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Best of, Credit Cards

Best Credit Cards for Bad Credit March 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

If you have bad credit, it can be difficult to get approved for loans and credit cards. But it is not impossible. Even people with bad credit have options – which we will now explain.

What exactly is a bad credit score? When we’re talking about obtaining credit via credit cards, the magic number is somewhere between 620 and 650. If your credit score falls below 650, you’re going to have a difficult time obtaining credit from some of the larger lending institutions, and if it’s below 620, you’re going to have a difficult time obtaining credit from anyone — including smaller financial institutions like credit unions and independent marketplace lenders.

There are, however, some products for which you’ll have an easier time qualifying. Before you apply, make sure you’re prepared to be responsible with your new line of credit so you can boost your score and credit history rather than damaging it further. The best way to do this is to spend within your means by creating a budget and sticking to it. Here are some helpful tools to help you do just that. Remember to always pay your bill off in full on or before the due date each month to establish good credit.

Here are the products and topics we’ll be discussing today:

Check if You’re Pre-qualified

Before you apply for a credit card check if you’re pre-qualified from a variety of institutions. This does not hurt your credit score and is a good first step when looking to apply for credit. You can read our complete guide to getting pre-qualified for a credit card here.

Build Credit with Secured Credit Cards

If you are trying to rebuild your credit, one of the best approaches is to get a secured credit card. In order to get the card, you will have to write a check to deposit with the credit card company. This money will be your line of credit.

In order to effectively rebuild your credit, you must actually use the card, and we recommend not charging more than 20% of your credit line. For example, if you have a $500 credit line, you should not charge more than $100. Then, pay off your balance in full every single month. You can even build credit with $10 a month on a secured card and see your credit score rise.

After you’ve consistently managed your secured card well over a period of time, you may be able to increase your credit line beyond your initial deposit or migrate to an unsecured credit card. With most companies, this is a tedious process that you’ll have to initiate. You also aren’t guaranteed to get results even after you’ve made a request.

Discover operates differently than most companies in this realm, making it our number one pick for secured cards.

Discover it® Secured

If you’re looking for a secured credit card, look no further than the Discover it® Secured. On top of being great for people with a bad credit score, Discover will also accept applicants who have no credit history at all. Discover offers great ways for you to rebuild your credit and be on the way to an unsecured card.

Discover it® Secured

APPLY NOW Secured

on Discover Bank’s secure website

Rates & Fees

Read Full Review

Discover it® Secured

Annual fee
$0
Minimum Deposit
$200
Regular APR
25.24% Variable
Credit required
bad-credit
Poor/New

Magnify Glass Pros

  • Bankruptcies May Be OK If you have a Chapter 7 bankruptcy on your credit report, it won’t automatically disqualify you from getting approved for a Discover it® Secured. However, there are no guaranteed approvals. This is a positive if you’ve had trouble getting a credit card in the past.
  • Helps You Rebuild Your Credit This is a legitimate way to rebuild your credit when you don’t qualify for other cards, or the agreement you are offered by another company is laden with fees and high interest rates.
  • Offers a Rewards Program Not only can you rebuild your credit, but you’ll also earn rewards points as you do so. This is a great feature that many secured cards don’t offer and is a reason why we consider Discover number one. Earn 2% cash back at restaurants or gas stations up to $1,000 in combined purchases each quarter. Plus 1% cash back on all other credit card purchases. During your first year, Discover will also match your cash back.
  • Easy to Get a Credit Increase Every eight months, Discover reviews your account to see if you’re eligible for an increase on your line of credit. This is typically a process you’d have to initiate with other lenders. So rest assured that Discover will give you an updated line of credit reflective of your changing situation.
  • Easy to Transition to an Unsecured Card Some companies will make it difficult to transition from a secured to unsecured card. Not Discover. They assess your eligibility during that eight-month checkup. This helps facilitate you from a secured to unsecured card.

Cons Cons

  • Rewards Limited The higher 2% reward tier is limited to the first $1,000 you spend at restaurants and gas stations each quarter. Regardless, that’s $20 back, which is a great reward when your goal is to increase your credit score.
  • Be Careful Not to Overspend As with the other cards in this review, you have to be careful that the rewards program doesn’t entice you to overspend. Otherwise, you run the risk of damaging your credit score further. Make sure that your primary goal, to raise your credit score, precedes the urge to spend too much money in order to get rewards.
Bottom line

Bottom line

The Discover it® Secured is a fantastic product for those with bad credit. Pay your balance in full by the end of every statement period and your financial life is almost guaranteed to get rosier. You’ll even have the added benefit of rewards — just be careful not to let the rewards program lure you into overspending. With proper practices, you’ll be on your way to an unsecured card and a better credit score.

