured

on AloStar Bank Of Commerce’s secure website

State Bank of India

State Bank of India

6 month CD APY: 1.86%
Bank information: State Bank of India originated in India, but opened a branch in New York in 1970. Today, they have over 22,000 branches across 36 countries and an online platform that allows them to reach customers worldwide.
Where to open CD account: Online
Minimum balance to open: $5,000
Maintenance fees: $0
Early withdrawal penalties: 30 days’ interest

LEARN MORE Secured

on State Bank Of India’s secure website

Banesco USA

Banesco USA

6 month CD APY: 1.85%
Bank information: Banesco is an international bank serving seven different countries, including the U.S. Banesco USA, located in South Florida, serves customers nationwide through its online banking platform.
Where to open CD account: Online
Minimum balance to open: $1,500
Maintenance fees: $0
Early withdrawal penalties: 30 days’ interest

LEARN MORE Secured

on Banesco USA’s secure website

Credit unions with the best 6 month CD rates

Service Credit Union

Service Credit Union

6 month CD APY: 2.00%
Credit union information: Founded in Portsmouth, N.H., in 1957, Service Credit Union originally served employees of Pease Air Force Base. Today, it has grown to serve over 200,000 people throughout New Hampshire, North Dakota, Massachusetts, and even Germany.
Membership details: To become a member, you must live or work, or have family members that live or work in New Hampshire or Falmouth, Bourne, Mashpee, and Sandwich, Mass. Current members of the military, veterans, retirees, and reservists of the U.S. Armed Forces along with their families are also eligible for membership.
Where to open CD account: You can open an account online or at one of their many branches.
Minimum balance to open: $250
Maintenance fees: $0
Early withdrawal penalties: Determined by credit union.

LEARN MORE Secured

on Service Credit Union’s secure website

PenFed Credit Union

PenFed Credit Union

6 month CD APY: 1.75%
Credit union information: PenFed, established in 1935, today serves more than 1.6 million members at branch locations in all 50 states and select overseas facilities.
Membership details: Open to current or retired members of the U.S. military, federal employees, affinity partners, members of qualifying organizations, or by donating to Voices for America’s Troops or the National Military Family Association.
Where to open CD account: You can open an account online or at one of their branches.
Minimum balance to open: $1,000
Maintenance fees: $0
Early withdrawal penalties: 90 days’ interest

LEARN MORE Secured

on PenFed Credit Union’s secure website

NCUA Insured

Latino Credit Union

Latino Credit Union

6 month CD APY: 1.55%
Credit union information: Founded in Durham, N.C., in 2000, Latino Credit Union opened its doors as a solution to the Durham Latino community who were being robbed and mugged. While their original intent was to serve the Latino community, they have since expanded their membership to include anyone and everyone.
Membership details: Anyone who is willing to provide a one-time $10 donation to the Latino Community Development Center is welcome to become a member of the credit union.
Where to open CD account: Online
Minimum balance to open: $500
Maintenance fees: $0
Early withdrawal penalties: 90 days’ interest

LEARN MORE Secured

on Latino Credit Union’s secure website

6 Month CD from Air Force Federal Credit Union

Air Force Federal Credit Union

6 month CD APY: 1.30%
Credit union information: Air Force Federal Credit Union is headquartered in San Antonio, TX. It was established in 1952 by Airmen volunteers and currently serves individuals in the military as well as civilians.
Where to open CD account: Online
Minimum balance to open: $1,000
Maintenance fees: $0
Early withdrawal penalties: Equal to half of the interest accrued starting from the withdrawal date through the maturity date.

LEARN MORE Secured

on Air Force Federal Credit Union’s secure website

Bethpage Federal Credit Union

Bethpage Federal Credit Union

6 month CD APY: 1.25%
Credit union information: Bethpage Federal Credit Union, located in Bethpage, NY, was founded for employees of Grumman Plant in 1941. Since then, they’ve undergone a lot of changes to expand their membership to include anyone in the U.S.
Membership details: A one-time $5 deposit into a Bethpage savings account enables you to become a member of the credit union.
Where to open CD account: Online
Minimum balance to open: $50
Maintenance fees: $0
Early withdrawal penalties: Determined by credit union.

LEARN MORE Secured

on Bethpage Federal Credit Union’s secure website

Pros and cons of using 6 month CDs

Pros:

  • The CD rates offered by banks and credit unions are generally higher than those on savings accounts.
  • The rates are fixed and guaranteed for the length of their term.
  • The discipline of keeping the funds in the CD means the money will be available upon maturity. (Note: Most banks offer a seven-day grace period to reinvest or withdraw the investment, after which the funds will roll over into a new CD. However, you are not guaranteed the same rate.)

Cons:

  • Six-month CD rates are lower than those offered on longer CD investment terms.
  • To tap into the CD funds — even for emergencies — consumers must accept a loss through penalties, which can include a percentage of the funds, a percentage of the earned interest, or a combination of both. A typical penalty on a short-term CD is between 30 and 90 days’ worth of interest earnings.
  • If you’re not confident you can do without access to the funds for six months, you may be better off putting your money in a traditional savings account, which is likely to earn less interest than a CD.
  • Since CD rollovers may reset at a different percentage rate, consumers must speak with the bank before the grace period ends to ensure they are getting the best deal.

Using a 6 month CD for laddering

A CD ladder comprises small-amount CDs with varying terms and respective interest rates that contribute to a long-term investment strategy. After the 6 month CD matures, investors can withdraw the funds for a predetermined expense. Or, they can reinvest the money into a longer-term CD with a better rate. By staggering the maturity dates on short-term CDs, consumers have access to their cash on a regular, predictable basis.

Where can you open a CD account?

Consumers can open 6 month CD accounts (or longer) from banks and credit unions. Bank and credit union CD rates are based on Federal Reserve rates, and there may be strategic times to pursue these short-term instruments following a rate increase.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Gabby Hyman
Gabby Hyman |

Gabby Hyman is a writer at MagnifyMoney. You can email Gabby here

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Advertiser Disclosure

Best of, Earning Interest

The Best Credit Union CD Rates – May 2018

Editorial Note: 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 prior to publication.

The top credit union CD rates
Source: iStock

Certificates of deposit (CDs) are a great way to safely store your savings at a financial institution, as they offer a guaranteed rate of return, and CD rates tend to be higher than those on traditional savings accounts. Maybe you’ve even heard that credit union CD rates offer higher returns—but is that really the case?

On average, yes. As of December 2017, the average one-year credit union CD had a 0.68% annual percentage yield (APY), compared to the 0.54% APY average among one-year bank CDs.

Using data from DepositAccounts.com, another LendingTree company, we identified the top one-year credit union CD rates, as of May 10, 2018. We then eliminated any credit union with a health rating lower than a B and identified the top three offerings in three categories: restricted, no cost, and best banking app. If there was a tie by APY, we went with the product with the lower minimum deposit. Here are the best one-year credit union CD rates.

Best CD rates for credit unions with no cost to join

The thing about credit unions is that they’re not usually just open to anyone. You usually need to meet some membership criteria in order to get in and get access to all of their really nice products. These credit unions, however, will let you in for free regardless of your personal details. (Note: Only two credit unions met our criteria for this list.)

Unify Financial Credit Union – 1-Year Share Certificate, 1.00% APY, min. deposit $1,000

UNIFY Financial Credit Union
Unify FCU offers the highest interest rates on CDs (which it calls share certificates) of any credit union with no cost to join. The interest rate on their 12-month CD, for example, is 1.00%, compared to the national average of 0.83% in December. You would earn $8.50 on a $1,000 deposit. If you withdraw your money early, however, you’ll face a penalty of 90 days’ worth of interest.

LEARN MORE Secured

on UNIFY Financial Credit Union’s secure website

NASA Federal Credit Union – 1-Year Share Certificate, 0.75% APY, min. deposit $1,000

NASA Federal Credit Union
If the rigid inflexibility of CDs makes you leery, NASA FCU might be your best bet. They have a lot of flexible certificates, such as add-on certificates that let you start with as little as $250, and bump-rate certificates that let you opt for a one-time interest rate increase if rates go up. You can even take out a loan from your certificate should you need the cash before it’s matured. You can join NASA FCU with a complimentary membership to the National Space Society.

If you do need to make an early withdrawal, you will face a penalty of 180 days’ worth of interest.

LEARN MORE Secured

on NASA Federal Credit Union’s secure website

Best credit union CD rates with restricted memberships or membership fees

Each of these credit unions have restricted membership criteria, but don’t let that scare you away. If you don’t meet their membership criteria, it’s possible to make a small donation to their charity of choice in order to become eligible for membership. Furthermore, these credit union CD rates offer some of the highest-returning share certificates out of any category.

Air Force Federal Credit Union – 1-Year Certificate 2.30% APY, min. deposit $1,000

Air Force Federal Credit Union
Members and family members of the military, civilian contractors, and certain employees are eligible to join the Air Force FCU, along with anyone willing to join the Airman Heritage Foundation ($25 annual membership fee).

This credit union comes in first place overall for highest interest rates for 12-month CDs. You can earn an APY of 2.30% by depositing a minimum of $1,000 in a 12-month CD. You can also use your CD as collateral to earn a lower interest rate on a loan, and membership comes with a host of discounts for parks and businesses in the San Antonio, Texas area. Watch out for the early withdrawal penalties, however, worth half of whatever you would have earned between when you withdrew the funds and when it would have matured.

PenFed Credit Union – 1-Year Money Market Certificate, 2.12% APY, min. deposit $1,000

PenFed Credit Union
PenFed tops this list with an APY of 2.12%. With a minimum deposit of $1,000, you could earn $20.70 in one year. Interest is compounded daily and posts to accounts monthly. However, be aware of the steep early withdrawal penalty. If you withdraw funds before the year is up, you may forfeit all interest accrued up to that point.

Eligibility for this credit union is mainly based on military status, governmental employment status, affiliation with certain associations and organizations or relation to eligible members. However, if you don’t qualify through those criteria, getting a membership to this credit union is not difficult if you’re willing to pay a one-time fee of $17 to either Voices for America’s Troops or the National Military Family Association.

LEARN MORE Secured

on PenFed Credit Union’s secure website

NCUA Insured

USAlliance Financial – 12 Month CD, 2.07% APY, min. deposit $500

USALLIANCE Financial
Membership to USAlliance Financial is open to anyone who lives, works or worships in certain counties of Massachusetts, the city of West Haven, Conn., and a few districts in New York. However, if you don’t qualify by location, you can qualify by giving USAlliance authorization to make you a member of various organizations, including the American Consumer Council, if you aren’t already a member of these organizations. Keep in mind that these organizations may request fees.

Once you’re a member of USAlliance Financial, you can open a 12-month CD with a minimum of $500. Their early withdrawal penalty equals 180 days’ worth of interest earned on the amount you withdraw.

LEARN MORE Secured

on USALLIANCE Financial’s secure website

Latino Credit Union – 12 Month CD, 2.05% APY, min. deposit $500

Latino Credit Union
To become a member of Latino Credit Union, anyone can simply donate $10 to the Latino Community Development Center. Once you become a member of this credit union, you’ll be able to take advantage of their 2.05% APY by depositing $500. Early withdrawal penalties are worth 90 days of interest on their 12 month CD.

LEARN MORE Secured

on Latino Credit Union’s secure website

Lake Michigan Credit Union – 12 Month Special VIP CD, 2.02% APY, min. deposit $500

Lake Michigan Credit Union
With a $5 donation to the ALS Foundation, anyone can join Lake Michigan Credit Union. If you live in Michigan or Florida, you’ll also qualify for membership. Once you become a member of the credit union, you’ll be able to open their 12 month CD with a $500 deposit.

With a minimum of $500, you’ll earn $10.10 by the end of the term. However, if you withdraw funds early, you’ll be penalized with a significant amount of interest.

LEARN MORE Secured

on Lake Michigan Credit Union’s secure website

Best CD rates for credit unions with the best mobile apps

By their very nature, CDs aren’t something that require constant attention, poking, and prodding. It’s a set-it-and-forget-it kind of a deal, so you won’t need any spiffy banking apps to use CDs.

But, if you’d like to switch all of your banking to the same institution that holds your CDs, it might be a wise idea to consider one of these credit unions if you’re a digital junkie. Most credit unions lag behind their bank compatriots in terms of mobile banking apps, but these credit unions offer top-notch mobile apps, according to MagnifyMoney’s 2017 mobile banking app analysis.

Eastman Credit Union – 1-Year Investment Certificate, 2.00% APY, min. deposit $1,000

Eastman Credit Union
Eastman Credit Union also has pretty restrictive membership requirements. You’ll have to be an employee (or a family member of an employee) of one of their select employers, or live in certain parts of Tennessee, Texas, or Virginia.

Eastman CU is another one of the rare credit unions that allow you to withdraw your dividends penalty-free before the maturity date, although again, doing so will lower your total returns. Currently, you can earn an interest rate of 2.00% on a 12-month CD with a minimum deposit of $1,000. If you withdraw your money before the CD matures, you’ll owe a penalty fee of anywhere between seven days’ worth of dividend earnings or all of your dividend earnings.