Read our full review of the Discover it® Secured

Also Consider

OpenSky® Secured Visa® Credit Card from Capital Bank N.A.

OpenSky® Secured Visa® Credit Card

This card does not do a credit check, and no bank account is needed to apply. This is beneficial for those with low credit scores or no access to a bank account. If you’ve filed for bankruptcy, you’re in luck because they don’t care to know, unlike other institutions. However, OpenSky® Secured Visa® Credit Card charges a $35 annual fee, which the Discover it® Secured does not. This can be a deal breaker if you don’t want to pay a fee, since there are many secured cards without fees.

Read MagnifyMoney’s full Secured Credit Card Guide.

Our Credit Union Favorite

If you’re looking to open a credit card with bad credit, it can be hard to find a card you qualify for. That’s where credit unions come in. They are sometimes more accepting of your credit history and have cards especially designed for people with low credit scores — helping your approval chances.

Visa® Classic from Georgia's Own Credit Union

Georgia’s Own Credit Union offers a variety of credit cards all with low interest. The Visa® Classic from Georgia's Own Credit Union is positioned toward those who need to rebuild credit and boasts a low APR. When you apply for a credit card on Georgia’s Own website you are directed toward an application that is for all credit cards they offer. This means that depending on your creditworthiness, you may not be directed to the Visa® Classic from Georgia's Own Credit Union as an option. Therefore, if you want to apply directly for the card, the best bet is to speak with a loan officer who will tell you if you’re pre-approved for the Visa® Classic from Georgia's Own Credit Union.

Visa® Classic from Georgia's Own Credit Union

APPLY NOW Secured

on Georgia's Own Credit Union’s secure website

Read Full Review

Visa® Classic from Georgia's Own Credit Union

Annual fee
$0
Regular Purchase APR
13.99%–18.99% Variable
Credit required
fair-credit
Fair

Magnify Glass Pros

  • Good chance of getting approved Georgia’s Own tailored this credit card toward those needing to rebuild or re-establish their credit history. This gives those with bad credit a greater chance of being approved. Also, if your score is above 620, you are more likely to be approved.
  • Fair APR This card has a fair APR ranging from 13.99%–18.99% Variable. This is significantly lower compared to other cards targeted to people with less than perfect credit, with APRs as high as 19.99%. Although your goal is to pay every bill in full and on time each month, if you keep a balance, this low APR won’t accrue as much interest as other cards.

Cons Cons

  • Have to join the credit union In order to get this card, you have to join Georgia’s Own Credit Union. Anyone can become a member regardless of residence. If you don’t qualify for Georgia’s Own free eligibility options, you will have to join the GettingAhead Association, which has a $5 annual membership fee. The best bet is to speak to a loan officer (404-874-1166) and see if you’re pre-approved for the credit card, and if pre-approved, you can join GettingAhead while completing your credit card application. All members will also need to keep $5 in a savings account that must remain in the account while you have the card open.
  • Foreign transaction fee of 2% of the U.S. dollar amount of each transaction Make sure to leave this card at home when you travel abroad as you’ll be charged a foreign transaction fee of 2% of the U.S. dollar amount of each transaction. This is slightly lower than most cards, which charge a 3% foreign transaction fee, yet high enough to increase your bill significantly if you make purchases abroad.
  • No rewards program There is no rewards program for this credit card. Georgia’s Own offers several other cards that have rewards programs, but you may have a harder time qualifying if you don’t have a good credit score.
Bottom line

Bottom line

The Visa® Classic from Georgia's Own Credit Union is a good option for people who have a bad credit score. If you don’t mind joining a credit union and plan on practicing proper credit behavior, you can rebuild your credit score. Later on, you’ll be able to qualify for other credit cards that have rewards programs.

Read our full review of the Visa® Classic from Georgia's Own Credit Union

Best for Cash: Personal Loans

If you’re looking to get some cash in your pocket, credit cards in general aren’t your best answer. Cash advances are not ideal, and putting a purchase you can’t currently afford onto a credit card with a high interest rate attributable to your not-so-great credit score is going to be an expensive venture.

Instead, you’ll want to consider personal loans. They’re admittedly a little more work up front with the application process, but the savings can be worth it. You can check to see if you are prequalified without impacting your credit score at most lenders. And LendingTree (the parent company of MagnifyMoney) has created a tool that lets you compare rates from dozens of lenders at once, without impacting your score.

LendingTree

LendingTree, our parent company, offers a one-stop tool that can help borrowers find numerous personal loan offers. After entering some basic information, you can receive offers from lenders in a matter of minutes. If you prefer to go directly to the lender’s site you can use one of the options listed below.

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

Advertiser Disclosure

LendingTree

Loan Amount
up to $50,000
Term
24 to 60 Months
APR Range
As low as 3.99%
Origination Fee
Varies
Credit Required
Bad or Could be Better/Average/Good/Excellent
Soft Pull
You can get your rate without hurting your score.

LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.


A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected).

Magnify Glass Pros

  • Check Multiple Offers at Once You can check personal loan offers from a wide range of lenders including Avant, LendingClub and Best Egg. The entire process happens online for free and is fast and easy.
  • Soft Pull on Your Credit LendingTree performs a soft pulll on your credit in order to give you accurate loan offers. This does not affect your credit score and can give you a good picture of what to expect if you’re approved for a loan.

Cons Cons

  • Need to Create and Account to View Offers The only way to view your personal loan offers is to create and account at LendingTree. This is a minor step, but it does allow you the ease of saving your offers so you can review them later.
Bottom line

Bottom line

LendingTree offers a great tool that lets you easily check your rates for a variety of lenders, all in a matter of minutes. This is a great way for you to see what rates you may get and allows you to shop around for the best offer, without the hassle of going to multiple websites.

Avant

Avant offers personal loans even to those with less-than-desirable credit. Because there is no prepayment penalty, you can pay off your loan before the end of your term without consequence.

SEE OFFERS Secured

on LendingTree’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

Avant

Loan Amount
$2,000 – $35,000
Term
24 to 60 Months
APR Range
9.95%-35.99%
Origination Fee
Up to 4.75%
Soft Pull
Checking your Loan Options will not affect your credit score.

Avant is an online lender that offers personal loans ranging from $2,000 to $35,000. ... Read More

Magnify Glass Pros

  • Apply Online The entire Avant application process happens online. This saves you the hassle of filling out paperwork and visiting a local branch.
  • Check Your Loan Options Before You Apply Avant allows you to check your Loan Options that you would be offered with a soft pull on your credit. This will not impact your credit score. This is helpful if you’re shopping around for different rates and gives you a realistic picture of what to expect should you choose Avant.
  • Could Save Money over Subprime Credit Cards Depending on the interest rate and upfront fee percentage you are offered, a personal loan from Avant could save you money over putting purchases on a subprime credit card. The ability to preview your interest rate can also help you compare between personal loans and other possible options.

Cons Cons

  • High Interest Rates Because you’re a subprime borrower, you’re not likely to qualify for the lowest interest rate offered. You’re more likely to be offered something closer to the 35.99% rate. This is a very high rate, and it’s important that you make all of your payments on time to avoid paying interest and damaging your credit score.
Bottom line

Bottom line

While there’s only one con for Avant’s personal loans, it’s a pretty big one. The interest rate can be extremely high, so do your math before deciding if this is a good product for you. And be sure to take advantage of the fact that they’ll let you check your interest rate before officially submitting your application. Use this feature to shop around for best offers and check if you qualify for a better loan

OneMain Financial

Avant is easier to apply for as the application process will take place online, but if you’re willing to go somewhere in person, you can also apply with OneMain Financial. Its application is also online, but in order to be approved, you’ll have to show up at a local branch with documentation backing the information you submitted at home.

OneMain Financial

Loan Amount
$1,500 – $30,000
Term
24 to 60 Months
APR Range
16.05%-35.99%
Origination Fee
Varies

If you have a credit score below 600, OneMain Financial is one of the few lenders that you can use to get a personal loan.... Read More


Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

Magnify Glass Pros

  • Same-day funds when you get a prepaid debit card or check, up to $10,000
  • No prepayment penalties
  • Several locations across 44 states

Cons Cons

  • High rates up to 35.99%
  • 5% late payment penalty
Bottom line

Bottom line

If you have a lower credit score and are limited in your options to take out a personal loan, OneMain Financial could provide you with a solution. However, be sure you understand the loan terms and the full cost of the loan.