LEARN MORE Secured

on Eastman Credit Union’s secure website

Redstone Federal Credit Union – 12 Month MemberPlus Regular Share Certificate, 1.75% APY, min. deposit $5

Redstone Federal Credit Union
You can’t just make a simple donation to join to Redstone Federal Credit Union if you fail to meet their membership criteria. You need to be a government employee or contractor, a member of the military, reserve, or National Guard, or affiliated with a number of organizations listed on their website among other options.

However, if you do qualify for membership, you could earn an APY of 1.75% with a minimum deposit of $5. Redstone FCU has compounding and non-compounding certificates, which allow you to have the option to withdraw interest earned or not throughout the term of the certificate.

LEARN MORE Secured

on Redstone Federal Credit Union’s secure website

Wright-Patt Credit Union – 1-Year Certificate, 1.64% APY, min. deposit $500

Wright-Patt Credit Union
Unlike many credit unions, you can’t just make a simple donation to join Wright-Patt CU if you fail to meet their membership criteria. You need to live in certain areas of Ohio, be associated with Wright-Patterson Air Force Base, or be an employee of their select employer group, among other options.

You can earn $8.20 on a 12-month CD with just a relatively small $500 deposit. However, if you’re able to deposit $100,000 or more, you’ll earn an APY of 1.74%, which will return $1,740 in interest. Early withdrawal penalties vary depending on the original term of your CD, however they’ll be anywhere between 5-12 months’ worth of dividends.

LEARN MORE Secured

on Wright-Patt Credit Union’s secure website

Delta Community Credit Union – 1-Year Certificate, 1.10% APY, min. deposit $1,000

Delta Community Credit Union
There are many ways to join Delta Community CU, such as living in certain parts of Georgia, being a member of one of their select employers, or being a member of one of their partner organizations. Interestingly, citizens of many countries like Argentina, France, and Peru are also eligible to join.

Delta Community CU used to be the lowest-earning credit union on our list, but recently increased the APY on this product from 1.00% to 1.10%. The early withdrawal penalty is 90 days’ worth of interest on a 12-month CD.

LEARN MORE Secured

on Delta Community Credit Union’s secure website

 

3 questions to consider before opening a credit union CD

Banks are more likely to call their products certificates of deposit, while credit unions often refer to them as share certificates. Aside from the name, the biggest difference between the two is that credit unions have higher average annual percentage yields (APYs), as of December 2017. That’s good news: It means more money back in your pocket when the CD matures (i.e., reaches the end of its term and is available for withdrawal).

There really is no difference in safety between depositing money in a CD with a credit union versus a bank, as long as they participate in either the National Credit Union Administration (NCUA) for credit unions, or the Federal Deposit Insurance Corporation (FDIC) for banks.

According to Neal Frankle, a Los Angeles-based Certified Financial Planner with Wealth Pilgrim, deposits of up to $250,000 per financial institution are “backed by the full faith and credit of United States Government, so it’s pretty solid.”

For the most part, choosing a CD at a bank or a credit union boils down to your preference as a consumer: Do you want to be a bank customer or a member of a credit union? Here’s a primer on the differences.

The biggest advantage of credit union CDs over bank CDs is that you can likely earn more interest. But with both products, the longer the CD term, the more interest you will earn. And with a CD laddering strategy, you can have the best of both worlds: frequent access to your money, yet you can still keep it locked away in high-interest, long-term CDs.

Beyond that, the disadvantages of opening a credit union CD are the same as if you’re opening a CD with a bank. You can’t access that money without paying an early withdrawal penalty until the CD matures. While CDs do offer some of the highest rates for any financial product you’re likely to come across at a bank or credit union, they still don’t really earn great interest. If you’re investing for the long-term (like retirement savings), your money is better invested in the riskier (but higher-earning) stock or bond market.

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Best of, Earning Interest

The Best IRA CD Rates – May 2018

Editorial Note: 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 prior to publication.

Top IRA CD rates
Source: iStock

Perhaps you’ve decided to build a CD ladder within your IRA, or maybe you’re looking for a safe way to store your retirement cash for a specific period of time. Whatever the reason, you’re interested in getting an IRA CD and, understandably, want to know what products will give you the best rate of return.

You can get an IRA CD with terms ranging from three months to more than six years, with interest rates generally increasing with the term length. There are lots of options, so we’ve rounded up the top IRA CD rates that are available right now for a variety of terms. You’ll select your IRA CD terms based on your CD-ladder master plan or whenever you’ll need access to your money.

Every month, we choose the best IRA CD rates using data from another LendingTree company DepositAccounts.com, a database of offerings at more than 17,100 banks and credit unions. On May 8, 2018, we sorted the products by APY, then eliminated institutions with a health rating below a B. We then eliminated products that are not available nationwide. From there, we chose the IRA CD with the highest APY among products with a minimum deposit no greater than $5,000. Here are the best options. (Average CD rates referenced below are based on DepositAccounts.com data as of May 8, 2018.)

The best IRA rates in May 2018

Term

Institution

APY

Minimum Deposit Amount

3 months

EverBank

1.25%

$5,000

6 months

Ally Bank

1.60%

$5,000

12 months

Air Force Federal Credit Union

2.30%

$1,000

18 months

Capitol Federal Savings Bank

2.41%

$500

2 years

Greenwood Credit Union

2.80%

$1,000

3 years

Air Force Federal Credit Union

2.60%

$1,000

4 years

ConnectOne Bank

2.94%

$500

5 years

American Bank

3.00%

$250

Rates as of May 8, 2018

3 Month IRA CD – EverBank, 3 Month Yield Pledge IRA (Traditional, Roth)

3 Month Yield Pledge CD from EverBankThree-month regular CDs are earning an average interest rate of 0.31% APY currently. EverBank is nearly quadrupling that, with an interest rate of 1.25% APY with their 3-Month Yield Pledge IRA CD. With that APY and a $5,000 minimum deposit, you would earn $15.55 when the certificate matures.

LEARN MORE Secured

on EverBank’s secure website

6-Month IRA CD – Ally Bank, IRA High Yield 6-Month CD

Ally Bank

Six-month IRA CDs typically earn a little bit better, but they’re still not great. Ally Bank offers the highest interest rate at 1.60% APY for deposits between $5,000 and $25,000. That translates into earnings of $43.56 on a $5,000 deposit. If you deposit less than $5,000, you can still earn a decent APY of 1.50%. If you deposit $25,000 or more, you’ll earn a 1.75% APY. Compare that to the average of all regular 6 month CDs, at 0.52%.

LEARN MORE Secured

on Ally Bank’s secure website

Member FDIC

1-Year IRA CD Rates – Air Force Federal Credit Union, 1 Year IRA (Traditional, Roth, CESA)

1 Year CD from Air Force Federal Credit Union

Regular one-year CDs earn an average interest rate of 0.83% APY. Air Force Federal Credit Union, however, is offering a one-year IRA CD at 2.30% APY. You’ll need a $1,000 minimum deposit to earn $23.00 in interest once the CD matures.

LEARN MORE Secured

on Air Force Federal Credit Union’s secure website

18-Month IRA CD Rates – Capitol Federal Savings Bank, 18 Month Variable IRA (Traditional, Roth, CESA)

Capitol Federal Savings Bank

18-month regular CDs earn an average interest rate of 1.02% APY. Capitol Federal Savings Bank on the other hand, is currently offering 2.41% APY on an 18-month IRA CD. This would translate into earnings of $18.18 with a minimum $500 deposit.

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on Capitol Federal Savings Bank’s secure website

2-Year IRA CD Rates – Greenwood Credit Union, 24 Month IRA (Traditional, Roth, CESA, SEP)

24 Month CD from Greenwood Credit Union
Two-year regular CDs earn an average interest rate of 1.12% APY. Greenwood Credit Union, on the other hand, is currently offering 2.80% APY on a 2-year IRA CD. This would translate into earnings of $56.78 with a minimum $1,000 deposit.

LEARN MORE Secured

on Greenwood Credit Union’s secure website

3-Year IRA CD Rates – Air Force Federal Credit Union, 3 Year IRA (Traditional, Roth, CESA)

1 Year CD from Air Force Federal Credit Union
Three-year regular CDs are earning an average interest rate of 1.33% APY currently. Air Force Federal Credit Union is nearly doubling that, with an interest rate of 2.60% APY with their 36-month IRA CD. With those interest rates and a $1,000 minimum deposit, you would earn $80.05 when the certificate matures.

LEARN MORE Secured

on Air Force Federal Credit Union’s secure website

4-Year IRA CD Rates – ConnectOne Bank, 48 Month Personal IRA

ConnectOne Bank
Four-year regular CDs are currently earning an average interest rate of 1.50% APY. ConnectOne Bank claims the top interest rate for these IRA CDs, with an interest rate of 2.94% APY. You would earn $61.44 on this CD with a $500 minimum deposit.

LEARN MORE Secured

on ConnectOne Bank’s secure website

5-Year IRA CD Rates – American Bank – 60 Month Promo IRA (Traditional, Roth)

60 Month CD from American Bank

Five-year IRA CDs hold the top spot for interest rates out of any category on our list. National averages for a regular 5-year CD is 1.78% APY, however American Bank outperforms the average with a 3.00% APY on its 5-year IRA CD for members. The minimum deposit is $250 to earn this APY.

LEARN MORE Secured

on American Bank’s secure website

6+ Year IRA CD Rates – Air Force Federal Credit Union, 7 Year IRA (Traditional, Roth, CESA)

1 Year CD from Air Force Federal Credit Union

We’re starting to see these very-long-term IRA CDs offer higher interest rates than the shorter-term five-year IRA CDs. Air Force Federal Credit Union offers the highest term for their seven-year IRA CD, at 3.20% APY. That’s a little more than American Bank which offers a 3.00% APY for a five-year IRA CD. Still, with Air Force Federal Credit Union’s seven-year IRA CD, you would earn $616.72 on a minimum deposit of $2,500 when the IRA CD matures.

LEARN MORE Secured

on Air Force Federal Credit Union’s secure website

3 questions to consider before opening an IRA CD

Opening an IRA CD generally requires filling out a form or talking to a banker. You’ll have to have a way to fund your IRA CD, whether that’s rolling over an existing retirement account into an IRA CD or depositing cash into the product. The same limits that apply to IRA contributions apply to IRA CDs: $5,500 per year ($6,500 if you’re over age 50) of your own money across all your IRA accounts each year, and you can do a rollover once per year.

Unless you’ve invested in a bump-up IRA CD, you won’t be able to take advantage of a higher rate until your CD matures. Withdrawing funds from an IRA CD before they mature will result in a stiff penalty. Bump-up IRA CDs give you a chance to increase your interest rate to a higher level if it’s available, but you’re generally only allowed to do this once or twice during the life of the CD.

You can either use the the direct-transfer method or the indirect-transfer method. The direct transfer method requires setting up your new IRA account filling out a form authorizing the bank or credit union to transfer money from the old account into the new account. The indirect transfer method involves you asking for a check from your old IRA account. You have up to 60 days to deposit that check into your IRA CD to avoid incurring a penalty.

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Best of, College Students and Recent Grads, Life Events

How to Find the Right 529 Savings Plan for You

Editorial Note: 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 prior to publication.

It is never too early to think about saving for college, and a 529 savings plan can help you do just that.

No other savings or investment account offers the tax breaks that a 529 college savings plan offers, which means that every dollar you contribute can cover a greater share of college costs. That’s especially helpful considering the average net price of a private nonprofit university came in at $26,740 for the 2017-18 school year, and the cost of college is on the rise.

But with almost every state offering a 529 savings plan, and with many offering more than one, it can be challenging to figure out which plan is right for you.

If you’re already well-versed in this savings tool, you can see our roundup of the best options here:

The truth is that contributing to a 529 savings plan isn’t always the right move. You may be better off using a different college savings account or even focusing on other financial responsibilities first.

This guide will help you sort through all of that. You’ll learn what a 529 college savings plan is, how it works, how to choose the right plan for you and alternatives you should consider.

What is a 529 college savings plan and how does it work?

A 529 college savings plan is an investment account that offers a number of tax breaks when the money is used for qualified education expenses:

  • Contributions are made after taxes, though there are a number of states that allow either a deduction or a credit for state income tax purposes.
  • Your money grows tax-free while it is in the account.
  • Money can be withdrawn tax-free for qualified education expenses, which typically includes tuition at any eligible school from elementary onward, as well as fees, books and room and board at an eligible higher education institution. If you withdraw the money for any other type of expense, the earnings will be taxed and subject to a 10% penalty.

529 savings plans offer a preselected set of mutual funds and your account balance will rise and fall based on your contributions and the performance of your chosen investments. Most 529 savings plans also offer age-based investments that provide an all-in-one portfolio and automatically become more conservative as your child approaches college.

529 savings plans are administered by states, with every state except for Wyoming offering at least one plan. However, you do not have to use your home state’s plan, and in some cases, you may be better off going elsewhere.

Regardless of which 529 savings plan you choose, you can withdraw the money tax-free for expenses incurred at any eligible school in any state, and even for certain international schools.

Anyone can open a 529 savings plan and name anyone else, including himself, as the beneficiary. You can also change the beneficiary later on, as long as the new beneficiary is related to the old beneficiary.