Last Resort: Subprime Credit Cards

Subprime credit cards are those that lending institutions issue to those with “bad” credit. They are not a good solution to your credit woes. They almost always come with high interest rates and a litany of fees — both of which make it difficult to use this product responsibly.

For example, First Premier makes a business out of lending to subprime borrowers with bad credit. Most of their applicants are only awarded a $300 line of credit. That’s after they pay a $95 fee just to apply (which is not a common practice in the credit card industry) and a $75 annual fee. If you are approved for a higher credit limit, your annual fee for the first year may be higher ($79-$125). In the second year, the annual fee drops ($45-$49), but at this point you are charged a $6.25-$10.40 account servicing fee every single month.

The cherry on top? The card’s APR is 36%. Heaven forbid you are ever late on a payment — your balance will skyrocket with the insanely high interest rate. Don’t forget about the late payment fee — up to $38.

Another example is Credit One Bank — not to be confused with Capitol One Bank, though their logos do look eerily similar. Not every Credit One Bank credit card comes with outrageous fees. In fact, there are 26 separate possible card agreements. But if you are a subprime borrower, you’re likely to qualify for higher rates.

Your credit may not be great, but that doesn’t make subprime credit cards a “fair” product. You may qualify for other, better options that aren’t as laden with fees. That’s why we recommend you first check if you’re pre-qualified for offers then look at store cards and personal loans before choosing a subprime credit card.

Bad Credit FAQs

Store cards can be used as payment anywhere the credit card company, such as MasterCard or Visa, is accepted. Private label cards can only be used at the branded company’s store. For example, if you get a private label card for New York & Company, you can only use it for purchases at New York & Company. You would not be able to use it at any other store.

Your best bet is to ask. If you are applying online, pick up the phone and call or use the company’s online chat if available.

If you have a physical card in front of you, you’ll notice that store cards always have the associated credit card company shown on the front, whether that be Visa, American Express, MasterCard, or another.

Private label cards tend not to display this information, though a major financial institution that a lot of companies work with for their private label cards is Comenity. If you have a card associated with Comenity Bank, it is likely a private label card.

No. Most businesses have an online application for their store cards.

Personal loans are typically issued by more reputable lenders who aspire to more transparency than those in the payday loan space. Payday loans are often advertised as having interest rates somewhere between 10% and 30%, but that interest is charged over a short period of time, making their effective APR (annual percentage rate) much higher. Some payday loans have an effective APR of 400% or more.

The lender isn’t likely to tell you that, though. Many businesses in this space are predatory. Payday loans also tend to come with outrageous fees.

While rates and fees on personal loans for those with bad credit aren’t ideal, they’re more than substantially lower than those of payday loans. Make no mistake about it: despite enticing advertising promises of deceptive payday lenders, personal loans are an infinitely better option.

Borrowing cash from your credit card company often comes with a fee of 1%-5%. That may not seem terrible when you look at the upfront fees of many personal loans, but you also have to account for interest.

Unlike purchases you charge to your card, interest on cash advances starts accruing immediately. You do not get to wait for your next statement to be issued. The interest rate for cash advances is also often higher than that of regular purchases.

A personal loan is an installment loan with a balance that will go down if you pay the minimum payment each month. This makes it far easier to manage than debt accrued via a cash advance. If you only pay the minimum payment on a cash advance each month, your balance will go up at a quick pace, potentially spiraling out of control.

First of all, the less you charge, the easier it will be to pay back. Since you have a bad credit score, you may have had issues with charging too much in the past and being unable to pay it off.

Secondly, around 30% of your credit score is made up of your credit utilization ratio. You find this ratio by dividing the amount of credit extended to you by the amount you have borrowed. By borrowing only 20% of your available credit, you reduce the risk of having your current balance negatively impacting your credit score.

It can sometimes take a year or more to see your score improve by 100 points if you are doing everything correctly and responsibly.

Yes, but only if you use them responsibly, paying the balance off in full every month. Keep in mind your credit utilization ratio here, too.

Potentially. Ten percent of your credit score is made up of something called “credit mix.” You don’t need to have every single type of credit in your credit report, but you should have more than one type. Here are the five that count:

  • Credit cards
  • Installment loans
  • Retail accounts
  • Finance company accounts
  • Mortgage loans

Conceivably, if you have a mortgage or business debt tied to your Social Security number or EIN, you might be able to get away with rebuilding your score through a personal loan (which is an installment loan). The key is to manage all of those debts well — and to do so consistently — especially since you already have bad credit.

No. Transactions on prepaid debit cards do not get reported to the credit bureaus. Also, it’s important to remember than many prepaid cards come with a ton of fees.

Advertiser Disclosure: The products that appear on this site may be 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 financial institutions or all products offered available in the marketplace.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne here

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Best of

Best Checking Accounts With No Overdraft Fees

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

iStock

If you’ve ever spent more money than you had in your checking account and got slammed with overdraft fees, you know how quickly they can drain your wallet. You might not even realize you’ve overdrawn your account and keep racking up additional charges before it hits you.

Tired of worrying about overdraft fees? We’ve combed our database to find seven banks that either don’t charge overdraft fees, provide a simple, no-charge method of overdraft protection, or decline transactions so you don’t overdraw in the first place.

Here are the best banks we can find with no overdraft fees:

Axos Bank Rewards Checking

Rewards Checking - 3 QualificationsThis rewards checking account from Axos Bank — formerly known as Bank of Internet USA — has no overdraft or non-sufficient funds fees. Beyond that, the account grants up to 1.25% APY so long as you meet the following requirements:

  • Monthly direct deposits of $1,000 or more earns 0.42%
  • Using your debit card 10 times per month (provided those transactions are at least $3 each) earns an additional 0.42%
  • Using the debit card 15 times per month earns yet another 0.42%

The account’s APY, combined with its lack of maintenance fees and required minimum monthly balance, makes it an attractive option for high-frequency users.

Learn More Secured

on Axos Bank’s secure website

Member FDIC

nbkc bank Personal Account

Personal AccountBased in the Kansas City metro area, this bank offers customers nationwide online access to its Personal checking account. For a mere $5 opening balance, you get a checking account with complimentary online banking, a box of paper checks, bill pay, e-statements and more — and most importantly for this list, there’s absolutely zero overdraft fees.

While using any of the approximately 32,000 ATMs in the bank’s network is free, you will have to pay whatever ATMs outside of its network charge per use. But nbkc commits to reimbursing $12 of those fees every month, so that should take some of the sting out.

Learn More Secured

on nbkc bank’s secure website

Member FDIC

Simple’s Safe-to-Spend checking features

Simple Checking AccountLike Axos Bank, Simple’s checking account doesn’t charge for overdraft fees or returned item fees. There are no minimums, no monthly fees, and you get access to 40,000 fee-free ATMs.

Simple’s an online-only bank built with mobile in mind, meaning that while you can access most of its features from your computer, the bank recommends you conduct your business via its smartphone app.

Overall, Simple offers a different kind of banking experience, as it provides tools to help you manage your money. With its “Safe-to-Spend” program, Simple takes into account any upcoming bills or scheduled transfers you have, and does the math and tell you what you can afford to spend. You can also track your financial goals within its mobile app.

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on Simple’s secure website

Chime spending account

Checking AccountAnother online mobile bank, Chime doesn’t charge customers overdraft fees for a very simple reason — it doesn’t allow people to overdraw their accounts in the first place. Like some of the other banks on this list, Chime will decline a transaction that would plunge a customer’s account into a negative balance.

As with other online-only banks, you sacrifice the convenience of being able to stroll strolling into a local branch for the elimination of fees charged by traditional banks. The lone exception is a $2.50 for over-the-counter cash withdrawals or using an ATM not part of its 38,000 machine network.

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on Chime’s secure website

Member FDIC

Aspiration Spend and Save Account

Aspiration AccountIf you’re willing to take a risk on a non-traditional bank that charges zero fees, then look no further than the Aspiration Spend and Save account. Online-only bank Aspiration markets itself as a financial institution for the globally-conscious client, and as part of their ethos refuses to charge fees for anything — including overdrafts.

You do need to deposit an initial $10 to open the account, but once you’re set up the only fees you pay are the ones you voluntarily give to Aspiration, 10% of which are donated to charity. Even better, the account boasts a 2.00% APY and free access to every ATM in existence.