In short, 529 savings plans allow you to save and invest for future education expenses in a tax-advantaged way.

Prepaid tuition plans vs. savings plans

In addition to 529 savings plans, some states also offer prepaid tuition plans that may be advantageous in certain situations.

Prepaid tuition plans allow you to buy units that each typically cover 1% of one year’s worth of college tuition at a public, in-state university. This essentially allows you to lock in the current cost of college, protecting you against the risk that tuition costs will continue to rise.

“The huge part of a prepaid tuition plan is that it’s guaranteed,” said Angie Furubotten-LaRosee, fee-only CFP and founder of Avea Financial Planning. “With a traditional 529 plan you have to worry about market fluctuations, and with these you don’t.”

There are downsides, though. The biggest of which is that while you can usually get your money back if your child wants to go to a private college or go out of state, the return is typically much smaller than what you would get from attending an in-state public school.

This is in contrast to a 529 savings plan, which allows you to use the money you’ve earned at any eligible institution.

“Prepaid plans are ideal for parents who have a good idea of where their child will attend college and who are willing to give up investment flexibility to lock in those costs,” said Kathleen Boyd, CFP and wealth adviser at Navigoe. “However, if you’re uncertain about your child’s future college plans, then a 529 savings plan may be the ideal option.”

Benefits of a 529 savings plan

1. Tax breaks

The tax breaks are the main advantage of 529 savings plans over other savings and investments accounts.

The growth and the ability to withdraw the money all tax-free for qualified education expenses mean that every dollar you contribute can multiply faster and cover a greater portion of your education expenses.

And if you live in one of the states that offers a state income tax break for contributions, you can potentially afford to make a bigger contribution without affecting your monthly budget, allowing you to get an even bigger head start.

“If you are in a state that offers good benefits, and some states even offer matching funds, it really is the right choice at that point because you aren’t going to get those benefits from any other option,” said Nannette Kamien, CFP and principal of Inspiration Financial Planning, a fee-only financial planning firm with expertise in helping families prepare for college financially.

2. High contribution limits

If you’d like to save a lot of money for education, a 529 savings plan will allow you to do it.

There is no annual contribution limit, though contributions are subject to gift tax rules, which means that you can effectively contribute $15,000 per year, per child, without exceeding the 2018 gift tax exemption. That limit is applied per donor, meaning that parents can combine their limits to contribute up to $30,000 per year, per child.

The tax code also allows you spread excess contributions over a 5-year period, meaning that as a couple, you could potentially contribute up to $150,000 in a single year without any gift tax consequences.

Most 529 savings plans do have lifetime contribution limits, but those limits are very high. For example, New York allows you to contribute up to $520,000 to any single beneficiary, and Utah allows up to $446,000 per beneficiary.

Additionally, there are no income restrictions on contributions, so anyone can take advantage of a 529 savings plan no matter how much money you make.

3. Mindset and accountability

One of the biggest benefits of contributing to a 529 plan is that it establishes saving for college as a real goal with progress that can be tracked along the way.

“Just having the 529 plan in and of itself solidifies that it’s an important priority for you and your family,” said Furubotten-LaRosee. “It’s now a budget item, it’s identified as money that’s earmarked for college, and I think that setting that habit is half the battle for a lot of people.”

4. Potential for long-term returns

By offering mutual funds that are invested in the stock and bond markets, 529 savings plans allow you to participate in the long-term, compounding returns that those investments offer. This can be especially powerful if you start when your child is young.

“Families who can invest over the long term are prime candidates for 529s,” said Boyd. “The earlier you start, the more time you have to take advantage of compound returns the markets provide over time.”

5. Low impact on financial aid

Many people are hesitant to save for college because of the potential impact on financial aid, but 529 savings plans have a relatively low impact.

As long as the account is held in a parent’s name, only up to 5.64% of the money in a 529 savings plan will be counted on the FAFSA. For example, if you have $100,000 in your 529 savings plan, only $5,640 will be considered for financial aid purposes.

In other words, there’s very little penalty for having money in a 529 savings plan. And the benefits of saving the money ahead of time will almost always outweigh any small decrease in financial aid.

6. Ability to change beneficiaries

529 savings plans allow a reasonable amount of flexibility when it comes to changing the beneficiary of the funds.

You are allowed to change the beneficiary as often as you like, and the only restriction is that the new beneficiary must be a family member of the old beneficiary. For the purposes of 529 plans, “family members” include siblings and stepsiblings, children, stepchildren, and grandchildren, parents, grandparents, nieces, nephews, first cousins and even in-laws.

All of which means that if the money isn’t needed for the original beneficiary, you can simply use it for another family member.

Pitfalls of 529 savings plans

1. Taxes and penalties if not used for education

The biggest downside to using a 529 savings plan is that if you withdraw money for anything other than qualified education expenses, the earnings will be subject to taxes and a 10% penalty.

This is one reason to be careful about over-contributing, and also to not contribute money that may be needed for other financial goals.

“That’s where that overarching financial plan comes into play,” said Furubotten-LaRosee. “You can always use other vehicles, like a Roth IRA, that come with more flexibility.”

2. Investment options can be narrow and confusing

Each 529 plan offers its own preselected set of investment options, and those options vary widely in terms of what they invest in and how much they cost. Sorting through all of those options and making the best choices for your needs can be difficult.

“Sometimes I see that parents are afraid to really invest the money and they don’t understand what the different investment options mean,” said Kamien. “Sometimes they get stuck in investments that are higher cost, and that really eats into the earnings that they could have gotten.”

Kamien said that she encourages people to look for “age-based index” options. These funds provide an all-in-one portfolio that automatically gets more conservative as your child approaches college, and they build the portfolio with index funds, which are generally low cost and have been shown to outperform actively managed funds the majority of the time.

3. Other financial responsibilities may be more important

While saving for college is a great goal, it’s often a good idea to handle other financial responsibilities first. This is especially important to consider before contributing money to a 529 savings plan because of the taxes and penalties on nonqualified withdrawals.

“I certainly would caution a parent or grandparent against sacrificing their own financial goals like saving for an emergency fund, paying off debt or retirement plans to contribute to a 529 plan,” said Boyd. “Saving for education is very important, but it’s also a luxury and a privilege for your children, and it shouldn’t come above your own financial security.”

How to compare 529 savings plans

When it comes to choosing a 529 savings plan, start by looking at the potential tax breaks offered by your home state’s plan, said Fred Amrein, a college funding expert and the founder of EFC Plus.

“You need to understand your in-state plan first, and if the beneficiary is in another state you need to understand their state’s plan next,” Amrein said. “In some cases, it may be more beneficial to gift the money to the beneficiary or the beneficiary’s parents and let them contribute the money.”

Even if your state does offer tax breaks, it’s not a given that your home state’s plan is the best option. There are a few more major variables you should consider as you compare 529 savings plans.

Here are the criteria we used to construct our list of best 529 plans.

Out of state

We evaluated each 529 savings plan from the perspective of an out-of-state resident. That means that state income tax breaks were not considered and that any 529 plans that are unavailable to out-of-state residents were ruled out.

Fees

Research has shown that cost is the best predictor of future investment performance, with lower costs leading to better returns. For that reason, we preferred 529 plans that minimized both investment and administrative fees.

We also filtered out adviser-selling 529 plans, which are specifically designed to be sold and managed by financial advisers and have higher fees in the form of commissions and management fees. Given that financial advisers can also advise on 529 plans that are sold directly to the consumer, and therefore cost less, we limited our search to those direct-sold plans.

Investment options

Investment portfolios built with index funds have been shown to outperform actively managed portfolios 80%-90% of the time, and we therefore only included 529 savings plans that offer index funds.

We also limited our list to 529 savings plans that offer age-based portfolios constructed with index funds, since these all-in-one portfolios simplify the investment process and automatically decrease your investment risk as your child nears college age.

Finally, we preferred 529 savings plans that offered access to individual index funds that allow investors to build custom portfolios if they so choose.

Minimum investment

Finding room in your budget for college savings can be difficult, so we did not consider any 529 savings plan that required a significant minimum investment.

None of the plans listed below require more than a $50 initial investment.

Other features

While most 529 savings plans offer most of the same basic features, we did consider additional features offered by certain plans that may be helpful for some investors.

The nine best 529 savings plans

Fidelity Arizona College Savings Plan

Arizona’s College Savings
Arizona’s College Savings Plan is managed by Fidelity, just like Delaware, Massachusetts and New Hampshire, which also appear on this list. Each of these states offers essentially the same plan.The index funds are high quality and low cost, and there are no other significant fees, though the presence of higher-cost actively managed funds could lead some people to pay more than they have to.

  • Investment options: Age-based portfolios constructed with Fidelity index funds, as well as access to individual Fidelity index funds if you’d like to customize your portfolio.
  • Fees: Age-based index funds range from 0.13%-0.16% per year. Individual index funds range from 0.13%-0.18% per year. There are no account maintenance fees.
  • Minimum initial investment: $15 with enrollment in automatic contributions. $50 otherwise.
  • Other features: None of note.
  • Website: https://www.fidelity.com/go/529-arizona/overview

California ScholarShare 529

ScholarShare 529
Managed by TIAA-CREF, California offers a selection of both index funds and actively managed funds. The lineup of passive age-based funds and individual index funds is strong.
  • Investment options: Age-based portfolios constructed with TIAA-CREF index funds, as well as access to individual TIAA-CREF index funds, if you’d like to customize your portfolio.
  • Fees: Age-based index funds range from 0.11%-0.17% per year. Individual index funds range from 0.08%-0.20% per year. There are no account maintenance fees.
  • Minimum initial investment: $15 with enrollment in automatic contributions. $25 otherwise.
  • Other features: None of note.
  • Website: https://www.scholarshare529.com

Delaware College Investment Plan

Delaware College Investment Plan

Delaware’s College Investment Plan is managed by Fidelity, just like Arizona, Massachusetts and New Hampshire. These states offer essentially the same plan.

The index funds are high-quality and low-cost and there are no other significant fees. The plan does offer higher cost actively managed funds, which could lead some people to pay more than they have to.

  • Investment options: Age-based portfolios constructed with Fidelity index funds, as well as access to individual Fidelity index funds if you’d like to customize your portfolio.
  • Fees: Age-based index funds range from 0.13%-0.16% per year. Individual index funds range from 0.13%-0.18% per year. There are no account maintenance fees.
  • Minimum initial investment: $15 with enrollment in automatic contributions. $50 otherwise.
  • Other features: None of note.
  • Website: https://www.fidelity.com/go/529-delaware/overview

Illinois Bright Start Direct-Sold College Savings Program

Illinois Bright Start Direct-Sold College Savings Program
The index age-based funds use Vanguard mutual funds with some of the lowest fees offered by any 529 savings plan. Even the higher-cost “multi-firm” age-based funds cost less than most actively managed funds offered by other plans.

  • Investment options: Age-based portfolios constructed with Vanguard index funds, as well as access to individual Vanguard index funds and DFA funds — a highly respected group of mutual funds that are typically only available through financial advisers — if you’d like to customize your portfolio.
  • Fees: Age-based index funds range from 0.12%-0.15% per year. Individual Vanguard index funds range from 0.10%-0.18% per year. There are no account maintenance fees.
  • Minimum initial investment: None
  • Other features: None of note.
  • Website: https://www.brightstartsavings.com

College Savings Iowa

College Savings Iowa
Every investment offered within Iowa’s 529 savings plan is managed by Vanguard and costs just 0.20% per year. And with a strong lineup of both age-based portfolios and individual mutual funds, you have plenty of room to personalize your investment plan.

  • Investment options: Age-based portfolios constructed with Vanguard index funds, as well as access to individual Vanguard index funds if you’d like to customize your portfolio.
  • Fees: Every investment option costs 0.20% per year. There are no account maintenance fees.
  • Minimum initial investment: $15 with enrollment in automatic contributions. $25 otherwise.
  • Other features: None of note.
  • Website: https://www.collegesavingsiowa.com

Massachusetts U.Fund College Investing Plan

Massachusetts U.Fund College Investing Plan
Massachusetts U.Fund College Investing Plan is managed by Fidelity. The plan is essentially the same as Arizona’s, Delaware’s and New Hampshire’s.

It offers high-quality, low-cost index funds with no other significant fees, though the presence of higher cost actively-managed funds could lead some people to pay more than they have to.

  • Investment options: Age-based portfolios constructed with Fidelity index funds, as well as access to individual Fidelity index funds if you’d like to customize your portfolio.
  • Fees: Age-based index funds range from 0.13%-0.16% per year. Individual index funds range from 0.13%-0.18% per year. There are no account maintenance fees.
  • Minimum initial investment: $15 with enrollment in automatic contributions. $50 otherwise.
  • Other features: None of note.
  • Website: https://www.fidelity.com/529-plans/massachusetts

New Hampshire UNIQUE College Investing Plan

New Hampshire UNIQUE College Investing Plan
New Hampshire’s UNIQUE College Investing Plan is managed by Fidelity, just like Arizona, Delaware and Massachusetts. Each of these states’ plans are on this list and are basically the same.

New Hampshire’s plan offers high-quality, low-cost index funds with no other significant fees. However, the plan offers higher cost actively-managed funds, which could lead some people to pay more than they have to.