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on Aspiration’s secure website

Ally Bank Interest Checking Account

Interest Checking AccountThere is no overdraft fee when you have an Ally Interest Checking account, if you enroll in overdraft protection. You can enroll in overdraft protection by linking an Ally savings or money market account to your checking account, and funds will be moved from the linked account to the checking account in $100 increments.

If you chose not to enroll in overdraft protection, Ally charges a once-a-day overdraft fee of $25. That means if you have more than one overdraft item in a single day, the most you’ll be charged is $25 – you won’t get charged a fee every time an overdraft occurs. Of course, Ally will continue to charge you this $25 fee each day your account balance remains negative, so it’s in your best interest to rectify the overdraft as soon as possible.

On the plus side, there aren’t any maintenance fees, there’s no minimum to open an account, and there are no fees incurred when transferring money to a non-Ally bank account.

Learn More Secured

on Ally Bank’s secure website

Member FDIC

Fidelity Cash Management Account

Cash Management AccountThe Fidelity Cash Management Account promises “all the features you need from a traditional checking account, without the bank fees.” Fidelity holds true to this promise with no overdraft fees, and opts to decline transactions that would put you in overdraft by default.

However if you enroll in the account’s free Cash Manager program, you can link a savings or brokerage account to your cash management account. Funds will automatically be transferred (up to $99,999.99 per day) to cover a pending transaction if you don’t have enough in your account, but there’s no option to open a line of credit (an overdraft option we’ll discuss later).

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on Fidelity’s secure website

Member FDIC

Learn more

What happens if you incur multiple overdraft fees in a day?

At many banks, overdraft fees aren’t always a simple one-time charge. If you aren’t paying attention, you could keep charging your debit card for multiple transactions before realizing you’ve been spending money you don’t have. Depending on the bank’s policy, each overdraft instance may incur its own fee, and there are varying limits on how many fees a customer can get hit with in a single day. Wells Fargo, for example, charges an overdraft fee of $35, with a cap of three charges per day, meaning a customer could be on the hook for up to $105 in fees in one day.

Avoid paying triple-figure fees by knowing when your checking account is running low or by taking swift action once you realize you’re in overdraft territory. The best way to do this is to sign up for account alerts with your bank. Many financial institutions will alert you via email or text (or both) if your account’s balance falls below a certain amount.

Remember, you may think you’re safe but have failed to take into account automatic payments set up for expenses such as utility bills, Netflix, etc. Make sure you keep more than you think you need in your checking account, if possible.

Why you might want to opt out of overdraft protection

Plenty of banks provide overdraft protection services to help provide support to customers who find themselves in an overdraft situation. These banks usually offer protection in one of the following ways:

  • Linking another account to your checking account. Some banks, including Axos and Ally on this list, offer an overdraft protection service where you link a savings or money market account to your checking account. If you make a transaction that would cause an overdraft, money from this backup account would transfer to your checking account to cover the cost.
  • Offering an overdraft line of credit. If you make a purchase that exceeds the amount of money in your account, the financial institution will cover the amount you owe and treat that sum as a loan, on which you’ll have to pay interest and (probably) a fee.

Of the two methods, linking your checking account to another account presents less risk. Taking an overdraft line of credit means paying interest, and if you can’t correct the overdraft in a timely matter, you could find yourself owing more than you originally bargained for, thanks to snowballing interest payments.

While overdraft protection allows you to make your purchases and provides a way to cover the difference, it often comes with a price. Banks can charge fees for transferring funds between linked accounts, for example, which you may want to avoid.

By opting out of overdraft protection, most banks will simply decline to process transactions that your account balance can’t cover. That’s great if you’re trying to buy a pair of sneakers and don’t want to get hit with fees, but if you need to make an emergency purchase, you could find yourself in trouble.

The bottom line

Overdraft fees are expensive and annoying. Buying an item that costs $5 and getting hit with a $27 fee is a pointless expense. Incurring bank fees like this means you’re essentially throwing money out of the window. If you’re prone to overdrawing your account, plug that leak by signing up with one of these seven no-overdraft-fee checking accounts.

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Advertiser Disclosure: The products that appear on this site may be 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 financial institutions or all products offered available in the marketplace.

James Ellis
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James Ellis is a writer at MagnifyMoney. You can email James here

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The Best No-Penalty CD Rates

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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CDs, or certificates of deposit, work under an easy-to-understand premise: You agree to place your money with a bank or credit union for a set amount of time, during which it will earn interest. At the end of the period, you get your money back plus a nice chunk of interest earnings. But if you withdraw money from your CD before the term expires — or before the CD “matures,” in financial parlance — the institution will charge you a penalty fee for breaking the terms of your agreement.

Generally depositors understand that they can’t touch their funds while they’re in the CD account. But the accounts below are special CDs that let customers withdrawal money from a CD account with no penalty charge at whatever time they want. No-penalty CDs aren’t generally widespread, but we’ve selected the best of these accounts available nationwide, based on the following criteria:

  • An APY of at least 1.8%
  • No penalties for early withdrawal of funds
  • Available across the nation

The best no-penalty CD rates in March 2019

1. PurePoint Financial

TermAPYMinimum balance to earn the APY
11-month2.15%$10,000
13-month2.60%$10,000
14-month2.25%$10,000

The online arm of Union Bank offers the best APY among the no-penalty CD accounts reviewed, which makes it a no-brainer — assuming you have the $10,000 needed for the minimum deposit. PurePoint’s sweet spot is the 13-month term no-penalty CD account, which offers an APY of 2.60% that trounces the 2.35% offered by its closest competitor in this space.

This no-penalty CD accounts come with the usual caveats — you can’t make any partial withdrawal of funds, and you have to wait seven days after your initial deposit before withdrawing. However, if you have the sizable chunk of change needed to open one of these accounts, you’ll earn some of the highest APY for your money.

LEARN MORE Secured

on PurePoint Financial’s secure website

Member FDIC

2. Marcus by Goldman Sachs®

TermAPYMinimum balance to earn the APY
7-month2.25%
$500
11-month2.30%
$500
13-month2.35%
$500

Marcus by Goldman Sachs stakes a strong claim to offering the best no-penalty CDs around, requiring a mere $500 deposit for customers to start earning APYs well above 2%. As with almost every CD, the longer the term the higher the APY, which is why the 13-month CD earns 2.35% as opposed to the 7-month CD’s 2.25%.

Interested customers should be aware, however, that like other no-penalty CDs on this list, the accounts offered by this bank lock in your money for seven days after you deposit. You can’t open a 7-month no-penalty CD on Monday and take out your money on Wednesday (if you needed to for whatever reason).

In addition, these accounts don’t allow any partial withdrawals of the principal. If you deposited $1,000 in an account and want to withdrawal money before that CD matures, you won’t be hit with any penalties — but you have to take out all $1,000 and your account will then be closed.

LEARN MORE Secured

on Goldman Sachs Bank USA’s secure website

Member FDIC

3. My eBanc

TermAPYMinimum balance to earn the APY
11-month2.30%$10,000

This Florida-based online savings bank may go by a somewhat generic name, but it’s a division of BAC Florida Bank, a financial institution with more than 45 years of history. The no-penalty CD offered here is called the Flex Time Deposit, and if customers have the $10,000 to open an account, they can earn an APY of 2.30%, which ranks among the best of the accounts on this list.

Where this account truly shines is that it allows for two partial withdrawals of your funds without having to close your CD account entirely (as long as the balance still remains at $10,000 or more). All of the other no-penalty CD accounts on this list require you to withdrawal all of the principal and any interest earned. The flexibility offered by My eBanc’s account, coupled with its competitive APY, make it one of the top choices for no-penalty CD accounts.

4. Ally Bank

TermAPYMinimum balance to earn the APY
11 months1.80%Up to $5,000
11 months2.15%$5,000
11 months2.30%$25,000

Online-only bank Ally offers a single no-penalty CD account with an 11-month term that earns more APY depending on how much you deposit. Because it has a low minimum balance requirement, this account will attract consumers without a lot of money to spare who still want a no-penalty CD. Of course with modest minimum balances comes an APY to match — the 1.80% earned in this account’s bottom tier is among the lowest listed in this roundup.

Similar to all of the other products listed, this Ally no-penalty CD account makes you wait for the seventh day after the initial deposit to withdraw your funds, and the bank doesn’t allow for partial withdrawals. The bank also offers what it calls its 10 Day Best Rate Guarantee, promising that if depositors fund this CD within 10 days of opening it, Ally will make sure the account earns the highest rate available should the bank change its rate within that 10 day period. It’s by no means a game-changer, but a nice bonus to avoid feeling left out if you deposit a pile of money in your CD on Thursday, only to discover on Friday that Ally hiked its rates.