  • Investment options: Age-based portfolios constructed with Fidelity index funds, as well as access to individual Fidelity index funds if you’d like to customize your portfolio.
  • Fees: Age-based index funds range from 0.13%-0.16% per year. Individual index funds range from 0.13%-0.18% per year. There are no account maintenance fees.
  • Minimum initial investment: $15 with enrollment in automatic contributions. $50 otherwise.
  • Other features: None of note.
  • Website: https://www.fidelity.com/529-plans/new-hampshire

New York’s 529 College Savings Program

New York’s 529 College Savings Program
Like Iowa, New York’s 529 College Savings Program offers only Vanguard index funds and index age-based funds, and in this case, the cost of each fund is even lower at 0.15% per year.

If your priority is minimizing fees and accessing Vanguard funds, this is likely the plan for you.

  • Investment options: Age-based portfolios constructed with Vanguard index funds, as well as access to individual Vanguard index funds if you’d like to customize your portfolio.
  • Fees: Every investment option costs 0.15% per year. There are no account maintenance fees.
  • Minimum initial investment: $0.
  • Other features: None of note.
  • Website: https://www.nysaves.org

Utah my529

Utah my529

Utah’s my529 offers possibly the most noteworthy set of features of any 529 savings plan:

  1. You can create your own age-based portfolio from the underlying funds offered by the plan, which include Vanguard index funds as well as DFA funds that are typically only offered by financial advisers.
  2. If you are working with a financial adviser, you can give him or her access to your 529 plan in order to manage your investments.

The fees are slightly higher than the other 529 savings plans listed here — though they are still very low — but the investment capabilities are second to none.

  • Investment options: A wide variety of age-based portfolios, Vanguard index funds and DFA funds.
  • Fees: Age-based index funds range from 0.169%-0.202% per year. Vanguard individual index funds range from 0.22%-0.40% per year and DFA funds range from 0.37%-0.72% per year. There are no account maintenance fees.
  • Minimum initial investment: $0.
  • Other features: Customized age-based portfolios and financial adviser access.
  • Website: https://my529.org

How to enroll in a 529 savings plan

Once you know which 529 savings plan you want to use, it’s time to open an account and make your first contribution. And while every plan will have a slightly different process, there are a few steps that are likely to be similar across the board:

  1. Have the necessary information ready for the account owner:
    1. Social Security number
    2. Birth date
    3. Mailing address
    4. Physical address
    5. Bank account number and routing number for making contributions
  2. Have the necessary information ready for the beneficiary
    1. Social Security number
    2. Birth date
    3. Mailing address
    4. Physical address
  3. Read the program description, which can be found on the 529 plan’s website
  4. Choose an investment strategy. You can review the options on the 529 plan’s website and in the program description.
  5. Start the application process online or submit the appropriate paperwork.

How to use 529 plans to pay for K-12 private education

The recently passed Tax Cuts and Jobs Act expanded the flexibility of 529 savings plans by allowing investors to withdraw up to $10,000 per year, per child tax-free and penalty-free for tuition for elementary or secondary school.

This opens up more opportunities for parents to use 529 funds for their child’s education. But given how new the law is, it’s a good idea to proceed carefully.

According to Amrein, the tax implications of withdrawing 529 money for K-12 tuition are straightforward on the federal side but are yet to be determined on the state side.

“What a lot of states are dealing with is a lot of them had incentive programs for college contributions,” said Amrein. “What I’m hearing is some of the states are either going to withdraw that incentive or, if you use it for K-12 expenses, there may be a clawback provision that they can rescind that tax break you received for previous contributions.”

If you live in a state that offers tax breaks for 529 plan contributions, and if you’ve taken advantage of those tax breaks, you may want to speak to an accountant before using your 529 funds for K-12 tuition.

Alternatives to 529 savings plans

While the tax breaks offered by a 529 savings plan are hard to beat if you’re saving money specifically for education, there are a number of other savings and investment accounts that can be more advantageous, depending on the specifics of your situation.

Here are some of the major alternatives to consider.

Roth IRA

While Roth IRAs are technically retirement accounts, they have a few characteristics that make them attractive college savings accounts:

  • They offer tax-deferred growth while the money is inside the account.
  • You can withdraw up to the amount you’ve contributed at any time and for any reason without tax or penalty.
  • Early withdrawals of Roth IRA earnings used for higher education are taxed but are not subject to the typical 10% penalty.
  • If you don’t need the money for college, you can keep it in the Roth IRA and use it tax-free for retirement.

“I’m a big proponent of incorporating a Roth into college planning, especially when you have a teenager who is hopefully earning money,” said Furubotten-LaRosee. “Starting the savings habit is a biggie, and if you don’t use it for college it’s available for retirement or any other goal.”

The big downsides are that Roth IRAs are not as tax-efficient as 529 savings plans when used for college and that by dedicating your Roth IRA for college savings, you’re using up valuable retirement space.

Still, the flexibility is often worth it.

Taxable investment account

A regular, taxable investment account doesn’t offer any tax advantages, but it does provide maximum flexibility to invest in whatever you’d like and to use the money at any time and for any reason.

“As a parent, sometimes you need flexibility with your money,” said Furubotten-LaRosee. “You need the ability to control things as life progresses, and not having it tied into a 529 plan means you can access it when you need to.”

Coverdell ESA

The primary benefit of a Coverdell Education Savings Account (ESA) used to be the ability to allocate the money for K-12 expenses, but that benefit is much less relevant now that 529 savings plans can also be used for the same purpose.

Coverdell ESAs also come with stricter contribution limits than 529 savings plans. Contributions are limited to $2,000 per year, per child across all contributors. Once your Modified AGI (adjusted gross income with certain deductions like student loan interest added back) exceeds $110,000 for individuals or $220,000 for married couples filing jointly, you can no longer contribute.

According to Amrein, the main benefit of a Coverdell ESA at this point is the ability to choose from a much wider range of investment options than you can get from a 529 plan.

“It’s kind of like comparing a 401(k) to an IRA,” said Amrein. “Most 529 plans are very restrictive, with maybe five to 10 investment options to choose from. On the Coverdell side, you can invest in anything you want, but you’re limited to $2,000 per year.”

Savings account

While a savings account can’t offer the long-term returns that you might get from a 529 savings plan, Roth IRA or Coverdell ESA, it is a simple and safe choice that can make sense either as a starting point or if your child will be starting college soon.

And Furubotten-LaRosee argues that no matter which account you choose, the main priority should simply be to separate your college savings from your regular checking and savings accounts.

“Even if it’s just in a separate savings account, the main thing is having it really separate and earmarked for college,” said Furubotten-LaRosee. “That gives it a little protection from your day-to-day spending.”

Choosing the right 529 savings plan for you

529 savings plans allow you to save a lot of money while being tax-efficient for your child’s education, which can help defray the rising costs of college.

The first step is always understanding your home state’s plan to see what kind of tax breaks are available. Then, you can compare it with other states to determine which 529 savings plan will allow you to minimize costs and access the best investment options.

Finally, you can make your decision within the context of your entire financial plan. Saving for college is a fantastic goal, and 529 savings plans are a powerful way to do it, but it shouldn’t come at the expense of other financial responsibilities.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

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Matt Becker |

Matt Becker is a writer at MagnifyMoney. You can email Matt here

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Best of

The Best Business Savings Account Rates in 2018

Editorial Note: 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 prior to publication.

Are you looking to start or grow a business? Opening a business savings account can offer federal protection for the funds you deposit (up to $250,000) and provide a source of liquidity should inevitable expenses arise. You can earn interest while setting aside money for capital improvement or income taxes. A commercial savings account can add credibility to your business, arm you with a business debit card and help your cash flow.

The best way to choose an account that fits your needs is to start by comparing the annual percentage yield offered by banks and credit unions. Then look for benefits that might make the account attractive based on your needs. Is there a monthly maintenance fee or a minimum deposit to open? Does the bank provide ample access to ATM and online account services?

Deciding which business savings account is best for your needs can be a difficult process, but hopefully this roundup of our picks for best savings accounts will help give you a head-start.

The best business savings account rates — May 2018

Institution

APY

Minimum balance amount

Goldwater Bank

1.65%

$0.01

Community Bank of Pleasant Hill

1.52%

None

Community Bank of Raymore

1.52%

None

First Internet Bank of Indiana

1.51%

$250,000

BofI Federal Bank

1.06%

$25,000

Digital Federal Credit Union (DCU)

1.06%

$25,000

Live Oak Bank

1.05%

None

Presidential Bank (Maryland)

0.50%

$5,000

UniBank

0.35%

$2,500

Andrews Federal Credit Union

0.31%

$100

Source: Deposit Accounts, May 1, 2018

1. Goldwater Bank, 1.65% APY, $5,000 minimum amount to open

Goldwater Bank is an online institution with a highly competitive rate on their business savings account. With a minimum deposit of $5,000, you can open their Savings Plus Business account and start earning an APY of 1.65%. Once you open the account you only need a balance of $0.01 to continue earning the APY.

Restrictions on joining: none.

on Goldwater Bank’s secure website

2. Community Bank of Pleasant Hill, 1.52% APY, No minimum balance

With its 1.50% APY, the Business Premier Money Management Account at Community Bank of Pleasant Hill offers highly competitive rates to explore. You need only put down $25 to open the account and maintain a minimum balance of $10,000 to avoid a $10 monthly service charge and $4 paper statement fee.

ATM access is offered surcharge-free when using ATMs in the MoneyPass® network. Community Bank began operations on Dec. 6, 2006, and is a member of the FDIC. Members can search for partner ATMs online or through mobile access.

Fine print: Just watch out for hefty withdrawal fees. You can make free withdrawals on the second and fourth Wednesdays of the month; on other days, there’s a $25 withdrawal fee. If you plan to make regular in-person withdrawals, this probably isn’t the best account for your needs.

Restrictions on joining: none.

LEARN MORE Secured

on Community Bank Of Pleasant Hill’s secure website

3. Community Bank of Raymore, 1.52% APY, $25 minimum deposit to open

The Community Bank of Raymore created its Premier Money Management Account specifically for business customers who carry high balances and are looking for security. It costs $25 to open your account but you’ll earn a solid 1.50% APY.

You must maintain a balance of at least $10,000 or you’ll be assessed a monthly $10 charge. You may only make free withdrawals on the second and fourth Wednesdays or face a $25 fee.

Electronic statements are free of charge. Nationwide ATM service without charge is available through the MoneyPass® network.

The Community Bank of Raymore was chartered in Missouri in May 15, 1979. According to the bank website, the idea of the bank originated at a community meeting at Raymore Elementary School in 1976.

Fine print: You’ll be restricted to two days a week for making free withdrawals in Raymar, too, on the second and fourth Wednesdays of the month. Other days, you’ll have to cough up $25.

Restrictions on joining: none.

LEARN MORE Secured

on Community Bank Of Raymore’s secure website

4. First Internet Bank, 1.51% APY, $250,000+ minimum balance amount, ATM services

First Internet Bank offers an FDIC-insured savings option for businesses with a relatively good 1.26% APY if you have a balance amount that is less than $250,000. However, if you have more than $250,000 to put in their business savings account, they’ll award you with a 1.51% APY. Unfortunately, the FDIC only insures up to $250,000. So, if you deposit more than $250,000 into the savings account, the excess deposit amount will not be insured by the FDIC.

It costs $100 to open your business account and you must maintain an average daily balance of $1,000 to avoid a $2 monthly maintenance fee.

There is no minimum balance to open or maintain the account. Unlimited deposits can be made each month and six transfers or withdrawals are allowed without charge.

The First IB ATM cards are offered to sole proprietors only. There is no charge for ATM transactions or electronic statements. Founded in 1999 by the First Internet Bancorp, First IB offers remote banking in all 50 states.

Fine print: Only six preauthorized, automatic, PC, or telephonic transfers are allowed each month. This restriction is common among most of these institutions, however, First Internet Bank will charge you $5 per item if you go beyond the allotted six.

Restrictions on joining: none.

on First Internet Bank’s secure website

4. BofI Federal Bank: 1.06% APY, $25,000 minimum balance, ATM access

BoFI Federal Bank offers one of the top APY rates in the DepositAccounts nationwide survey of business savings accounts. The bank’s Business Premium Savings Account with a high-yield 1.06% APY can be opened with a $25,000 minimum deposit.

There is no monthly maintenance fee for the account and no average daily balance requirement.

BoFI also makes it easy to access your funds when you need it. Customers have ATM access to their accounts along with free online banking. However, ATM withdrawal limits are $1,010 per day and there’s a daily purchase limit of $5,000. BofI is an FDIC-insured bank based in San Diego and publicly traded online. Other products include Business Interest Checking and Business Money Market accounts.

LEARN MORE Secured

on BofI Federal Bank’s secure website

5. Digital Federal Credit Union (DCU), 1.00% APY, $25,000 minimum balance

Digital Federal Credit Union offers a solid 1.00% APY rate through its Business DCU Ltd Savings Account with a minimum $25,000 balance.

Businesses participating in the DCU Ltd Savings Account receive 24/7 online banking, mobile banking through the DCU Mobile Banking App, access to DCU ATMs, deposits, transfers or balance verification. Watch out for their ATM fees, though. They charge $0.75 per withdrawal from a non-DCU ATM, which will surely add up if you make regular withdrawals. Created by the Digital Equipment Corporation in 1979, DCU is the largest credit union in Massachusetts by assets. Federally insured by NCUA, DCU is based in Marlborough, Mass.

Restrictions on joining: To join, you must meet eligibility requirements within the field of membership for employers, organizations, participating communities or condominium associations.

LEARN MORE Secured

on Digital Federal Credit Union (DCU)’s secure website

6. Live Oak Bank, 1.05% APY, No minimum balance

Live Oak Bank awards 1.05% APY on its business accounts are eight times the national average. There is no minimum opening balance or deposit required to open a business savings account.

The business savings account is open to deposits of up to $5 million and is free of monthly maintenance fees. You may make up to 6 withdrawals from your Live Oak Bank Savings account per statement cycle, including preauthorized, automatic and telephone transfers. After that there’s a $10 fee per withdrawal. Live Oak Bank, established in 2008, holds assets of $2.12 billion.

The bank is in Wilmington, N.C., and is a member of the FDIC. Learn more about business savings at Live Oak Bank.

Small Print: The bank may verify credit and employment history at its discretion, meaning you may receive a pull against your credit report.

Restrictions on joining: none.

LEARN MORE Secured

on Live Oak Bank’s secure website

7. Presidential Bank (Maryland), up to 0.50% APY, $5,000 to open, ATM services

Presidential Bank’s Commercial Premier Savings account offers 0.50% APY for balances up to $35,000, making it a decent — if not extraordinary — bet for business owners.

Business customers are not required to maintain a minimum balance on the account in order to receive all ATM privileges. So long as you use one of their ATMs you won’t incur fees, but there is a $0.75 ATM fee for non-network ATMs. Free online banking, mobile banking and ATM card come with the account.

Established in 1985, Presidential Online Bank was one of the first lenders to offer online banking. Located in Bethesda, Md., it currently lists assets in excess of $550 million.

Restrictions on joining: none.

LEARN MORE Secured

on Presidential Bank’s secure website

8. UniBank, 0.35% APY, $25,000 minimum balance, $500 to open, ATM services

The Business Regular Savings account at UniBank currently pays out 0.35% AYP for all accounts starting at $2,500. It costs $500 to open your business account and the monthly service fee is $12.

You can have that service fee waived by maintaining a $2,500 minimum daily balance. Customers have online, telephone and ATM access to their business accounts. There are more than 25,000 surcharge-free UniBank ATMs available through the MoneyPass® network.

Established in 2006, the bank is located in Lynnwood, Wash. While its business savings account rates leave much to be desired, the bank’s strength may lie in its current money market rates, which Deposit Accounts says are 70 percent higher than the national average.

Restrictions on joining: none.

LEARN MORE Secured

on UniBank’s secure website

9. Andrews Federal Credit Union, 0.31% APY, $100 minimum balance, ATM banking

The Business Base Share Savings account at Andrews Federal Credit Union offers a 0.31% APY. You can open the account with as little as $5 and there is a $100 minimum balance requirement to earn the APY.

The account comes with free online banking, free eStatements and a debit card. Transactions are free at Andrews Federal & CO-OP ATMs. However, there is a $25 charge for withdrawals that result in overdrafts.

Founded in 1948 in Suitland, Md., Andrews Federal Credit Union has assets over $1.5 billion and offers a range of banking services to 120,000 members worldwide.

Restrictions on joining: $5 fee to join the credit union. Open to field of membership including nationwide membership eligibility through the American Consumer Council.

LEARN MORE Secured

on Andrews Federal Credit Union’s secure website

10. SaviBank, 0.30% APY, $100 to open, ATM services

Rounding out the top 10, the business savings accounts at SaviBank offer a decent 0.30% APY. It costs $100 to open the account. If you keep a minimum daily balance of $250, the bank dismisses a $5 monthly service charge.

Checks and third-party withdrawals are limited to six for each calendar month.

Established in Burlington, Wash., in 2005 as Business Bank, SaviBank offers 24-hour access to accounts through online banking and surcharge-free ATM locations nationwide over the MoneyPass® network.

Restrictions on joining: none

LEARN MORE Secured

on SaviBank’s secure website

Learn more about business savings accounts

How we ranked the best business savings accounts

To come up with this list, we first used data from DepositAccounts.com, which tracks rates on a range of deposit accounts across thousands of banks in the U.S. Note: DepositAccounts is also owned by MagnifyMoney’s parent company LendingTree.com.

We eliminated any institutions that were given a health rating below a B by DepositAccounts. We also weeded out any credit unions that have very restrictive membership requirements. From there, we chose the top 10 business savings accounts with the highest APY. And lastly, all the banks on our list offer FDIC or NCUA insurance.

Business savings accounts vs personal savings accounts

Business and regular savings accounts may offer many of the same features ,such as 24/7 online banking, free electronic reporting, debit cards, fund transfers and ATM machines.

The trade-off in choosing a business account is that you’ll get services focused on business planning and spending in exchange for a less-desirable APY.

When you compare the interest earned on a business savings account with the best APY rates offered on savings accounts, it may not look like opening a business account is a wise strategy. The top business savings account APY right now is 1.32%. The top APY among personal savings accounts is 1.60% with no minimum deposit and ATM access. You can weigh the services, charges and minimum account fees between the top business and top personal savings accounts to decide which is best for you.

There are other benefits to offset any differences in earnings, particularly if your business is incorporated. It’s considered sound business practice to separate your personal saving and checking accounts from your business saving and checking accounts. A business account can help you manage cash flow, accounting, recordkeeping and working capital. At income tax time, separate accounts can help you differentiate business from personal expenses.

Paired with a business checking account, your business savings account can add professional branding, since all payments and correspondence with clients will bear your business name.

Or you can create savings in your business account to pay quarterly income taxes or purchase equipment.

Finally, business savings accounts are secure when you open accounts with banks and credit unions that are insured up to $250,000 per account by the FDIC or the NCUA.

North Shore Bank of Brookfield, Wis., says that a business savings account can boost your credit ratings and make it easier to obtain a business loan, since the lender can see you have an account dedicated to your company.

Choosing the right business savings account

When evaluating a financial institution for your business, there’s more than just finding a good APY.

Many of the banks on our Top 10 list look great on the APY front but carry fees that can eat into any of the returns you might make. Particularly, watch out for fees for ATM or bank withdrawals, monthly service fees and ATM fees.

The Small Business Administration (SBA) has identified the key factors to consider when searching for the right bank or credit union. These include:

  • Customer service reputation
  • Access to branches or no-surcharge ATMs
  • Benchmarks to have fees waived
  • Automatic FDIC insurance

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Gabby Hyman
Gabby Hyman |

Gabby Hyman is a writer at MagnifyMoney. You can email Gabby here

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Best of, Credit Cards

Best Credit Cards of 2018

Editorial Note: 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 prior to publication. This site may be compensated through a credit card partnership.

As you look for a new credit card, remember the golden rule of credit cards:

Choose a rewards card for your spending bonuses. Choose a low-rate card for your borrowing and paying off debt. Don’t confuse the two types of cards!

We examined each card type’s fine print to understand fees, rewards rates, interest rates, and more. After digging into the cards, we determined that these are the best credit cards to have in your wallet.

Credit cards offer more than unparalleled consumer protections and an easy way to track your spending. They can offer 2% cash back, 6% category bonuses, and travel miles. Credit card issuers spent more than $22.6 billion on rewards in 2016 alone. That’s 23% more than they spent in 2015. If you haven’t changed your rewards credit card in the last two years, you’re leaving money on the table.

Even if you carry credit card debt from time to time, credit cards can be a tool to help you plow out of debt. No matter what your situation, MagnifyMoney can help you find the credit card that will put money back in your pocket.

Best Cash Back Rewards Cards

Citi Double Cash®

The Citi Double Cash® credit card offers straightforward rewards. You earn 1% when you buy and 1% when you pay off your bill. This is a great card for people who don’t want to worry about difficult reward redemptions. It’s also one of the first credit cards that encourages you to pay off your bill in full each month. After all, you don’t get the second half of your reward until you pay off your credit card.

Best Cash Back Credit Card of 2018

Citi<sup>®</sup> Double Cash Card – 18 month BT offer

APPLY NOW Secured

on Citibank’s secure website

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Citi® Double Cash Card – 18 month BT offer

Annual fee
$0*
Cashback Rate
Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay
Regular Purchase APR
14.99%-24.99%

Variable

Credit required
good-credit
Excellent/Good

Alliant Cash Back Visa® Signature

With 3% cash back in the first year, and 2.5% all other years, this card offers some of the best pure cash back rates on the market. The $59 annual fee means that you have to spend at least $1,000 per month to come out ahead relative to a 2% earnings rate. Not everyone feels comfortable putting that much on a credit card each month. But if you regularly spend that much (and pay off your debt), this is the right credit card for you.

First Year 3% Back

Alliant Cashback Visa<sup>®</sup> Signature Card

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on Alliant Credit Union’s secure website

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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
Regular Purchase APR
11.74%-14.74%

Variable

Credit required
good-credit

Good

Capital One® BuyPower CardTM

This credit card isn’t for everyone, but it offers compelling rewards for GMC devotees. Since GMC doesn’t want to earn money from this credit card, they offer premium rewards and perks to all cardholders. Perks include 5% back on the first $5,000 you spend on the card. If you plan to buy a new GMC vehicle, make this your new favorite credit card.

Up to 5% Toward Your Next Vehicle

Capital One® BuyPower Card<sup>®</sup>

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on Capital One’s secure website

Capital One® BuyPower Card®

Annual fee
$0
Cashback Rate
5% on your first $5,000 in purchases, 2% after that
Regular Purchase APR
14.40%-24.40%

Variable

Credit required
excellent-credit

Excellent/Good

QuicksilverOne Rewards® from Capital One

If you struggled with credit in the past, but you’re back on track, the QuicksilverOne® Rewards card from Capital One® offers the right rewards at the right price. If you spend at least $225 per month on credit cards, you’ll earn more than you pay in annual fees. Normally, we don’t recommend cards with annual fees and low earning rates. However, this card is an exception if you have fair credit. Once your credit improves, you can call Capital One and ask for a no-fee card with better rewards.

OK for Fair Credit

Capital One® QuicksilverOne® Cash Rewards Credit Card

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on Capital One’s secure website

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Capital One® QuicksilverOne® Cash Rewards Credit Card

Annual fee
$39
Cashback Rate
Earn unlimited 1.5% cash back on every purchase, every day
Regular Purchase APR
24.99%

Variable

Credit required
fair-credit
Average

Best Cash Back for the Way You Spend

Blue Cash Preferred® Card from American Express

Everyone needs to eat, but grocery spending can eat into your budget. By using the Blue Cash Preferred® Card from American Express, you can save 6% at U.S. supermarkets (up to $6,000 per year) without clipping a coupon. You’ll pay a $95 annual fee, but big grocery spenders will earn that much and more from their annual supermarket spend.

6% Supermarket Bonus

Blue Cash Preferred® Card from American Express

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on American Express’s secure website

Terms Apply

Rates & Fees

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Blue Cash Preferred® Card from American Express

Annual fee
$95
Cashback Rate
6% at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 3% at U.S. gas stations and select U.S. department stores, 1% on other purchases
Regular Purchase APR
14.49%-25.49%

Variable

Fort Knox Federal Credit Union Visa® Platinum Card

With an unlimited 5% cash back on fuel purchases, this is one credit card that can lower your pain at the pump. Unlike other credit cards, rewards get applied to your statement balance. This means you don’t have to fiddle around with awards programs. You’ll simply pay less each month.

5% Gas Bonus Cash

Fort Knox Federal Credit Union Visa<sup>®</sup> Platinum Card

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on Fort Knox Federal’s secure website

Fort Knox Federal Credit Union Visa® Platinum Card

Annual fee
$0
Cashback Rate
5% back on all gas station spending, 1% on all other purchases
Regular Purchase APR
10.75%-18.00%

Variable

Credit required
good-credit

Good

PenFed Premium Travel Rewards American Express® Card

If you’re constantly in the air, the PenFed Premium Travel Rewards card offers one of the market-leading rates for purchasing airfare. If you want to redeem your rewards for more airfare, you can find rates as high as 4.5%, but if you want cash, the PenFed Premium Travel Rewards card offers the best rate. You’ll earn an effective 4.25% cash back rate whenever you buy tickets directly from an airline.

5x Airfare Bonus

PenFed Premium Travel Rewards American Express® Card

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on PenFed Credit Union’s secure website

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PenFed Premium Travel Rewards American Express® Card

Annual fee
$0
Regular Purchase APR
9.74%-17.99%

Variable

Credit required
good-credit

Good

The SavorSM card From Capital One

It’s easy for restaurant spending to dominate your credit card spending. If you eat out a few times a week or more, the 3% cash back on dining will help you enjoy more rewards after you enjoy your meal. Plus, this no-annual-fee card comes with travel protections that usually require at least a $59 annual fee. Foodies can feel good about having a card that rewards them for the way they spend.

3% Dining Bonus (And More)

Capital One<sup>®</sup> Savor<sup>®</sup> Cash Rewards Credit Card

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on Capital One’s secure website

Capital One® Savor® Cash Rewards Credit Card

Annual fee
$0
Cashback Rate
3% on dining, 2% on groceries, 1% on all other purchases
Regular Purchase APR
15.99%-24.74%

Variable

Credit required
excellent-credit
Excellent

Also Consider Also Consider

Chase Sapphire ReserveSM

If you’re a traveling foodie, you may want to consider the Chase Sapphire ReserveSM Credit Card. The card allows you to earn 3 points for every dollar you spend on dining or travel and 1 point for every other dollar you spend. When you redeem the points for more travel, you get a 50% bonus, which brings the rewards rate up to 4.5 cents for every dollar you spend on dining or travel.

The card comes with a hefty $450 annual fee, but it also comes with a $300 annual statement credit for travel purchases and superior travel protections. Plus, you’ll earn a 50,000 point bonus if you spend $4,000 in three months.

Amazon Prime Rewards Visa® Signature Card

If you’re already an Amazon Prime customer, you can enjoy an additional 5% off with every purchase. Anyone who is addicted to Amazon’s convenience will love saving even more on their everyday spending. Of course, some people worry they spend too much online. This credit card doesn’t have to make your problem worse. If you choose to remove “instant purchase” from your Amazon account, you’ll force yourself to think before you check out

5% Online Retail

Amazon Prime Rewards Visa<sup>®</sup> Signature Card

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on Amazon’s secure website

Amazon Prime Rewards Visa® Signature Card

Annual fee
$0
Cashback Rate
5% back on Amazon.com and Whole Foods Market purchases, 2% back at restaurants, gas stations, and drugstores, 1% back on other purchases
Regular Purchase APR
15.74%-23.74%

Variable

Credit required
good-credit

Good

Also Consider Also Consider

Target REDcard™ Credit Card

Target REDCardTM

If you’re not already an Amazon Prime member, the Amazon card isn’t a good fit for you. Instead, consider the Target REDCard™. As a REDCard holder, you’ll get 5% off all Target and Target.com purchases, free shipping, and an extra 30 days for returns. When it comes to everyday shopping needs, you can’t find a better rate than 5% off. Just don’t carry a balance on this card: REDCard™ credit cards carry a 23.65% APR. If you want the same discount without another credit card, you can also get a REDCard™ debit card.

Best Travel Rewards Credit Cards

Chase Sapphire Preferred® Credit Card

Kiplinger named the Chase Sapphire Preferred® Credit Card their 2016 “Easiest for flight redemption” credit card. We can see why. Customers can use points

directly with airlines, redeem through the Chase rewards portal, or choose a statement credit. With a huge intro bonus and great perks, this makes a great card for airline travelers.

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

Best Overall

Chase Sapphire Preferred® Card

Annual fee
$0 Intro for the First Year, then $95
Rewards
2 points on travel and dining, 1 point on all other spending
Regular Purchase APR
17.49%-24.49%

Variable

Credit required
good-credit

Good/Excellent

Also Consider Also Consider

Capital One® Venture® Rewards Credit Card

Capital One® Venture® Card

Capital One® Venture® Card allows you to earn a 50,000 point bonus when you spend $3,000 in your first three months. You’ll also earn an unlimited two miles for every dollar you spend. With just a $95 annual fee, waived the first year, this is one of the few travel rewards cards that might be worthwhile to lower spenders. The card also comes with all Visa Signature® benefits. Those benefits include secondary auto rental collision damage waivers, hotel upgrade options, and free extended warranties. If you can’t justify a high annual fee, consider this Venture® card for your travel credit card needs.

Discover it® Miles Travel Credit Card

The Discover it® Miles card offers one of the best rewards rates for travel credit cards without an annual fee. You’ll earn unlimited 1.5 miles per dollar, and Discover will match all the Miles you’ve earned at the end of your first year. Points are worth 1 cent each, so your first year you earn an effective rate of 3% on all your spending. You can redeem your rewards at any time for any type of travel.

3x Rewards Your First Year (With No Annual Fee)

Discover it<sup>®</sup> Miles

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Rates & Fees

Discover it® Miles

Annual fee
$0
Rewards
Unlimited 1.5x Miles per dollar on all purchases, every day, with no annual fee. We'll match all the Miles you've earned at the end of your first year.*
Regular APR
13.49%-24.49%

Variable

Credit required
good-credit
Good / Excellent

Also Consider Also Consider

Bank of America® Travel Rewards Credit Card

BankAmericard Travel Rewards® Credit Card

The standard rewards rate for this fee-free credit card is 1.5 miles per dollar spent. However, you’ll also earn a 20,000 point bonus if you spend $1,000 or more in your first 90 days. High net worth individuals also have an opportunity to boost their rewards. If you have at least $20,000 in assets at Bank of America or Merrill Edge, you’ll earn 25% more rewards. At $50,000 in assets, you’ll boost your earnings by 50%. With $100,000 in assets, you’ll get 75% more rewards. That’s the equivalent of 2.63 miles for every dollar spent. For high net worth individuals, this card offers higher earning potential than some of the best cards with fees.

Priceline RewardsTM Visa® Card

When traveling abroad, you need a credit card with Chip + PIN technology and no foreign transaction fees. Many international merchants, hotels, and restaurants can accept the more common Chip + Signature technology featured on U.S. credit cards, but automated kiosks at train stations and other travel hubs require the PIN technology. Thankfully, the Priceline RewardsTM Visa® Card has the required technology, and it doesn’t charge foreign transaction fees. Plus, you’ll earn a few rewards when you spend with this card. It’s not the best credit card for earning rewards, but it’ll save your money and your sanity when you’re abroad.

No Fee for International Travel

Priceline Rewards™ Visa<sup>®</sup> Card form Barclays

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Priceline Rewards™ Visa® Card form Barclays

Annual fee
$0
Rewards
5 points on eligible priceline.com purchases, 1 point on all other purchases
Regular Purchase APR
16.24%-26.24%

Variable

Credit required
excellent-credit

Excellent

The Starwood Preferred Guest® Credit Card from American Express

Starwood points are among the most valuable points on the market. They are transferable to many airlines, and you can even trade 1 Starwood point for 3 Marriott points. Thanks to flexibility in transferring and redeeming points, this is our favorite card for earning free hotel stays. Many users can get at least 2.5 cents per point in value on their redemption.

Triple Your Hotel Rewards

The Starwood Preferred Guest® Credit Card from American Express

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Terms Apply

Rates & Fees

The Starwood Preferred Guest® Credit Card from American Express

Annual fee
$0 introductory annual fee for the first year, then $95.
Rewards
up to 5x points
Regular Purchase APR
16.74%-20.74%

Variable

Credit required
good-credit

Good

Best Sign-Up Bonuses

Chase Sapphire Preferred® Credit Card

Earn $500 cash or $625 in travel credits when you spend $4,000 in your first three months. This isn’t the largest sign-up bonus available today. However, the flexible points redemption options and great travel protections make this our top choice for travel sign-up bonuses.

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

Best Travel Bonus - $625

Chase Sapphire Preferred® Card

Annual fee
$0 Intro for the First Year, then $95
Rewards
2 points on travel and dining, 1 point on all other spending
Regular Purchase APR
17.49%-24.49%

Variable

Credit required
good-credit

Good/Excellent

Also Consider Also Consider

U.S. Bank Altitude Reserve Visa Infinite® Card

U.S. Bank Altitude Reserve Visa Infinite® Card

U.S. Bank customers with good credit and high spending may qualify for the lucrative $750 travel sign-up bonus with the Altitude Reserve Visa Infinite® Card. You need to spend $4,500 in 90 days to earn the 50,000 point bonus. When redeemed for qualified travel, 50,000 points translates to $750 in travel. The Altitude Reserve Visa Infinite® comes with a hefty $400 annual fee, but most people will make that up easily. The card offers a $325 annual statement credit for travel purchases, complimentary access to airport lounges, and other high-end perks. In addition to offering the best sign-up bonus on the market, it offers some of the most exciting travel perks. This card failed to become first place because of the high annual fee, but for frequent travelers, this is the best card on the market.

TruWest Visa<sup>®</sup> Signature Card

TruWest Visa® Signature

If you don’t spend much money on credit cards, you can still earn lucrative sign-up bonuses. The TruWest Visa® Signature Card offers a $100 sign-up bonus when you spend just $100 in your first 90 days. You’ll also get a competitive interest rate and no annual fee. The card also comes with secondary auto rental collision damage waivers that can save you money when renting a vehicle. Cardholders only earn 1 point for every dollar that they spend, and points can be redeemed for a penny (or for more when redeemed through the TruWest redemption portal).

Best 0% APR Purchase Credit Cards

18 Months Without Interest

Citi Simplicity<sup>®</sup> Card - No Late Fees Ever

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Citi Simplicity® Card - No Late Fees Ever

Intro BT APR
0%

promotional rate

Balance Transfer Fee
$5 or 5% of the amount of the transfer, whichever is greater
Regular Purchase APR
15.49%-25.49%

Variable

Duration
18 months
Credit required
good-credit
Excellent/Good

Also Consider Also Consider

Wells Fargo Platinum Visa<sup>®</sup> Card

Wells Fargo Platinum Visa® Card

Wells Fargo Platinum Visa® Card has an intro 0% for 18 months on balance transfers and purchase (after, 16.40%-26.24% variable). However, you will pay late fees on any late payments. As long as you make on-time payments, the Wells Fargo Platinum Visa® Card makes an excellent 0% intro APR credit card.

Best Balance Transfer Credit Cards

BankAmericard® Credit Card

The BankAmericard® Credit Card provides cardholders a hard-to-find $0 intro balance transfer fee for the first 60 days your account is open. After that, the fee for future balance transfers is 3% (min. $10). This is a great way to save money on the 2-5% fee most other cards charge. For example, transferring a balance of $1,000 to another card with a 3% BT fee will incur a $30 fee. While you won’t be charged a fee on balances transferred within 60 days from account opening to the BankAmericard® Credit Card.

15 Months, $0 Intro BT Fee

BankAmericard<sup>®</sup> Credit Card

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BankAmericard® Credit Card

Intro BT APR
0%

promotional rate

Balance Transfer Fee
Introductory $0 balance transfer fee for the first 60 days your account is open. After that, the fee for future balance transfers is 3% (min. $10).
Regular Purchase APR
14.49%-24.49%

Variable

Duration
15 months
Credit required
good-credit

Excellent/Good

 

Also Consider Also Consider

Chase Slate<sup>®</sup>

Chase Slate®

Like Barclays, Chase Slate® offers an 0% Introductory APR for 15 months on purchases and balance transfers with a $0 introductory balance transfer fee for transfers made within the first 60 days of account opening. However, the card has a higher regular variable interest rate (16.24%-24.99%), 3% foreign transactions fees, and just a 21-day grace period before interest begins to accrue. Other than the fine print, Chase Slate® is a solid balance transfer credit card.

Santander Sphere® Credit Card

An intro 0% balance transfer, intro 0% APR for purchases, rewards, and modest interest rates. The Santander Sphere® Credit Card has it all. But the real reason to use this credit card is the 24-month balance transfer period. Even if you have substantial credit card debt, you could pay it all off by the end of the 24-month 0% balance transfer period. The card charges a 4% balance transfer fee, so this shouldn’t be your first choice card (it’s better to use two 15-month credit cards with 0% balance transfer fees). Despite the fee, you should consider this card if you’re committed to paying off all your credit card debt in under two years and live in CT, DC, DE, ME, MD, MA, NH, NJ, NY, PA, RI, or VT.

Longest Balance Transfer

Sphere<sup>®</sup> Credit Card from Santander

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Sphere® Credit Card from Santander

Intro BT APR
0%

promotional rate

Balance Transfer Fee
$10 or 4% of the amount of the transfer, whichever is greater
Regular Purchase APR
13.99%-23.99%

Variable

Duration
18 months
Credit required
fair-credit

Average

Also Consider Also Consider

Citi Simplicity<sup>®</sup> Card - No Late Fees Ever

Citi® Simplicity® Cardrewards, and modest interest rates

Citi® Simplicity® offers just a 21-month balance transfer period, but this card is much friendlier than the Santander Sphere® Credit Card. You’ll never pay late fees with Citi® Simplicity®, and the balance transfer fee is 3% instead of 4%. Citi® Simplicity® has some gotcha fees (like foreign transaction fees and cash advance fees), but it’s designed for ease of use. Take a look if you want a simpler balance transfer credit card.

Best Low Interest (Not 0%) Credit Cards

Elements Financial Platinum Visa® Credit Card

Elements Financial Platinum Visa® Credit Card is close to the perfect credit card. It offers a low everyday borrowing rate, a significant sign-up bonus, and no balance transfer fees. This card is straightforward and easy to use. You have to become a member of Elements Financial Credit Union, but you can easily join online. When it comes to low interest rates for people with average credit, this is our top choice.

No Gimmicks, 9.99% Interest Rate

Elements Financial Platinum Visa<sup>®</sup> Credit Card

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Elements Financial Platinum Visa® Credit Card

Annual fee
$0 For First Year
$0 Ongoing
Regular Purchase APR
10.49%

Variable

Credit required
fair-credit

Average

Visa® Platinum Card from Trustmark Bank

People with excellent credit can see rates as low as 7.15% with the Visa® Platinum Card from Trustmark Bank. Even if you have fair credit, your rate is only as high as 12.15%. The card isn’t perfect. It comes with a host of late fees, and other problematic fees that could lead to financial trouble. However, the low borrowing rate makes it worth considering, especially for people who don’t qualify for great rates elsewhere.

Great Rates for All

Visa<sup>®</sup> Platinum Card from Trustmark Bank

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Visa® Platinum Card from Trustmark Bank

Annual fee
$0 For First Year
$0 Ongoing
Regular Purchase APR
7.65%-12.65%

Variable

Credit required
fair-credit

Fair

Tinker Federal Credit Union Visa® Classic

Even people with fair credit can qualify for the Tinker Federal Credit Union Visa® Classic credit card. It’s a straightforward credit card with interest rates between 9.50% and 11.50%, depending on your credit score. The card doesn’t come with special perks or bonuses, but for people with fair credit, this is an excellent unsecured credit card option.

OK for Fair Credit

Tinker Federal Credit Union Visa® Classic

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Tinker Federal Credit Union Visa® Classic

Annual fee
$0 For First Year
$0 Ongoing
Regular Purchase APR
9.50%-11.50%

Variable

Credit required
fair-credit

Fair

Best Credit Cards for Building Your Credit Score

Discover it® Secured Credit Card

If you’re building or rebuilding your credit score, the Discover it® Secured Credit Card offers your best opportunity to build credit without unreasonable fees. You won’t pay an annual fee, the deposit is reasonable, and the path to a deposit return is automatic. Other secured credit cards have lower interest rates or smaller required deposits. However, the Discover it® offers the tools and insights that you need to increase your credit score.

Best Secured Card for Bad Credit

Discover it<sup>®</sup> Secured Card - No Annual Fee

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Rates & Fees

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Discover it® Secured Card - No Annual Fee

Annual fee
$0
Minimum Deposit
$200
Regular APR
24.49%

Variable

Credit required
bad-credit
Bad

Also Consider Also Consider

Capital One<sup>®</sup> Secured Mastercard<sup>®</sup>

Capital One® Secured MasterCard®

The Capital One® Secured MasterCard® offers deposits as low as $49, and you won’t pay an annual fee. Plus you’ll have access to the CreditWise tools that can help you build your credit. Unfortunately, Capital One doesn’t automatically review your credit use to return your security deposit. This means you will have to call the bank after a year to ask for a credit card upgrade.

The Capital One® Secured MasterCard® offers better benefits than other secured credit cards. For example, you’ll get price protection, free extended warranties, and secondary auto rental insurance. However, your credit limit will likely be so low that you can’t take advantage of these protections at first.

Best Credit Cards for Students

Discover it® for Students

The Discover it® for Students credit card offers reasonable rewards to students who might not qualify for better credit cards. With this card, you won’t pay an annual fee, you’ll have access to credit info, and you can earn up to 5% back in rotating categories. Plus, you’ll have a chance to double your rewards at the end of your first year and earn an extra $20 when you keep your grades up. This is an ideal card for college students who want to improve their credit score.

Discover it<sup>®</sup> for Students

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Rates & Fees

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Discover it® for Students

Annual fee
$0
Cashback Rate
5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate. 1% unlimited cash back automatically on all other purchases.
Regular APR
14.49%-23.49%

Variable

Credit required
fair-credit
Fair

Also Consider Also Consider

Journey<sup>®</sup> Student Rewards from Capital One<sup>®</sup>

Journey Student Credit Card from Capital One®

Students can earn up to 1.25% cash back when they use the Journey Student Credit Card from Capital One®. The card also comes with no foreign transaction fees, travel perks, and more. As a customer, you’ll also have access to the CreditWise® portal from Capital One®. The portal offers free insights into your credit score and the steps you can take to improve it. The rewards aren’t as good as the Discover it® for Students credit card, but it’s worth a look, especially if you already have a bank account with Capital One.

Best Credit Cards for Business Spending

Chase Ink Business PreferredSM Credit Card

The Chase Ink Business PreferredSM Credit Card offers a huge intro bonus and opportunities to earn triple points. Customers can use points directly with partner airlines, redeem through the Chase rewards portal, or choose a statement credit. With a huge intro bonus and great perks, this makes a great card for business owners who want to earn great rewards for their business spending.

Best Credit Card for Business Rewards

Ink Business Preferred℠ Credit Card

Ink Business Preferred℠ Credit Card

Annual fee
$95
Rewards
Earn 3 points per $1 in select business categories
Regular Purchase APR
17.49%-22.49%

Variable

Credit required
excellent-credit

Excellent

Also Consider Also Consider

Capital One<sup>®</sup> Spark<sup>®</sup> Cash for Business

Capital One® Spark® Cash for Business

For business owners who want straightforward cash back rewards, the Capital One® Spark® Cash for Business may be the best option. It comes with unlimited 2% cash back. Plus, you can earn a $500 intro bonus when you spend at least $4,500 in your first three months. The Capital One® Spark® Cash for Business makes a lot of sense for business owners who want to give their employees credit cards because they don’t charge to make employees authorized users.

The card does have a $95 annual fee (waived the first year), but any business owner who spends more than $1,000 per month will outearn the Capital One® Spark® Cash Select for Business, which only earns 1.5% back.

Also Consider Also Consider

Ink Business Cash℠ Credit Card

Chase Ink Business CashSM Card

The Chase Ink Business CashSM Card offers 12 months of interest-free financing for business owners. It’s not as long as the intro borrowing period from the Blue BusinessSM Plus Credit Card from American Express, but it is another great option. Right now, you’ll earn a $300 intro bonus when you spend $3,000 in your first three months with the Chase Ink Business CashSM Card. Plus, you’ll enjoy Chase’s famous travel insurance protections on a card with no annual fee. The only drawback to this card is the high everyday borrowing rates and the fees (including a 3% foreign transaction fee and late payment and returned payment fees).

Learn More

A credit card allows you to build a credit score without paying interest or fees, but you shouldn’t open a credit card if you don’t understand how to use it. In our in-depth study of credit card debt, we found that 73.2% of U.S. adults have a credit card, and 58% of them had credit card debt in the last year. That means that a lot of people pay credit card interest each year.

We want everyone to enjoy the benefits of credit card use, but you cannot enjoy the benefits unless you understand the credit card risks. A credit card is a short-term loan. To avoid paying interest on your credit card, you need to pay back the credit card balance on time and in full every month. When you’re prepared to take on that responsibility, open up a credit card.

If you’ve struggled with debt, consider setting guardrails in place for your credit card use. You could use debit cards for all purchases except a small monthly bill (like internet service). This will help you increase your credit score without pushing you to overspend. Some people use services like Debitize to deduct credit card expenses from their checking account as they spend. Both strategies can prevent you from going into debt.

Over time, you may learn about opportunities to borrow money at 0% interest rates, or to earn cash back rewards. However, when you first open a credit card, your primary goal should be building your credit score.

The best type of credit card depends on your credit history and your goals. Many people love credit card rewards. You can earn big sign-up bonuses, or up to 2% cash back on all your purchases when you use credit cards.

Of course, the best credit cards aren’t always the cards that offer the biggest rewards. If you’re trying to pay off debt, you’ll want to look at 0% balance transfer credit cards. People who are new to credit or need to rebuild credit should consider secured credit cards.

Most credit cards have high interest rates. That makes them less attractive for borrowing money in the long term. These days, you can find 0% purchase offers for up to 21 months. Consider 0% purchase cards for times when you have a cash flow emergency or when you want to pay off a larger purchase over time.

The best way to maximize credit card rewards is to take advantage of sign-up bonuses. Credit cards offer bonus rewards worth 10%-30% cash back when you meet a spending threshold. But you need to be careful with this type of strategy.

Deal chasers can end up in serious credit card debt, and they pay more in interest and fees than they earn in rewards. You also may end up paying multiple annual fees on cards you never use.

Low-interest credit cards can be an important part of your financial plan, but you have to be careful when you use them. If you qualify for a 0% APR credit card, consider using that promotional interest rate strategically. Some people use 0% APR rates to even out cash flow for a big purchase. For example, if you need materials for a remodel or new appliances, a 0% loan makes sense. Whenever you borrow on credit cards (even at a 0% rate), you need a plan to pay off the debt before the end of the intro rate. Borrowing money at double-digit rates always hurts. Part of your plan to eliminate debt should involve making more than the minimum payments on your credit card debt, even when the interest rate is at 0%.

Many people keep low-interest credit cards around for emergencies. This is an effective strategy when you’re just getting started or if you have unpredictable income. However, a low-interest credit card does not replace an emergency fund. Everyone can work to save a $1,000 checking account buffer as soon as possible. In time, you may want to save as much as six months of income in cash.

Balance transfers are one of the more complex credit card features. If you have credit card debt or personal loans, you can transfer the balance of an existing debt onto a new credit card. Why would you want to do that? Some credit cards offer 0% introductory interest rates for balance transfers. This means that you can save money on interest payments while you pay down debt.

In our popular guide to becoming debt free, we outline specific ways you can use a balance transfer. Our guidelines help you save money and improve your financial peace of mind.

If you want to use a balance transfer to pay off debt faster, these are the things you should know:

  1. You need to transfer the balance immediately. Balance transfer offers last anywhere from 30 to 90 days after you open a credit card. Take advantage of the 0% interest right away.
  2. You may pay a balance transfer fee. In general, you will pay a 3%-4% balance transfer fee. That means you’ll pay $300-$400 to transfer $10,000 of credit card debt.
  3. You can transfer debt more than once. Most people spend years getting into credit card debt. That means it could take years to get out of debt. You don’t need to pay painfully high interest rates if you can’t eliminate all your debt by the end of the promo period. Instead, make a plan to transfer your debt at the end of the introductory offer. For example, you can use a 15-month balance transfer followed by a 21-month balance transfer to eliminate your credit card debt in less than four years.
  4. Use this calculator to compare personal loans to balance transfers to see which will save you more money.

Credit cards are the best tool for building (or rebuilding) a credit score. They are the only credit option that allows you to build a credit score without paying interest or fees. We’ve seen people build credit scores in the 700s range with just a single credit card.

If you want to build your credit score using just credit cards, follow this strategy. First, identify the type of credit card you should use. Most people open a student credit card or a secured credit card for their first credit account. Look to prequalify for a credit card if possible. Since you want to keep your first credit card open forever, you’ll want to avoid predatory lenders with high fees and unclear contracts. We explain the red flags below.

Once you have a credit card, you’ll want to keep your credit card utilization low. People with the best credit scores typically have utilization rates below 15%. What does that mean? If you have a $200 credit limit, then aim to spend less than $30 per month on your credit card. That doesn’t mean carry a $30 balance from month to month. It means never spend more than $30 on your credit card at one time.

You’ll also need to pay your credit card bill on time and in full every month. This is the easiest way to build your credit score. Keep tabs on your credit score using Credit Karma or a tool offered by your bank. Don’t apply for new credit cards until you have average or good credit.

If you have no credit history, or items in collections, banks will consider you a poor credit risk. That means you won’t get the best credit card perks, and you’ll have high interest. However, people with poor credit shouldn’t be subject to unclear contracts or high fees without merit.

When we read credit card contracts, we’ve noticed that even secured credit cards come with complex fine print that includes:

  • Annual fees automatically added to bills.
  • No opportunity to transfer to an unsecured credit card.
  • User fees.
  • Interest begins accruing immediately (no grace period).

If you’ve got bad credit or no credit, banks like Credit One, First Premier, First Progress, and Continental Finance will target you with fee traps. Most or all products offered by these banks failed MagnifyMoney’s transparency score. If you have a card by one of these banks, shut it down. You don’t need these fee traps. Instead, open a secured credit card from a reputable bank or credit union that is willing to work with you.

Please note: If you’ve undergone bankruptcy in the last year, you may not qualify for secured credit cards from reputable institutions. Rather than choosing a shady lender, wait for a year to open a new credit card.

If you have just a few derogatory marks on your credit, you will probably qualify for secured credit cards that will help you rebuild your credit score.

When you use a credit card responsibly, you’ll enjoy two major perks. First, credit cards help you build your credit. This means you’ll pay less for auto loans or mortgages. It means that landlords will be more likely to accept you as a tenant, and you won’t have to pay deposits for utility bills.

The second perk is protection against fraud. By law, you’ll never pay more than $50 for fraudulent charges on your credit card. However, most credit cards offer an even better perk. They offer $0 fraud liability. Plus, credit card companies monitor your credit card use to shut down fraudulent transactions as soon as they happen.

Debit cards don’t offer that kind of protection. According to the FTC, your bank can hold you responsible for 100% of the losses associated with your debit card if you fail to report the fraud within 60 days.

Debit card liability from FTC.gov.

Most rewards credit cards offer other protections and perks, too. Check your credit card’s guide to benefits to see if you have these amazing benefits:

Price protection – You bought a big ticket item and then found a cheaper price a week later. If your credit card offers price protection, you can get the price difference refunded to your card. Cards that offer this perk usually offer price protection that lasts 30-90 days.

Purchase protection – Protect your items from theft or accidental damage for up to 30-90 days. Credit cards that offer this insurance may require proof of loss or damage. The program also compensates loss only up to $1,000 in most cases. Still, this is a great asset that most people don’t understand.

Visibility to credit score – You need to know your credit score and how to improve your score. Most credit card companies now offer free credit-reporting tools to help you improve your credit health.

Free extended warranties – Never pay for an extended warranty again. Many credit cards will match manufacturer warranties.

Auto rental collision damage waiver – If you don’t have rental protection on your car insurance, you want to rent cars with a credit card that offers primary auto rental collision damage waivers. This benefit will easily save you $20 or more every day that you rent a vehicle.

Trip interruption/cancellation insurance – Was your trip interrupted or canceled due to events outside of your control? Your credit card may refund what your airline, train, or hotel will not.

Lost luggage insurance – Airlines won’t compensate you when they lose your luggage, but your credit card will. Credit cards that offer this perk usually limit loss to $3,000 per person.

Concierge level identity theft resolution services – If you become the victim of identity theft, the biggest cost to you is your time. Some credit cards will resolve all identity-theft-related issues for you.

Access to airport lounges – Some high-fee travel credit cards give you unlimited access to airport travel lounges.

Upgrades on hotel stays – Credit cards offer all kinds of hotel-related perks. You can get everything from free breakfast to discounted room upgrades to elite hotel membership status.

Free checked bags – Some airline cards offer free checked bags. Other cards will refund airline fees up to a set amount each year.

Concierge services – Need help booking tickets or hotels or reserving restaurants? Call the concierge service provided by your credit card. They will provide you with insights and the help you need to make your life easier.

The most common credit card fees are late payment fees. If you pay your bill late by even a day, most credit card companies will automatically assess a fine in excess of $20 (some are as high as $39).

The good news is if you have a history of on-time payments, most banks will waive the late payment fee if you call and ask them.

Other common fees you should consider include:

  • Foreign transaction fees: You’ll pay 1%-3% on every transaction that you make overseas.
  • Returned payment fees: If the check for your payment bounces, you’ll pay a hefty fee in most cases.
  • Cash advance fees: Unless you want to pay $5-$10 to get cash out of an ATM, avoid cash advances.
  • Balance transfer fees: When you transfer a balance, you’ll generally pay 3%-4% of the total balance.
  • Penalty APR: Your interest rate may increase if you make a late payment.

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

If you look on the back of you bill, your credit card company will provide information on how to pay off your debt in three years or less.

It’s better to make no payment than to make a payment less than your required minimum. If you have multiple credit cards, try to make the minimum payments on the greatest number of credit cards. Don’t pay late on one credit card one month, and then a different card the next month. This will just get you into a game of robbing Peter to pay Paul.

If you truly cannot make the minimum payments, choose which card should go into default. Strategic default will trash your credit score, but it’s better than starving or going homeless.

In the long run, you will need to increase your income and decrease your expenses, so that you can pay off all your debt.

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

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

However, we recommend closing credit cards from time to time. You may wish to close a credit card that has an annual fee. Before you close a credit card, try to call the bank and ask about a no-fee option.

You might also need to close a secured credit card if your lender will not return your deposit despite your credit score growth.

If you choose to close a credit card, follow these guidelines: Don’t close a credit card if you need a new loan in the next six months. Open a new credit card before you close an existing credit card.

Every credit card application requires a bank to make a hard credit inquiry. A hard credit inquiry will reduce your credit score about 5-10 points in most cases. In general, you only want to apply for one credit card at a time. You should also wait at least three months between applications in most cases.

If you’ve got no credit, bad credit, or fair credit, you may struggle to get approved for a credit card. Instead of applying for tons of credit cards at once, look to prequalify for a credit card. This will keep your credit score up.

NO! Carrying a balance will not help your credit score. This nasty rumor keeps good people trapped in bad debt. You do not need to pay interest to grow your credit score.

Although carrying a balance will not help your credit score, using your credit card will help your score. If you don’t use your credit card, your bank will not report usage to the three major credit bureaus. This won’t help your credit score grow.

As a rule of thumb, you should use your credit card at least once every month. Once you make a charge, you can pay off your bill.

The law requires that any payment amount beyond the minimum due must be applied to the highest APR balance first. Most credit card companies apply the minimum payment to the lowest APR balance first. As a customer, you want to eliminate high APR debt. That means you should make payments as big as possible. The extra amount will always go to the most expensive debt first.

If a bank denies your credit card application, they must explain why they denied your application. However, answers can be frustratingly vague. These are the most common reasons that your credit card application was denied.

  • Bad credit history: If you have items in collections, late payments, auto repossession, foreclosure, or bankruptcy on your credit report, you may not qualify for certain credit cards. A history of defaulting on credit cards makes it particularly difficult to get a decent credit card. However, you can recover from bad credit. These six steps can help you improve your credit score over time.
  • No credit history: You may also struggle to get a credit card if you have no credit history. If you’ve never had a loan or credit card, consider a secured credit card first. You may also have some luck opening up a store or gas station credit card.
  • No evidence of income: Credit card companies need to know that you can pay your bill. If you’re unemployed or your income is sporadic, the company may not extend a line of credit to you.
  • You’re too young: If you’re under 18, you won’t qualify for a credit card without a co-signer. Young adults 18-21 years old may struggle to obtain a credit card, too. We recommend secured credit cards or student credit cards for young adults.
  • You applied for a bunch of credit cards: Applying for multiple credit cards at once sends negative signals to banks. They see someone who is desperate for credit. That means, you have a higher risk of default. Apply for one credit card at a time. Ideally, you should wait at least three months between credit card applications.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here

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Best of, Earning Cashback

7 Best Cash Back Credit Cards for Dining Out in May 2018

Editorial Note: 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 prior to publication.

iStock

If you’re someone who frequently dines out, cash back credit cards that reward you for it are a great way to put money back in your pocket. Cash back cards for dining can earn you rewards for purchases made through restaurants, bars and takeout establishments. This is a great way for foodies to reap extra rewards just by doing what they love — eating!

We picked the following cards because they offer competitive cash back rates above 2% for dining-related purchases, as well as have low or no annual fees. As with most rewards credit cards, you may lose your cash back rewards if your account is not in good standing.

Uber Visa Card – 4% cash back

Uber Visa Card

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

4% back on dining, 3% back on hotel and airfare, 2% back for online purchases, and 1% on everything else

Regular Purchase APR

16.49%-25.24%

variable

The Uber Visa Card offers unlimited 4% back on dining purchases that will benefit the biggest foodies. Additionally, earn 3% back on hotels and airfare, including vacation home rentals; 2% back on online purchases that include Uber, online shopping and video and music streaming services; and 1% back on all other purchases. Dining purchases include those made at restaurants, fast-food restaurants, bars and UberEATS. Your rewards come in the form of points with a value of $0.01 per point (so 2,500 points can be redeemed for a $25 statement credit, for example). Another cool perk: There is a great sign-up bonus of 10,000 points (worth $100) if you spend $500 within the first 90 days of account opening. You can read our full review here.

AARP® Credit Card from Chase – 3% cash back

AARP<sup>®</sup> Credit Card from Chase Bank

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

3% cash back at restaurants and gas station purchases, 1% on everything else

Regular Purchase APR

17.74%-24.49%

Variable

Don’t be led astray by the name: This card isn’t limited to people over 50 — anyone can apply. The AARP® Credit Card from Chase offers 3% cash back at restaurants (including fast food) and gas station purchases, and all other purchases will earn 1%. There is a great sign-up bonus of $200 after you spend $500 on purchases in the first three months from account opening.

The information related to the AARP® Credit Card from Chase has been collected by MagnifyMoney.com and has not been reviewed or provided by the issuer of this card.

Marvel Mastercard® – 3% cash back

Marvel Mastercard<sup>®</sup>

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

3% cash back on dining, select entertainment, online purchases at Marvel.com and Marvel’s official merchandise booths and 1% cash back on all other purchases

Regular Purchase APR

16.49%-26.49%

Variable

The Marvel Mastercard® is a great choice for Marvel fans who want to benefit from exclusive Marvel discounts, with the added benefit of earning a high cash back rate on dining purchases. You earn 3% cash back on dining, select entertainment, online purchases at Marvel.com and Marvel’s official merchandise booths and 1% cash back on all other purchases. Some of the Marvel related perks you earn include 10% off merchandise purchases at MarvelShop.com, free shipping offers and special discounts on Marvel Unlimited or Marvel digital comics. Terms apply.

There is also a new cardmember bonus of a $25 statement credit after your first purchase with your card.

Sam’s Club Mastercard® – 3% cash back

Sams Club<sup>®</sup> Mastercard<sup>®</sup>

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

5% cash back on gas (on first $6,000 per year in purchases, then 1%), 3% on dining and travel, and 1% on other purchases

Regular Purchase APR

11.65%

Variable

APPLY NOW Secured

on Sam's Club’s secure website

The Sam’s Club Mastercard® offers 3% cash back on restaurant purchases (excluding purchases at wholesale clubs other than Sam’s Club). You will also earn 5% cash back on gas (on the first $6,000 per year in purchases, then 1%), 3% on travel and 1% on other purchases. From now until Dec. 31, you can receive a $45 statement credit if you open your card online and make a $45 purchase on Samsclub.com on the same day you open your account. However, you do need a Sam’s Club membership to apply, and current membership fees start at $45 per year.

Take note that you’re limited to earning a maximum of $5,000 in cash back rewards in a calendar year. Checks are issued each February for the cash back earned during the previous calendar year. You will lose any cash back you earned if you end your membership or let it lapse, or if you accumulate less than $5 cash back in a calendar year.

Costco Anywhere Visa® Card by Citi – 3% cash back

Costco Anywhere Visa<sup>®</sup> Card from Citi

Annual fee

$0

Cashback Rate

4% cash back on eligible gas for the first $7,000 per year and then 1% thereafter, 3% on restaurants & travel, 2% at Costco & Costco.com, 1% on all other purchases

Regular Purchase APR

16.74%* (Variable)

APPLY NOW Secured

on Citibank’s secure website

The Costco Anywhere Visa® Card by Citi requires a Costco membership (currently, annual memberships start at $60) and offers 4% cash back on eligible gas for the first $7,000 per year and then 1% thereafter, 3% on restaurants & travel, 2% at Costco & Costco.com, 1% on all other purchases. Take note that purchases made at bakeries and certain restaurants/cafes in department stores, groceries or warehouse clubs will only earn 1%.

Cash back comes as an annual credit card reward certificate in February billing statements, redeemable for cash or merchandise at U.S. Costco Warehouses. You must maintain your Costco membership to receive rewards, and you will also lose rewards if you accumulate less than $1 in cash back or if you don’t redeem them by the end of the year.

Capital One® Savor® Cash Rewards Credit Card – 3% cash back

Capital One<sup>®</sup> Savor<sup>®</sup> Cash Rewards Credit Card

Annual fee

$0

Cashback Rate

3% Cash Back on dining; 2% Cash Back on groceries; 1% Cash Back on all other purchases

Regular Purchase APR

15.99% - 24.74% (Variable)

APPLY NOW Secured

on Capital One’s secure website

The Capital One® Savor® Cash Rewards Credit Card enables you to  earn unlimited 3% Cash Back on dining; 2% Cash Back on groceries; 1% Cash Back on all other purchases. Also, there is a One-time $150 cash bonus after you spend $500 on purchases within the first 3 months from account opening. (The card website specifies that the one-time bonus is available by applying through the site, and may not be available if an applicant navigates away from the page. Also, the bonus may not be available for existing or previous accountholders.)

Alternative: Rotating cash back categories

Discover it® - Cashback Match™ – 5% cash back

Discover it<sup>®</sup> - Cashback Match<sup>TM</sup>

Annual fee

$0

Cashback Rate

5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate. 1% unlimited cash back automatically on all other purchases.

Regular APR

13.49% - 24.49% Variable

APPLY NOW Secured

on Discover Bank’s secure website

Rates & Fees

The Discover it® - Cashback Match™ offers 5% cash back in different places (on up to $1,500 in purchases each quarter, then 1%) and unlimited 1% on all other purchases, automatically.Restaurants are slated to be a bonus category from July 1 through Sept. 30, 2018. Set a reminder to activate the bonus category. In addition to a cash back program, Discover is offering a first year cash back reward in which it will automatically match all the cash back you’ve earned at the end of your first year (new cardmembers only).

Are these deals the best for you?

Cash back rewards should only be pursued by responsible credit users who have no trouble paying off their balance on time and in full every month. If you’re a credit all-star who also has an affinity for dining out, these cards will provide the best perks.

If you’re apt to carry a balance, check out our picks for the best credit cards that can help you pay down debt faster.

As always, check the fine print on each card before signing up, taking special note of any fees. With those things in mind, decide which rewards structure best serves your typical spending activity and enjoy the cash back benefits — and the good eats.

promo-cashback-wide

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Alexandria White
Alexandria White |

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

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