LEARN MORE Secured

on Ally Bank’s secure website

Member FDIC

5. Chartway Credit Union

TermAPYMinimum balance to earn the APY
12-month share certificate2.20%
$500

This credit union may be based in Virginia Beach, Va., but you can potentially become a member, so long as they meet one of the following conditions:

  • You reside or go to school or a place of worship in one of the areas served by a local branch of the credit union. Currently, Chartway Credit Union operates branches in the states of Florida, Texas, Utah and Virginia.
  • You have a family member who’s already a Chartway member
  • You or someone in your immediate family works at a company that utilizes Chartway’s financial services for its employees
  • You make a $10 donation to the We Promise Foundation, a charity founded by the credit union.

Once you’re a member, you can open a 12-month share certificate. Doing so requires a minimum deposit of $500, on which you’ll earn an APY of 2.20%. As with all the other no-penalty CD accounts listed, you can’t make a partial withdrawal of your funds — it’s all or nothing.

LEARN MORE Secured

on Chartway Federal Credit Union’s secure website

NCUA Insured

6. CIT Bank

TermAPYMinimum balance to earn the APY
11-month2.05%$1,000

If you have the $1,000 minimum deposit for this no-penalty CD account, CIT Bank will give you a rate of 2.05% APY on an 11-month term. While that’s not as much as the 2.30% earned with the comparable CD at Marcus by Goldman Sachs, the deal offered by CIT could provide a decent alternative.

Still, despositers determined to save with CIT Bank may want to look at some of its non-CD products, particularly its Savings Builder savings account. Customers can earn 2.45% APY by opening the account with a $100 deposit and making an additional deposit of at least $100 every month. Alternatively, if you have $25,000 to park in a savings account, you can just deposit it in the account and reap the same APY.

LEARN MORE Secured

on CIT Bank’s secure website

Member FDIC

Honorable mention: AgFed

TermAPYMinimum balance to earn the APY
6 months1.80%
$1,000
12 months2.55%
$1,000
18 months2.65%
$1,000
24 months2.85%
$1,000
36 months2.95%
$1,000
48 months3.05%
$1,000
60 months3.15%
$1,000

AgFed offers a range of CDs whose estimated APY rates vary depending on term. Terms range from six to 60 months, and the minimum initial deposit is $1,000.

AgFed’s CDs do levy substantial early withdrawal penalties, but there’s a loophole: a single withdrawal can be made during the original term of the certificate without a penalty being imposed. Any additional withdrawals will, however, be subject to their penalties, which vary based on the term of the CD but sometimes mean forfeiting all of your interest earnings.

LEARN MORE Secured

on AgFed Credit Union’s secure website

NCUA Insured

Learn more: Is a no-penalty CD worth it?

According to Ken Tumin, our in-house savings expert and founder of LendingTree-owned DepositAccounts.com, no-penalty CDs aren’t a bad option since there isn’t really much risk to trying one out. Just aim to find the longest term no-penalty CD deal you can since the rates will generally be higher.

“When the bank has your money for longer, they’ll usually offer a higher interest rate — and that interest will have more time to compound,” Tumin says. “So if you open a no-penalty CD, you should go for the one with the longest term possible. The rates will likely still be higher, and after all, if you decide to take the money out early, it’s no problem.”

Also, look for no-penalty CDs that offer the benefit on full withdrawals. Some banks only allow penalty-free partial withdrawals, Tumin warns.

Building a CD ladder to avoid withdrawal fees

If you’re interested in using CDs while still maintaining access to your funds, there’s another approach you could consider: building a CD ladder.

It’s can be a complicated strategy, but in short, you split your deposit up into smaller chunks and open several CDs with various term lengths. When the CDs reach maturity, you can renew the account and lengthen the term or withdraw the money if you need to. This way, you can take advantage of higher interest rates while still avoiding early withdrawal fees.

For a step-by-step guide to building a CD ladder, check out our guide linked above. And for even more savings strategies and tactics, keep your eye on the blog. We’re always reviewing the latest financial products and accounts to help you find the best solutions for your money.

Advertiser Disclosure: The products that appear on this site may be 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 financial institutions or all products offered available in the marketplace.

James Ellis
James Ellis |

James Ellis is a writer at MagnifyMoney. You can email James here

TAGS: