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Wedding Loans: Find Better Options with Lower Rates

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.

Frugal Wedding

Updated November 03, 2017
Did you know that the average cost of a wedding in the United States is around $31,200? That’s the number uncovered in a 2014 survey conducted by The Knot, a top resource for wedding planning. A figure that doesn’t even include the honeymoon.

If you’re planning a wedding, you’re probably well aware that your big day isn’t likely to be cheap, especially if you have a guest list that exceeds 100.

So what can you do if you can’t afford your dream wedding and aren’t willing (or ready) to compromise on cost? You may have already come across wedding loans, but it’s important to know a few things before you sign for one.

This guide is intended to walk you through the pros and cons of a wedding loan, what to look out for with lenders, other methods you can use to affordably finance your wedding, and finally, what alternatives are available if you realize that a loan isn’t the right option for you.

Wedding Loans Are Personal Loans in Disguise

When searching Google for “wedding loans,” you’ll find plenty of lenders offering them. However, you should know that a wedding loan is really just a personal loan that anyone can get. They’re not specifically meant for weddings. In fact, if you fill out an application for a personal loan and have to choose the purpose of the loan, you’ll likely have a few options to choose from.

Lenders are aware that people are searching for “wedding loans” just like they’re searching for “home renovation loans” and “vacation loans.” They create these specific pages you find for those keywords (so they get more search engine traffic), when they actually offer more than just wedding loans.

What this means is that you should broaden your search to all personal loan lenders. You don’t have to specifically search for wedding loans as, in most cases, you can use a personal loan for a wedding (or anything, for that matter). The good news is that there are plenty of personal loan lenders out there for you to shop around with.

What to Watch Out For

As with any loan, you want to get the lowest APR possible. Unfortunately, because lenders have these “wedding loan” pages, you may not be aware that other types of loans are offered at a lower APR. If you find yourself on such a page, try going to the lender’s homepage to see how the rates compare.

promo-personalloan-halfFor example, upon searching “wedding loans,” Karrot’s wedding loan came up in the results. The landing page says it offers APRs as low as 6.44%, but if you visit the main page, you’ll see that personal loans are available with APRs starting at 6.44%. For the most part, the APR you’re eligible for won’t depend on the purpose of the loan; it will depend on your credit history. It’s worth digging deeper so you’re not caught paying more than you have to.

As you go through search results, you may also find that there are sites specifically for wedding loans that are a bit misleading. For example, MyWeddingLoans.com looks like a legitimate site, but when you click “apply,” it leads to LendingClub’s website.

The URL of the application also contains a “partner ID,” which means it’s an affiliate of LendingClub and receives a commission every time someone applies through that link. MyWeddingLoan discloses this in the fine print on its “Terms of Use” page. It’s important to know that MyWeddingLoans isn’t the actual lender or the company you’ll be dealing with if you obtain financing.

Other “wedding specific” lenders, such as Promise Financial, claim there are no hidden fees and prepayment penalties. While its fees aren’t necessarily “hidden,” there are fees to watch out for, such as an origination fee. You need to make sure you read the fine print for any loan you’re considering; otherwise it may cost you more.

[How Personal Loans Work and the Traps to Avoid]

What Will a Wedding Loan Cost You?

Do you think weddings are expensive? Then you should know how costly personal loans are. You’re going to pay interest on your loan, which means you’ll end up paying more than what you borrow. Let’s look at an example.

Say you want to finance $20,000 of your wedding as you’ve already saved $10,000. $20,000 on a 3-year term at a fixed APR of 7.246% results in a monthly payment of $619.79. You’ll pay a total of $22,312.44. If you choose a 4-year term at a fixed rate of 8.247%, your monthly payment will be $490.58, for a total amount of $23,547.84.

Both of these are actual examples, and in each case, you end up paying a few thousand dollars in interest. The APR you’re eligible for is largely based on your credit score. Having a higher credit score and a longer credit history will make lower APRs available to you.

If you’re absolutely set on borrowing money for your wedding, then it literally pays to increase your credit score prior to applying for a personal loan. Do yourself a favor and check your score using a free tool like Credit Karma or Credit Sesame, and download your free credit report at annualcreditreport.com. Is your score below 700? Then have a look at 6 ways you can improve your credit score before you shop for a loan.

As you’ll see below, some lenders have APRs with a large range. To get on the lower end of that range, you should have a score close to 700. Having a score below 600 will put you on the high end of the range, which will make the loan less affordable.

Least Expensive Wedding Loan Options – Good Credit Required

These lenders are your best bet if you must take out a personal loan to afford your wedding. They have the lowest APRs, lowest fees, and the most flexibility. These are all online lenders for a reason – traditional banks tend to have pricier personal loans.

We recommend shopping around to all the lenders that make the most sense for your situation. Similar inquiries to your credit made within a 30-day period will only count as one inquiry, so your credit score won’t take too much of a hit.

SoFi: One of the leading online lenders in almost all categories, SoFi offers borrowers excellent terms. There’s No origination fee to worry about, and fixed APRs range from 6.99% to 14.87% if enrolled in autopay. You can borrow a maximum of $50,000 (hopefully you don’t need that much for your wedding) on terms of 36 to 84 months. The minimum FICO score , although your accounts should be in good standing.

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Earnest: Another good choice for personal loans, Earnest offers borrowers $75,000 on loans that have terms ranging 36 to 60 months with no origination fee. You need a minimum credit score of 650 to be approved.

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LightStream: You can borrow $100,000 on terms ranging 24 to 144 months. APRs range from 3.09% to 14.24%, and there’s No origination fee. The minimum credit score needed to apply is 660.  LightStream’s maximum APR is slightly higher than SoFi’s and Earnest’s, and it’s the only lender out of these choices that requires a hard credit pull.

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Upstart: We recommend looking at SoFi and Earnest first, only because of the lack of an origination fee. However, if your credit isn’t the best, lenders such as Upstart can help. You can borrow up to $50,000 on a 36 & 60 month term with APRs ranging from 8.36% to 29.99%. Origination fees range from 0.00% - 8.00% depending on the terms of your loan, and a minimum credit score of 640 is required.

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Prosper: This is a peer-to-peer marketplace where people can invest in your loan. As a result, requirements are a bit leaner, but you’ll pay for it with higher APRs and an origination fee. APRs range from 6.95% to 35.99%, origination fees range from 2.41% - 5.00%, and the maximum amount you can borrow is $40,000. You can borrow on 36 or 60-month terms], and need a minimum credit score of 640 to qualify.

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LendingClub: Another great option is LendingClub, which has a minimum credit score requirement of 600. It works in much the same way as Prosper as it’s also a peer-to-peer marketplace lender. Again, you can borrow up to $40,000 for 36 or 60 months, and APRs range from 6.16% to 35.89%, with origination fees ranging from 1.00% - 6.00%. LendingClub is not available in Iowa or West Virginia.

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PenFed: Pentagon Federal Credit Union offers personal loans starting with a fixed interest rate of 6.49% APR for 60 months. You do need to be a member of the credit union, but anyone can become. You pay a one time dues to Voices for America’s Troops for $14 or National Military Family Association for $15 in order to become eligible for a PenFed membership.

PenFed Credit Union

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As you can see, Upstart, Prosper, and LendingClub all have high APR caps. If your credit isn’t in the best shape, you’ll likely be approved for a rate on the higher end.

Also note that aside from LightStream and PenFed, all of these lenders allow you to apply for a pre-approval without a hard credit pull. That means you can see your potential terms before committing, and your credit score won’t be harmed in the process. Just remember that these rates and terms are estimated; those rates and terms may change after a hard credit pull.

[How to Create a Frugal Wedding]

Credit Card Options for Those With Good Credit

We wouldn’t normally recommend that you finance your wedding on a credit card, as purchase APRs are typically much higher than APRs on personal loans. However, if you have the means to pay off the debt quickly, then you might want to consider these 0% APR offers. This gives you a way to avoid paying interest on your debt for a short period of time.

Please keep in mind when using this method that you should be absolutely certain you could pay off the amount you finance within the 0% APR introductory period. If you don’t, you’ll be subject to very high interest rates after it expires, negating the entire point of this strategy.

For that reason, it’s a good idea to know how much you’re planning to finance beforehand. You can use that number to calculate how much you’ll have to pay per month to get your balance paid off. Make sure it’s realistic for your situation.

Citi Simplicity® Card - No Late Fees Ever: This card has an introductory 0%* for 18 months on Purchases*. That means you have a year and a half to pay off your balance before the regular purchase APR kicks in, currently 15.74% - 25.74%* (Variable). The Citi Simplicity® Card - No Late Fees Ever also has no late fees, a $0* annual fee, and no penalty APR if you’re late in making a payment. These benefits make it a great everyday use card after you’re done paying off your wedding charges.

Chase Slate®: With this card, you can save with a 0% Intro APR on Balance Transfers for 15 months and get 0% Intro APR on Purchases for 15 months (16.74% - 25.49% Variable APR, thereafter). This is one of our favorite balance transfer offers.

The information related to the Chase Slate® has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

If you don’t qualify for any of these offers, you can try checking around local credit unions and community banks for low interest credit cards. Many of our top recommendations have low APRs. While these aren’t ideal, they may be more affordable than a personal loan, depending on your credit.

Because credit cards are revolving debt, if you go this route, do not be fooled into making just the minimum payments. Do your best to pay extra and get the balance paid off within 3 years or less.

We also want to mention the possibility of using a 0% introductory APR balance transfer offer. This should only be considered if you have strong credit (otherwise you might not be approved for one). If you must charge wedding expenses to your card and can’t pay them off right away, or you plan on using your credit card to finance most of your wedding, then you can still avoid paying interest with this option.

[Find the Best 0% APR Balance Transfer Offers Here.]

Top Wedding Loans for Those With Bad / Poor Credit

There are a few solutions available for couples with bad or poor credit that don’t qualify for any of the above offers, but they come with a hefty price tag. We’re hesitant to recommend going this route in the first place, but if your wedding can’t wait and you don’t have time to improve your credit score, these options might be worth looking at.

Avant: With no prepayment fee and APRs ranging from 9.95% to 35.99%, Avant could be a good option. You could borrow $2,000 to $35,000 and need a credit score of 580 to apply. Through Avant, you could get your money as soon as the next business day. Loans through Avant are available in all states except Colorado, Iowa, West Virginia, and Vermont.

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

OneMain Financial: This company is known for making loans to those with less than stellar credit, and its rates reflect that reality. You can only borrow a maximum of $30,000. OneMain Financial has an origination fee that varies by state, the APRs range from 16.05% to 35.99%, and you need a minimum credit score of 600 to apply.

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FreedomPlus: With APRs ranging from 4.99% to 29.99%, this loan is similar to Avant in that you’re probably looking at an APR closer to 0.00% - 5.00% that you need to watch out for. You can borrow up to $35,000 on terms of 24 to 60 months, and need a minimum score of 700 to qualify.

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Note that with the exception of Avant, all of these lenders use a hard credit pull when you check your rate. (Avant does not use a hard pull to check your rate, but will complete a hard pull if you decide to take out the loan).

Consider Creative Alternatives to Borrowing

As you can tell, financing all or part of your wedding may cost a lot more than you anticipated. If it’s at all possible, we suggest using one of the alternatives below as opposed to going into debt for your big day.

While it’s undoubtedly a day you want to remember forever, starting out married life with a bunch of debt (especially if you already have consumer debt or student loans to deal with) doesn’t feel great. It also doesn’t bode well for your relationship, considering arguments about money are a top reason for divorce.

Instead of taking chances with debt and your sanity, try these alternatives instead.

Hold off on the wedding: According to another survey conducted by The Knot in 2014, the average length of an engagement is 14 months. That’s not a long time to save up $10,000, let alone $30,000 (the estimated average cost of a wedding). That would take a monthly savings of $714 and $2,142 respectively. Instead of rushing to the altar, try lengthening your engagement to lessen the financial burden. Giving yourself more time to save is a wise idea; what’s the rush?

“Crowdfund” your honeymoon: We don’t literally mean asking strangers on the internet to fund your honeymoon, but you could ask your family and friends to “crowdfund” your honeymoon by using sites like Honeyfund. It’s a honeymoon registry that allows you to ask for cash from your wedding guests in a classier way, and hopefully, they feel more comfortable giving it. Remember, that $31,000 figure didn’t take the honeymoon into account. Now isn’t the time to go further into debt for your dream vacation.

Side hustle for extra money: If you’re really hurting for money, you need to find a way to earn more of it. Side hustling can be a great option if you have marketable skills that are in demand, especially online. These extra jobs should also be flexible – what’s better than working from home? You can also try picking up extra shifts at your job, working overtime, or getting a part-time job temporarily to cover costs. This doesn’t have to be forever; you just need enough stashed away in your wedding savings fund to cover your needs.

Reevaluate your wedding budget: Speaking of needs, are you going over your original wedding budget? Something might have to give. It’s time to take another look at it. For example, maybe you need to narrow your guest list down. Perhaps you need to reconsider your dream venue if it’s costing you an arm and a leg. Can you have DIY decorations and invitations? Postage often costs couples much more than they thought; classy invitations from Paperless Post can help offset that cost. The Knot has a list of common wedding expenses and what percentage of your budget can be expected to go toward each here if you need a comparison.

Know how to deal with deposits: Many items, such as the venue, food, and photography, will require a deposit. That means you don’t need to pay an overwhelming amount in one lump sum, but it does mean that you need to come up with something to reserve these things. If you have anything saved for your wedding, you should earmark it for deposits first to ensure you can pay the upfront cost.

You can pay for deposits with cash or check, but some advice says to pay via credit card to cover you in case something happens. As most deposits are non-refundable, if you’re unhappy with the services provided, or if services aren’t provided, you can contact your credit card company and dispute the charge as long as you do so within 60 days of the event. Some vendors and merchants might do wrong by you, and miscommunication can occur. Using your credit card gives you a better chance of recovering your money.

Of course, you should only charge expenses that you have the cash to cover. Putting your wedding expenses on a credit card and then not paying it off in full can be extremely expensive – the average credit card APR is 15%!

Remember to keep in mind that the deposit is only one portion of what you have to pay. You’ll need to come up with the rest of the funds prior to your wedding. Do your best to save up before then. If it helps, create a separate “wedding expenses” savings account so you won’t be tempted to raid it for another reason.

[How to Effectively Combine Income and Debts After Marriage]

Be Realistic and Create a Plan

You now have all the information you need to create a plan to fund your wedding. You might find that it’s not as easy as you thought it would be, but don’t let that dampen your spirits. If your wedding means that much to you, you’ll find a way to make it happen. Whether you take on side jobs to earn more, slash everyday expenses (such as cutting cable and brown-bagging lunch), or work toward improving your credit score, you can make room in your regular budget for your wedding.

Just stay realistic on costs and include your future spouse in all discussions pertaining to your finances. Now is the time to work as a team, not to surprise each other by going into debt to afford certain aspects of your wedding. Talk it through –your future spouse may have a great idea on how to lessen the financial burden of your wedding

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.

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

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Best of, Earning Interest

The Best Credit Union CD Rates – September 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 June 2018, the average one-year credit union CD had a 0.92% annual percentage yield (APY), compared to the 0.75% 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 September 8, 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, 1.75% 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 1.75%, compared to the national average of 0.92% in June. You would earn $17.50 on a $1,000 deposit. If you withdraw your money early, however, you’ll face a penalty of 90 days’ worth of interest.

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NASA Federal Credit Union – 1-Year Share Certificate, 1.00% 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.

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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.

CommunityWide Federal Credit Union – 12 Month CD, 2.50% APY, min. deposit $2,000

Communitywide Federal Credit Union
Membership to CommunityWide Federal Credit Union is open to members of the Michiana Goodwill Boosters or Marine Corps. of St. Joseph Valley. However, if you’re not a member of either of those organizations, you can qualify by becoming a donor member of select organizations such as the Y.M.C.A.

Once you’re a member of CommunityWide Federal Credit Union, you can open a 12-month CD with a minimum of $2,000. Their early withdrawal penalty equals the withdrawn amount multiplied by the number of days that remain in the term.

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Connexus Credit Union – 12 Month Certificate, 2.50% APY, min. deposit $5,000

12 Month Certificate from Connexus Credit Union With a $5 donation to the Connexus Association, anyone can join Connexus Credit Union. The Connexus Association assists educational institutions by providing scholarships and financial information. Once you become a member of the credit union, you’ll be able to open their 12 month CD with a $5,000 deposit.

If you’re able to deposit $5,000 into Connexus’s 12 month CD, you’ll earn $125 by the end of the term. However, if you withdraw funds early, you’ll be penalized with 90 days’ worth of interest.

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PenFed Credit Union – 1-Year Money Market Certificate, 2.45% APY, min. deposit $1,000

PenFed Credit Union
PenFed has an outstanding APY of 2.45%. With a minimum deposit of $1,000, you could earn $24.50 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.

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on PenFed Credit Union’s secure website

NCUA Insured

Alliant Credit Union – 12-17 Month Share CD, 2.65% APY, min. deposit $25,000

Alliant Credit Union
 With a minimum deposit of $1,000, you could earn an APY of 2.65% on a 12-17 month CD. If you deposit $25,000 or more, you would be able to earn an APY of 2.65% with the same term. An early withdrawal penalty of 90 days’ worth of interest may be imposed if you withdraw funds prior to the CD’s maturity date.

With a $10 donation to Foster Care to Success, you can easily become a member of Alliant Credit Union. You can also become a member if you are an employee or retiree of certain organizations, related to existing Alliant members, or live or work in qualifying communities.

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on Alliant Credit Union’s secure website

USAlliance Financial – 12 Month CD, 2.28% 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.

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on USALLIANCE Financial’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.

Redstone Federal Credit Union – 12 Month MemberPlus Regular Share Certificate, 2.17% APY, min. deposit $1,000

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 2.17% with a minimum deposit of $1,000. 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.

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on Redstone Federal Credit Union’s secure website

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.

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on Eastman Credit Union’s secure website

Wright-Patt Credit Union – 1-Year Certificate, 1.76% 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 $8.80 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 1.87%, which will return $1,870 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.

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on Wright-Patt Credit Union’s secure website

Delta Community Credit Union – 1-Year Certificate, 1.25% 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 1.10% to 1.25%. The early withdrawal penalty is 90 days’ worth of interest on a 12-month CD.

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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 March 2018. 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.

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.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

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The Best IRA CD Rates – September 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 September 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 September 8, 2018.)

The best IRA rates in September 2018

Term

Institution

APY

Minimum Deposit Amount

3 months

TIAA Bank

1.65%

$5,000

6 months

CommunityWide Federal Credit Union

2.15%

$2,000

12 months

Connexus Credit Union

2.50%

$5,000

18 months

Interior Credit Union

2.68%

$500

2 years

Justice Federal Credit Union

3.25%

$500

3 years

Salem Five

3.00%

$2,000

4 years

CommunityWide Federal Credit Union

3.20%

$2,000

5 years

Achieva Credit Union

4.00%

$500

 

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

TIAA Bank
Three-month regular CDs are earning an average interest rate of 0.36% APY currently. EverBank is exceeding that, with an interest rate of 1.65% APY with their 3-Month Yield Pledge IRA CD. With that APY and a $5,000 minimum deposit, you would earn $19.88 when the certificate matures.

LEARN MORE Secured

on TIAA Bank’s secure website

6-Month IRA CD – CommunityWide Credit Union, 6 Month IRA (Traditional, Roth)

Communitywide Federal Credit Union

Six-month IRA CDs typically earn a little bit better, but they’re normally still not great. CommunityWide Federal Credit Union, however, is breaking that norm by offering the highest interest rate at 2.15% APY for deposits of $2,000 and over. That translates into earnings of $21.39 if you were only to deposit the minimum amount. Compare that to the average of all regular 6 month CDs, at 0.63%.

LEARN MORE Secured

on Communitywide Federal Credit Union’s secure website

1-Year IRA CD Rates – Connexus Credit Union, 1 Year IRA (Traditional, Roth, CESA)

Connexus Credit Union

Regular one-year CDs earn an average interest rate of 1.00% APY. Connexus Credit Union, however, is offering a one-year IRA CD at 2.50% APY. You’ll need a $5,000 minimum deposit to earn $125.00 in interest once the CD matures.

LEARN MORE Secured

on Connexus Credit Union’s secure website

18-Month IRA CD Rates – Interior Federal Credit Union, 18 Month IRA Certificate (Traditional, Roth, CESA)

Interior Federal Credit Union
18-month regular CDs earn an average interest rate of 1.23% APY. Interior Federal Credit Union on the other hand, is currently offering 2.68% APY on an 18-month IRA CD. This would translate into earnings of $20.23 with a minimum $500 deposit.

LEARN MORE Secured

on Interior Federal Credit Union’s secure website

2-Year IRA CD Rates – Justice Federal Credit Union, 24 Month IRA Certificate Special w/ Checking – New Money (Traditional, Roth)

Justice Federal Credit Union
Two-year regular CDs earn an average interest rate of 1.32% APY. Justice Federal Credit Union, on the other hand, is currently offering 3.25% APY on a 2-year IRA CD. This would translate into earnings of $33.03 with a minimum $500 deposit.

LEARN MORE Secured

on Justice Federal Credit Union’s secure website

3-Year IRA CD Rates – Salem Five, 36 Month IRA Special (Traditional, Roth, CESA, SEP)

Salem Five
Three-year regular CDs are earning an average interest rate of 1.52% APY currently. Salem Five is exceeding that, with an interest rate of 3.00% APY with their 36-month IRA CD. With those interest rates and a $2,000 minimum deposit, you would earn $185.45 when the certificate matures.

LEARN MORE Secured

on Salem Five’s secure website

4-Year IRA CD Rates – CommunityWide Federal Credit Union, 48 Month Personal IRA

Communitywide Federal Credit Union

Four-year regular CDs are currently earning an average interest rate of 1.67% APY. CommunityWide Federal Credit Union claims the top interest rate for these IRA CDs, with an interest rate of 3.20% APY. You would earn $268.55 on this CD with a $2,000 minimum deposit.

LEARN MORE Secured

on Communitywide Federal Credit Union’s secure website

5-Year IRA CD Rates – Achieva Credit Union – 60 Month IRA/457B (Traditional, Roth, CESA)

Achieva Credit Union
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 1.97% APY, however Achieva Credit Union outperforms the average with a 4.00% APY on its 5-year IRA CD for members. The minimum deposit is $500 to earn this APY. If you’re able to deposit more than $500, you may eligible for a higher APY. With a deposit of $25,000 you may be able to earn an APY of 4.10%. If you’re able to deposit $75,000, you may be able to earn 4.20% APY.

One item to note with this credit union: the rates may vary by region, so make sure you check to see if you’re eligible for the above rates in your location.

LEARN MORE Secured

on Achieva Credit Union’s secure website

NCUA Insured

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

AFFCU

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 less than Achieva Credit Union which offers a 4.00% 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 AFFCU’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 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.

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.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

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Best of, Earning Interest

The Top 6 Month CD Rates for September 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 September 7, 2018, and we excluded promotional offerings. The national average APY on 6 month CDs (among banks and credit unions) is 0.65%, 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 DollarSavingsDirect

DollarSavingsDirect

6 month CD APY: 2.15%
Bank information: DollarSavingsDirect is an online division of Emigrant Bank. Founded by Irish emigrants in 1850, Emigrant Bank has created various online divisions throughout the years. DollarSavingsDirect seems to be the most active and competitive online division when it comes to its rates.
Where to open CD account: Online
Minimum balance to open: $1,000
Maintenance fees: $0
Early withdrawal penalties: 90 days’ interest

LEARN MORE Secured

on DollarSavingsDirect’s secure website

Member FDIC

My Banking Direct

My Banking Direct

6 month CD APY: 2.15%
Bank information: My Banking Direct is a division of New York Community Bank. The bank was originally chartered in 1859 in Queens, NY. My Banking Direct was created as a way to offer consumers higher rates on deposit accounts.
Where to open CD account: Online
Minimum balance to open: $2,500
Maintenance fees: $0
Early withdrawal penalties: 90 days’ interest

LEARN MORE Secured

on My Banking Direct’s secure website

NexBank

NexBank

6 month CD APY: 2.15%
Bank information: NexBank is also located in Dallas, TX. While it primarily focuses on commercial banking, mortgage banking, and institutional services, it does offer CDs and personal banking to customers nationwide.
Where to open CD account: Online
Minimum balance to open: $10,000
Maintenance fees: $0
Early withdrawal penalties: Determined by the bank

LEARN MORE Secured

on NexBank’s secure website

6-Month CD from Limelight Bank

Limelight Bank

6 month CD APY: 2.11%
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

CD Bank

CD Bank

6 month CD APY: 2.10%
Bank information: A subsidiary of TBK Bank, SSB, this online bank has no branch locations, but offers service online in all 50 states.
Where to open CD account: Online
Minimum balance to open: $10,000
Maintenance fees: $0
Early withdrawal penalties: 90 days’ interest

LEARN MORE Secured

on CD Bank’s secure website

Credit unions with the best 6 month CD rates

36 Month Share Certificate from Communitywide Federal Credit Union

CommunityWide Federal Credit Union

6 month CD APY: 2.15%
Credit union information: Founded as a credit union to provide quality financial services to individuals in South Bend, IN, CommunityWide Federal  Credit Union has grown to offer their services to various communities within Indiana as well as the digital world.
Membership details: Anyone can become a member by donating to a list of organizations including the Y.M.C.A. If you’re a member of the Michiana Goodwill Boosters or Marine Corps. League of St. Joseph Valley, you’re also eligible to become a member.
Where to open CD account: Online
Minimum balance to open: $2,000
Maintenance fees: $0
Early withdrawal penalties: Equal to the amount withdrawn multiplied by the remaining days left in the term.

LEARN MORE Secured

on Communitywide Federal Credit Union’s secure website

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: 2.00%
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

Bellco Credit Union

Bellco Credit Union

6 month CD APY: 1.90%
Credit union information: Bellco Credit Union was founded in 1936. This credit union is located in Colorado and is focused on supporting their community.
Membership details: If you don’t qualify by one of their location or employment field of membership requirements, you may join the Bellco Foundation with minimum donation of $10. All new members will also need to pay a one-time $5 membership fee and make a minimum deposit of $25.
Where to open CD account: Online
Minimum balance to open: $500
Maintenance fees: $0
Early withdrawal penalties: 90 days’ interest.

LEARN MORE Secured

on Bellco Credit Union’s secure website

Spectrum Credit Union

Spectrum Credit Union

6 month CD APY: 1.75%
Credit union information: Spectrum Credit Union was founded in 1973. This credit union is a division of Chevron Federal Credit Union and serves members worldwide through their online banking platform.
Membership details: If you don’t qualify by one of their location or employment field of membership requirements, you may apply for membership by joining one of their non-profit partners: Contra Costa Country Historical Society or Navy League of the United States.
Where to open CD account: Online
Minimum balance to open: $500
Maintenance fees: $0
Early withdrawal penalties: Equal to three months of dividends.

LEARN MORE Secured

on Spectrum 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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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 — September 2018

Institution

APY

Minimum balance amount

Live Oak Bank

1.05%

None

Digital Federal Credit Union (DCU)

5.12%

$1,000

Capital One

1.75%

None

Community Bank of Pleasant Hill

1.72%

None

Goldwater Bank

1.65%

$0.01

First Internet Bank of Indiana

1.81%

$250,000

BofI Federal Bank

1.06%

$25,000

Presidential Bank (Maryland)

0.50%

$5,000

Northpointe Bank

0.40%

$25,000

Andrews Federal Credit Union

0.31%

$100

Source: Deposit Accounts, September 4, 2018

1. 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

2. Digital Federal Credit Union (DCU), 5.12% APY (up to $1,000), $5 minimum balance

Digital Federal Credit Union offers an outstanding 0.25% APY on the first $1,000 with the Primary Savings account. Amazingly, even if your balance exceeds $1,000, DCU will still honor the 0.25% APY on the first thousand and then add an additional 0.25% APY on the amount exceeding $1,000. For instance, if your account holds $1,500, you’ll earn a blended APY of 3.50%. You’ll have to keep this account open and active for one year to get the blended APY.

This credit union also offers a solid 1.06% 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

3. Capital One, 1.75% APY, No minimum balance

Capital One is currently offering a business savings account with a 1.75% APY. This account doesn’t have a minimum balance requirement and doesn’t come with any monthly fees.

While this account doesn’t come with ATM access, Capital One makes it easy to transfer funds to either another one of their accounts or a linked account of your choosing. You can easily set this up through their online banking platform or mobile app. Their mobile app also allows you to deposit checks. Keep in mind, however, that you’ll be limited to depositing $5,000 per month into the business savings account. You’ll also be limited to making six withdrawals per month due to Federal regulations.

Fine Print: The APY on the Spark Business Savings account is a promotional rate and will drop to 0.40% APY 365 days after opening the account.

Restrictions on joining: none.

LEARN MORE Secured

on Capital One’s secure website

Member FDIC

4. Community Bank of Pleasant Hill, 1.72% APY, No minimum balance

With its 1.74% 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

5. 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.

LEARN MORE Secured

on Gold Water Bank’s secure website

6. First Internet Bank, 1.81% APY, $250,000+ minimum balance amount, ATM services

First Internet Bank offers an FDIC-insured savings option for businesses with a relatively good 1.61% 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 1.81% 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.

LEARN MORE Secured

on First Internet Bank’s secure website

7. 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

8. 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

9. Northpointe Bank, 0.40% APY, $25,000 minimum balance

The Business Savings account at Northpointe Bank currently pays out 0.40% APY if you deposit and maintain a balance of $25,000. However, you only need $1,000 to open the account and you can start earning 0.20% APY with that balance. If your balance increases anywhere between $2,500 and $24,999.99, the APY will increase to 0.25%. If your balance increases to $100,000, the APY will further increase to 0.50%. There are no monthly fees with this account.

Restrictions on joining: none.

LEARN MORE Secured

on Northpointe Bank’s secure website

10. 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

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

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Best of, Earning Cashback

7 Best Cash Back Credit Cards for Dining Out in September 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.

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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.

Capital One® Savor® Cash Rewards Credit Card – 4% cash back

Capital One® Savor® Cash Rewards Credit Card

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on Capital One’s secure website

Capital One® Savor® Cash Rewards Credit Card

Regular Purchase APR
16.24% - 25.24% (Variable)
Annual fee
$0 intro for first year; $95 after that
Rewards Rate
4% Cash Back on dining; 4% Cash Back on entertainment; 2% Cash Back at grocery stores; 1% Cash Back on all other purchases

The Capital One® Savor® Cash Rewards Credit Card enables you to earn unlimited 4% Cash Back on dining; 4% Cash Back on entertainment; 2% Cash Back at grocery stores; 1% Cash Back on all other purchases. Earn a one-time $500 cash bonus after you spend $3000 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.)

Uber Visa Card – 4% cash back

Uber Visa Card

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The information related to Uber Visa Card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Uber Visa Card

Regular Purchase APR
16.74% - 25.49% Variable
Annual fee
$0
Rewards Rate
4% back on dining, 3% back on hotel and airfare, 2% back for online purchases, and 1% on everything else.

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: Earn $100 after spending $500 on purchases in the first 90 days. You can read our full review here.

AARP® Credit Card from Chase Bank – 3% cash back

AARP® Credit Card from Chase Bank

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

AARP® Credit Card from Chase Bank

Regular Purchase APR
17.99% - 24.74% Variable
Annual fee
$0
Rewards Rate
Earn 3% Cash Back rewards on purchases at restaurants, from fine dining to fast food, 3% Cash Back rewards on purchases at gas stations, and 1% Cash Back rewards on all other purchases.

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 Bank lets you Earn 3% Cash Back rewards on purchases at restaurants, from fine dining to fast food, 3% Cash Back rewards on purchases at gas stations, and 1% Cash Back rewards on all other purchases. Earn $100 bonus cash back after you spend $500 on purchases in the first 3 months from account opening.

Marvel Mastercard® – 3% cash back

Marvel Mastercard®

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on Synchrony Bank’s secure website

Marvel Mastercard®

Regular Purchase APR
16.49%-26.49% Variable
Annual fee
$0
Rewards Rate
Earn 3% cashback on Dining, Select Entertainment, Online at Marvel.com and Marvel's Official Merchandise Booths, and 1% cashback on all other Mastercard purchases.

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% cashback on Dining, Select Entertainment, Online at Marvel.com and Marvel's Official Merchandise Booths, and 1% cashback on all other Mastercard 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 new Marvel Mastercard.

Sams Club® Mastercard® – 3% cash back

Sams Club® Mastercard®

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on Sam's Club’s secure website

Sams Club® Mastercard®

Regular Purchase APR
11.65% Variable
Annual fee
$0
Rewards Rate
$5,000 cash back per calendar year and offers 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.

The Sams Club® Mastercard® offers $5,000 cash back per calendar year and offers 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. 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® Card from Citi

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on Citibank’s secure website

Costco Anywhere Visa® Card from Citi

Regular Purchase APR
16.99%* (Variable)
Annual fee
$0
Rewards 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

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.

Alternative: Rotating cash back categories

Discover it® Cash Back – 5% cash back

Discover it® Cash Back

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on Discover Bank’s secure website

Rates & Fees

Discover it® Cash Back

Regular APR
13.74% - 24.74% Variable
Annual fee
$0
Rewards 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.

The Discover it® Cash Back 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 will match ALL the cash back you’ve earned at the end of your first year, automatically. There’s no signing up. And no limit to how much is matched (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.

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

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Balance Transfer, Best of, Pay Down My Debt

Best balance transfer credit cards: 0% APR, 24 months

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.

btgraphic

Looking for a balance transfer credit card to help pay down your debt more quickly? We’re constantly checking for new offers and have selected the best deals from our database of over 3,000 credit cards. This guide will show you the longest offers with the lowest rates, and help you manage the transfer responsibly. It will also help you understand whether you should be considering a transfer at all.

1. Best balance transfer deals

No intro fee, 0% intro APR balance transfers

Very few things in life are free. But, if you pay off your debt using a no fee, 0% APR balance transfer, you can crush your credit card debt without paying a dime to the bank. You can find a full list of no fee balance transfers here.

The Amex EveryDay® Credit Card from American Express

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Terms Apply

Rates & Fees

The Amex EveryDay® Credit Card from American Express

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
14.74%-25.74% Variable
Rewards Rate
2x points at US supermarkets, on up to $6,000 per year in purchases (then 1x), 1x points on other purchases.
Credit required
good-credit
Excellent/Good

The Amex EveryDay® Credit Card from American Express includes an extended intro period now at an intro 0% for 15 Months on balance transfers and purchases (14.74%-25.74% Variable APR after the promo period ends) and a $0 balance transfer fee. (For transfers requested within 60 days of account opening.) This offer is in direct competition with other $0 intro balance transfer fee cards like Chase Slate®.
In addition to the intro periods, you can benefit from a rewards program tailored to U.S. supermarket spenders where you earn 2x points at US supermarkets, on up to $6,000 per year in purchases (then 1x), 1x points on other purchases.
The intro offers, coupled with the rewards program make The Amex EveryDay® Credit Card from American Express the frontrunner among balance transfer cards, outpacing competitors. This card presents cardholders with the unique opportunity to transfer a balance and make a large purchase during the intro period, all while earning rewards on new purchases. To qualify for this card, you need Excellent/Good credit.
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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 20% bonus

 

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

 

Chase Slate®

Chase Slate®

The information related to the Chase Slate® has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

With Chase Slate® you can save with a 0% Intro APR on Balance Transfers for 15 months and a balance transfer fee that’s Intro $0 on transfers made within 60 days of account opening. After that: Either $5 or 5%, whichever is greater.  There’s also a 0% Intro APR on Purchases for 15 months. After the intro periods end, a 16.74% - 25.49% Variable APR applies. This card also has a $0 annual fee. Plus, you can see monthly updates to your FICO® Score and the reasons behind your score for free.

You can get longer transfer periods by paying a fee (either $5 or 5% of the amount of each transfer, whichever is greater), so this deal is generally best if you have a balance you know you‘ll pay in full by the end of the promotional period.

Also, keep in mind you can’t transfer a balance from one Chase card to another, so this is good if the balance you want to move is from a bank or credit union that’s not Chase.

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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 are late payment and cash advance fees

Tip: You have only 60 days from account opening to complete your balance transfer and get the introductory rate.

BankAmericard® Credit Card

BankAmericard® credit card

There is a 0% Introductory APR on purchases for 15 billing cycles and an 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). There’s also an 0% Introductory APR on purchases for 15 billing cycles. After that, a 14.74% - 24.74% Variable APR will apply.
 You need Excellent/Good credit to get this card and you can only transfer debt that is not already at Bank of America. You can get longer transfer periods by paying a fee, so this deal is generally best if you have a balance you know you’ll pay in full by the end of the 15-month promotional period.
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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.
  • No penalty APR – paying late won’t automatically raise your rate (APR)
  • There are late payment and cash advance fees

Tip: You can provide the account number for the account you want to transfer from while you apply, and if approved, the bank will handle the transfer.

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on Bank Of America’s secure website

 

 

0% balance transfers with a fee

If you think it will take longer than 15 months to pay off your credit card debt, these credit cards could be right for you. Don’t let the balance transfer fee scare you. It is almost always better to pay the fee than to pay a high interest rate on your existing credit card. You can calculate your savings (including the cost of the fee) at our balance transfer marketplace.

These deals listed below are the longest balance transfers we have in our database. We have listed them by number of months at 0%. Although you need good credit to be approved, don’t be discouraged if one lender rejects you. Each credit card company has their own criteria, and you might still be approved by one of the companies listed below.

Discover it® Balance Transfer

Decent 0% intro balance transfer period

Discover it® Balance Transfer: Intro APR of 0% for 18 months, 3% BT fee.

This is a basic balance transfer deal with an above average term. If you don’t have credit card balances with Discover, it’s a good option to free up your accounts with other banks. With this card, you also have the ability to earn cash back, and there is no late fee for your first missed payment and no penalty APR. Hopefully you will not need to take advantage of these features, but they are nice to have.

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  • Interest is waived during the balance transfer period, no foreign transaction fees and no late fee for your first late payment
  • The range of the purchase interest rate based on your credit history.  The 13.74% - 24.74% Variable APR is fairly standard.
  • There is a cash advance fee

Tip: Complete your balance transfer as quickly as possible for maximum savings.

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on Discover Bank’s secure website

Rates & Fees

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

Longest 0% intro balance transfer card

Citi® Diamond Preferred® Card – 21 Month Balance Transfer Offer: 0%* for 21 months on Balance Transfers*, 5% balance transfer fee

The Citi® Diamond Preferred® Card – 21 Month Balance Transfer Offer has the longest intro period on our list at intro 0%* for 21 months on Balance Transfers* made within 4 months from account opening. There is also an intro 0%* for 12 months on Purchases*. After the intro periods end, a 14.74% - 24.74%* (Variable) APR applies. The balance transfer fee is typical at 5% of each balance transfer; $5 minimum. This provides plenty of time for you to pay off your debt. There are several other perks that make this card great: no annual fee, Citi® Private Pass®, and Citi® Concierge.

Transparency Score
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.
  • Interest rate is not known until you apply.

Tip: Complete your balance transfer within four months from account opening to take advantage of the 0% intro offer.

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on Citibank’s secure website

Low rate balance transfers

If you think it will take longer than 2 years to pay off your credit card debt, you might want to consider one of these offers. Rather than pay a balance transfer fee and receive a promotional 0% APR, these credit cards offer a low interest rate for much longer.

The longest offer can give you a low rate that only goes up if the prime rate goes up. If you can’t get that offer, there is another good option offering a low rate for three years.

Variable Rate Credit Visa®Card from UNIFY Financial CU

Long low rate balance transfer card

Unify Financial Credit Union – 6.74%-18.00% Variable APR, no expiration, $0 BT fee

If you need a long time to pay off at a reasonable rate, and have great credit, it’s hard to beat this deal from Unify Financial Credit Union, with an APR of 6.74%-18.00% Variable with no expiration. The rate is variable, but it only varies with the Prime Rate, so it won’t fluctuate much more than say a variable rate mortgage. There is also no balance transfer fee.

Just about anyone can join Unify Financial Credit Union. They’ll help you figure out what organization you can join to qualify, and you don’t need to be a member to apply.

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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 are late payment fees.

Tip: If you’re credit’s not great, this probably isn’t for you, as the APR chosen for your account is anywhere between 6.74%-18.00% Variable.

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on UNIFY Financial Credit Union’s secure website

Prime Rewards Credit Card from SunTrust Bank

Long low rate balance transfer card

SunTrust Prime Rewards – 4.75% variable APR for 36 months, $0 intro BT fee

If you live in Alabama, Arkansas, Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, Washington, D.C., or West Virginia you can apply for this card without a SunTrust bank account.

The deal is you get the prime rate for 3 years with no intro balance transfer fee. That’s currently 4.75% variable, though your rate will change if the prime rate changes, either up or down, and you have 60 days to complete your transfer with no fee. After that, it’s $10 or 3% of the amount of the transfer, whichever is greater. Also beware the prime rate deal isn’t for new purchases, so only use this card for a balance transfer.

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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.
  • The range of the purchase interest rate is based on your credit history: 12.74%-22.74% (v), and is more than 10%, which is high.
  • There are late payment and cash advance fees.

Tip: You have only 60 days from account opening to get the intro $0 transfer fee.

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on SunTrust Bank’s secure website

For fair credit scores

In order to be approved for the best balance transfer credit cards and offers, you generally need to have good or excellent credit. If your FICO score is above 650, you have a good chance of being approved. If your score is above 700, you have an excellent chance.

However, if your score is less than perfect, you still have options. Your best option might be a personal loan. You can learn more about personal loans for bad credit here.

There are balance transfers available for people with scores below 650. The offer below might be available to people with lower credit scores. There is a transfer fee, and it’s not as long as some of the others available with excellent credit. However, it will still be better than a standard interest rate.

Just remember: one of the biggest factors in your credit score is your amount of debt and credit utilization. If you use this offer to pay down debt aggressively, you should see your score improve over time and you will be able to qualify for even better offers.

Platinum Mastercard® from Aspire FCU

For less than perfect credit

Aspire Credit Union Platinum – 0% intro APR for 6 months, 0% intro BT fee

Balance transfer deals can be hard to come by if your credit isn’t great. But some banks are more open to it than others, and Aspire Credit Union is one of them, saying ‘fair’ or ‘good’ credit is needed for this card. Anyone can join Aspire, but if you’re looking for a longer deal you also might want to check if you’re pre-qualified for deals from other banks, without a hit to your credit score, using the list of options here.

You’ll be able to check with several banks what cards are pre-screened based on your credit profile, and you might be surprised to see some good deals you didn’t think were in your range. That way you can apply with more confidence.

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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.
  • The ongoing interest rate isn’t known when you apply.

Tip: Only Aspire’s Platinum MasterCard has this deal. Its Platinum Rewards MasterCard doesn’t have a 0% offer. And if you transfer a balance after 6 months a 2% fee will apply.

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on Aspire Federal Credit Union’s secure website

2. Learn more

Checklist before you transfer

Never use a credit card at an ATM

If you use your credit card at an ATM, it will be treated as a cash advance. Most credit cards charge an upfront cash advance fee, which is typically about 5%. There is usually a much higher “cash advance” interest rate, which is typically above 20%. And there is no grace period, so interest starts to accrue right away. A cash advance is expensive, so beware.

Always pay on time.

If you do not make your payment on time, most credit cards will immediately hit you with a steep late fee. Once you are 30 days late, you will likely be reported to the credit bureau. Late payments can have a big, negative impact on your score. Once you are 60 days late, you can end up losing your low balance transfer rate and be charged a high penalty interest rate, which is usually close to 30%. Just automate your payments so you never have to worry about these fees.

Get the transfer done within 60 days

Most balance transfer offers are from the date you open your account, not the date you complete the transfer. It is in your interest to complete the balance transfer right away, so that you can benefit from the low interest rate as soon as possible. With most credit card companies, you will actually lose the promotional balance transfer offer if you do not complete the transfer within 60 or 90 days. Just get it done!

Don’t spend on the card

Your goal with a balance transfer should be to get out of debt. If you start spending on the credit card, there is a real risk that you will end up in more debt. Additionally, you could end up being charged interest on your purchase balances. If your credit card has a 0% balance transfer rate but does not have a 0% promotional rate on purchases, you would end up being charged interest on your purchases right away, until your entire balance (including the balance transfer) is paid in full. In other words, you lose the grace period on your purchases so long as you have a balance transfer in place.

Don’t try to transfer between two cards of the same bank

Credit card companies make balance transfer offers because they want to steal business from their competitors. So, it makes sense that the banks will not let you transfer balances between two credit cards offered by the same bank. If you have an airline credit card or a store credit card, just make sure you know which bank issues the card before you apply for a balance transfer.

Comparison tools

Savings calculator – which card is best?

If you’re still unsure about which cards offer you the best deal for your situation, try our calculator. You get to input the amount of debt you’re trying to get a lower rate on, your current rate, and the monthly payment you can afford. The calculator will show you which cards offer you the most savings on interest payments.

Balance transfer or a loan?

A balance transfer at 0% will get you the absolute lowest rate. But you might feel more comfortable with a single fixed monthly payment, and a single real date your loan will be paid off. A lot of new companies are offering great rates on loans you can pay off over 2, 3, 4, or 5 years. You can find the best personal loans here.

And you might find even though their rates aren’t 0%, you could afford the payment and get a plan that takes care of your debt for good at once.

Use our calculator to see how your payments and savings will compare.

Questions and Answers

It depends, some credit card companies may allow you to transfer debt from any credit card, regardless of who owns it. Though, they may require you to first add that person as an authorized user to transfer the debt. Just remember that once the debt is transferred, it becomes your legal liability. You can call the credit card company prior to applying for a card to check if you’re able to transfer debt from an account where you are not the primary account holder.

Yes, you can. Most banks will enable store card debt to be transferred. Just make sure the store card is not issued by the same bank as the balance transfer credit card.

As a general rule, if you can pay off your debt in six months or less, it usually doesn’t make sense to do a balance transfer.

Here is a simple test. (This is not 100% accurate mathematically, but it is an easy test). Divide your credit card interest rate by 12. (Imagine a credit card with a 12% interest rate. 12%/12 = 1%). In this example, you are paying about 1% interest per month. If the fee on your balance transfer is 3%, you will break even in month 3, and will be saving money thereafter. You can use that simplified math to get a good guide on whether or not you will be saving money.

And if you want the math done for you, use our tool to calculate how much each balance transfer will save you.

With all balance transfers recommended at MagnifyMoney, you would not be hit with a big, retroactive interest charge. You would be charged the purchase interest rate on the remaining balance on a go-forward basis. (Warning: not all balance transfers waive the interest. But all balance transfers recommended by MagnifyMoney do.)

Many companies offer very good deals in the first year to win new customers. These are often called “switching incentives.” For example, your mobile phone company could offer 50% off its normal rate for the first 12 months. Or your cable company could offer a big discount on the first year if you buy the bundle package. Credit card companies are no different. These companies want your debt, and are willing to give you a big discount in the first year to get you to transfer.

If you transfer your debt and use your card responsibly to pay off your balance before the intro period ends, then there is no trap associated with the 0% APR period. But, if you neglect making payments and end up with a balance post-intro period, you can easily fall into a trap of high debt — similar to the one you left when you transferred the balance. As a rule of thumb, use the intro 0% APR period to your advantage and pay off ALL your debt before it ends, otherwise you’ll start to accumulate high interest charges.

Balance transfers can be easily completed online or over the phone. After logging in to your account, you can navigate to your balance transfer and submit the request. If you rather speak to a representative, simply call the number on the back of your card. For both options, you will need to have the account number of the card with the debt and the amount you wish to transfer ready.

You will be charged a late fee by missing a payment and may put your introductory interest rate in jeopardy. Many issuers state in the terms and conditions that defaulting on your account may cause you to lose out on the promotional APR associated with the balance transfer offer. To avoid this, set up autopay for at least the minimum amount due.

No, you can’t. Balances can only be transferred between cards from different banks. That includes co-branded cards, so be sure to check which issuer your card is before applying for a balance transfer card — since you don’t want to find out after you’ve been approved that both cards are backed by the same issuer.

Many credit card issuers will allow you to transfer money to your checking account. Or, they will offer you checks that you can write to yourself or a third party. Check online, because many credit card issuers will let you transfer money directly to your bank account from your credit card. Otherwise, call your issuer and ask what deals they have available for “convenience checks.”

In most cases, you cannot. However, if you transfer a balance when you open a card, you may be able to. Some issuers state in their terms and conditions that balance transfers on new accounts will be processed at a slower rate compared with those of old accounts. You may be able to cancel your transfer during this time.

Yes, it is possible to transfer the same debt multiple times. Just remember, if there is a balance transfer fee, you could be charged that fee every time you transfer the debt. Also, don’t keep on transferring your debt without making payments because you won’t accomplish much.

You can call the bank and ask them to increase your credit limit. However, even if the bank does not increase your limit, you should still take advantage of the savings available with the limit you are given. Transferring a portion of your debt is more beneficial than transferring none.

Yes, you decide how much you want to transfer to each credit card. For example, if you have $3,000 in debt, you can transfer $2,000 to Card A and $1,000 to Card B.

No, balance transfers are excluded from earning any form of rewards whether it’s points, miles or cash back.

No, there is no penalty. You can pay off your debt whenever you want without a penalty. It’s key to pay off your balance as soon as possible and within the intro period to avoid carrying a balance post-intro period.

Mathematically, the best balance transfer credit cards are no fee, 0% intro APR offers. You literally pay nothing to transfer your balance and can save hundreds of dollars in interest had you left your balance on a high APR card. Check out our list of the best no-fee balance transfer cards here. However, those cards tend to have shorter intro periods of 15 months or less, so you may need more time to pay off your balance.

If you are running out of time on your intro APR and you still have a balance, don’t sweat it. At least two months before your existing intro period ends, start looking for a new balance transfer offer from a different issuer. Transfer any remaining balance to the card with the new 0% intro offer. This can provide you with the additional time needed to pay off your balance. Ideally, look for a card that has a 0% intro APR and also no balance transfer fee.

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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Best of, College Students and Recent Grads, Credit Cards

Best Student Credit Cards September 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.

Getting a credit card while you’re in college might seem dangerous or confusing. But if you are able to use a student credit card responsibly, you do not need to be afraid, and you can set yourself up for financial success after you leave school.

Fortunately, learning how to choose and use the right student credit card is relatively simple. Make sure you avoid annual fees and go with a bank or credit union you can trust. When you get the card, make sure you use it responsibly and pay the balance in full and on time every month. If you do these things consistently over time, you can leave school with an excellent credit score. And if you want to rent an apartment or buy a car, having a good credit score is very important.

Our Top Pick

Discover it® Student Cash Back

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on Discover Bank’s secure website

Rates & Fees

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Discover it® Student Cash Back

Annual fee
$0
Rewards 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
14.74% - 23.74% Variable
Credit required
fair-credit
Fair Credit

Magnify Glass Pros

  • Good Grades Reward program: Did you study extra hard this year? If you’ve gotten a 3.0 GPA or higher for an entire school year, Discover will reward you with an extra $20 statement credit. You can get this reward for up to five years in a row as long as you’re still a current student when you apply.
  • Free FICO® score: Just like how you have grades for your classes, your FICO® score is your “grade” for your credit. Credit cards have a huge effect on your FICO® score. You can watch how your new credit card affects your score over time with a free FICO® score update on your monthly statement.
  • 5% cash back : You can earn up to 5% cash back at different places that change each quarter, on up to $1,500 in purchases every quarter that you activate. Past categories have included things like Amazon purchases, restaurants, and ground transportation. Even if you don’t buy something in the bonus category, you’ll still earn 1% cash back on all other purchases.
  • Cash back match at end of your first year: In addition to rotating 5% cash back categories, new cardmembers will also get an intro bonus. When your first card anniversary comes around, Discover will automatically match your cash back rewards you earned during your first year.

Cons Cons

  • Remember to sign up for bonus places: Even though this card comes with a great cash back rewards program, it comes with a catch: you’ll need to manually activate the bonus places each quarter. You can do this by calling Discover or logging in to your account online. If you forget, you’ll still earn 1% cash back if you make any purchases in the qualifying categories.
  • Gift certificates only available at certain levels: You can redeem your rewards for many things such as Amazon purchases, a statement credit, or a donation to a charity, to name a few. But, if you’d like to get a gift card instead, you’ll need a cash back balance of at least $20 saved up in your account.
Bottom line

Bottom line

The Discover it® Student Cash Back offers great perks for college students, such as a rewards program for good grades and a free FICO® score so you can learn about your credit firsthand. Its cash back rewards program is our favorite. No other card for students (that we could find) offers the opportunity to earn up to 5% cash back. And with no annual fee, this is our top pick.

Read our full review of the Discover it® Student Cash Back

Best for Commuter Students

Bank of America® Cash Rewards Credit Card for Students

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on Bank Of America’s secure website

Bank of America® Cash Rewards Credit Card for Students

Annual fee
$0
Rewards Rate
1% cash back on every purchase, 2% at grocery stores and wholesale clubs, and 3% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter.
Regular Purchase APR
14.99% - 24.99% Variable
Credit required
good-credit

Good

Magnify Glass Pros

  • Cashback program: You’ll earn 1% cash back on every purchase, 2% at grocery stores and wholesale clubs, and 3% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter. The higher rate you get for gas purchases is great for students who commute to class.
  • Redemption bonus: If you’re a Bank of America customer, you’ll receive a 10% customer bonus every time you redeem your cash back into a Bank of America® checking or savings account. The bonus is even better if you’re a Bank of America Preferred Rewards client — you could get a 25-75% bonus. Cardholders who redeem this way will maximize their cash back.
  • Free FICO® Score: A large part of getting a credit card in college is to build your credit score. The hope is that monitoring your FICO® Score on a monthly basis will let you see your score rise through proper credit behavior.

Cons Cons

  • Foreign transaction fee: This card has a foreign transaction fee of 3% of the U.S. dollar amount of each transaction, not suitable for students who travel abroad. You will negate any cash back earned while using this card outside the U.S.
Bottom line

Bottom line

The Bank of America® Cash Rewards Credit Card for Students is a great option for students who commute to class and spend on groceries. This card has an added redemption bonus for Bank of America® checking or savings accountholders that is a great way to increase your cash back.

Best Flat-Rate Card

Journey® Student Rewards from Capital One®

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on Capital One’s secure website

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Journey® Student Rewards from Capital One®

Annual fee
$0
Rewards Rate
1% Cash Back on all purchases; 0.25% Cash Back bonus on the cash back you earn each month you pay on time
Regular Purchase APR
24.99% (Variable)
Credit required
bad-credit
Average/Fair/Limited

Magnify Glass Pros

  • 1.25% cash back if you pay on time: Each purchase you make earns a flat-rate 1% Cash Back on all purchases; 0.25% Cash Back bonus on the cash back you earn each month you pay on time. This makes it handy for people who want as simple a card as possible. And it rewards great behavior.
  • Higher credit lines after on-time payments: If you’re approved for this card, you’ll receive a credit line of at least $300. If you make five on-time payments in a row, you can call Capital One and ask them to increase your credit line.
  • No foreign transaction fee: This is a great card to take overseas, because you won’t have to pay any foreign transaction fees. Most cards charge an average 3% foreign transaction fee, but Journey allows you to use your card abroad without being charged extra fees.

Cons Cons

  • High APR: This card carries an APR of 24.99% (Variable). That’s almost twice as high as some other student credit cards, such as the Wells Fargo Cash Back CollegeSM Card with a rate as low as 12.90% - 22.90% Variable APR. It’s just one more incentive to pay off your bill in full each month.
Bottom line

Bottom line

We really like this card because it actively rewards you for developing good credit-management behavior by offering a small cash back bonus for on-time payments. In addition, the cash back program is straightforward with no confusing categories to remember or opt into, making this card a good option for students who want a simple, flat-rate card.

Read our full review of the Journey® Student Rewards from Capital One®

Best Intro Bonus

Wells Fargo Cash Back CollegeSM Card

Annual fee
$0
Rewards Rate
3% cash rewards on gas, grocery, and drugstore purchases for the first 6 months, 1% cash rewards on virtually all other purchases
Regular Purchase APR
12.90% - 22.90% Variable
Credit required
fair-credit
excellent-credit
Good/Excellent

Magnify Glass Pros

  • Interest rates as low as 12.90% - 22.90% Variable APR: Depending on your credit, your interest rate could be between 12.90% - 22.90% Variable APR, but there is no guarantee you’ll receive the lower rate. This is a lower variable APR range than most student cards, and can help if you aren’t able to pay your balance in full one month.
  • Intro Rewards Bonus: 3% cash rewards on gas, grocery, and drugstore purchases for the first 6 months, 1% cash rewards on virtually all other purchases
  • Access to credit education: Wells Fargo provides you with all sorts of tools and information to learn about things like credit, budgeting, and expense tracking. While this is a nice feature, it’s not exclusive to Wells Fargo. You can get this information from free tools such as Mint, or even reading books and blogs. But it is pretty handy having it right at your fingertips when logged in to your account.

Cons Cons

  • Need to be a Wells Fargo member to apply online: You can go into any one of the 6,000+ branches and apply for the card. You can also apply online, but you’ll need to be an existing Wells Fargo customer. However, anyone can open a checking account online with a minimum deposit of $25.
  • High bars for some cash back redemption options: There are a lot of redemption options available through Wells Fargo’s own online cash back rewards mall. However, if you’d just like straight cash, you have a few options. You can request a direct deposit into your Wells Fargo checking account, savings account, or Wells Fargo credit card (if applicable) in $25 increments, or request a paper check in $20 increments. That can take a long time to accumulate if you’re not spending much with your card.
Bottom line

Bottom line

The Wells Fargo Cash Back CollegeSM Card is a relatively simple card with a great intro bonus of 3% cash rewards on gas, grocery, and drugstore purchases for the first 6 months, 1% cash rewards on virtually all other purchases In addition, the low variable APR is handy for those who think they’ll be carrying a balance on their credit card from month to month at some point in the future. This is generally something we recommend against, but if you can’t avoid it, the Wells Fargo Cash Back CollegeSM Card is your best bet.

Read our full review of the Wells Fargo Cash Back CollegeSM Card

Altra Federal Credit Union Student Visa® Credit Card

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on Altra’s secure website

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Altra Federal Credit Union Student Visa® Credit Card

Annual fee
$0
Rewards Rate
Earn double Reward Points on every dollar of purchases in the first 60 days after opening your new account, then 1 point per dollar spent.
Regular Purchase APR
15.65% Fixed

Magnify Glass Pros

  • $20 reward for good credit card usage: If you can maintain your account in an “exceptional way” for your first year, you’ll get a bonus $20 reward on your card’s anniversary. All you have to do is not have any late payments, don’t charge over your card’s limit, and use your card for at least six out of twelve months.
  • Up to $500 random winner each quarter: It’s like playing the lottery, except you don’t have to buy a lottery ticket. Each quarter Altra will choose one student cardholder at random and pay back all of their purchases from the previous month, anywhere between $50 to $500.
  • Earn rewards: For the first 60 days after you open your account, you’ll earn 2 points per dollar spent. After that you’ll earn 1 point per dollar spent. You can redeem these points for cash back, merchandise through their online rewards mall, or travel.
  • Redeem points for a lower interest rate: If you’ll need a car in the future, this might be a good credit card to get. You can trade in 5,000 points for a 0.25% reduction, or 10,000 points for a 0.50% reduction on an auto loan through Altra Federal Credit Union. That could end up saving you a ton of cash in the long run.

Cons Cons

  • 1% foreign transaction fee: This is definitely one card to leave at home if you’ll be traveling or studying abroad. Most credit cards charge a 3% foreign transaction fee, so this is on the low side. Still, it’s not too hard to find a student credit card with no foreign transaction fee, such as the Discover it® Student Cash Back or the Journey® Student Rewards from Capital One® card.
  • Must join Altra Federal Credit Union: Luckily, anyone can join, but it might take a bit of legwork on your part compared to a bank. If you don’t meet certain membership eligibility criteria, you can join the Altra Foundation for $5. Then you’ll need to open a savings account with a minimum $5 deposit that must remain in the account while you have your card open.
Bottom line

Bottom line

If you’re a student who doesn’t mind working with a credit union, Altra provides a card that has several rewards benefits. This card is a good option if you may be taking out an auto loan in the next few years, since you’ll benefit from a reduced interest rate by trading in your rewards points. In addition to earning rewards, using this card responsibly can help you build credit.

Read our full review of the Altra Federal Credit Union Student Visa® Credit Card

Best for Studying Abroad

Bank of America® Travel Rewards Credit Card for Students

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on Bank Of America’s secure website

Bank of America® Travel Rewards Credit Card for Students

Annual fee
$0
Rewards Rate
Earn unlimited 1.5 points for every $1 you spend on all purchases everywhere, every time and no expiration on points.
Regular Purchase APR
16.74% - 24.74% Variable
Credit required
good-credit
Excellent/Good

Magnify Glass Pros

  • Chip + PIN technology: Most credit cards have chip + signature technology, and while this is good inside the U.S. you may face issue when traveling abroad. That’s where a card with chip + PIN functionality is the safest bet when traveling outside the U.S.
  • No foreign transaction fees: When you travel abroad you will not be charged additional fees like other cards.
  • Cashback rewards: You will earn unlimited 1.5 points for every $1 you spend on all purchases everywhere, every time and no expiration on points. This is a decent flat-rate that isn’t limited to bonus categories.
  • Redemption bonus: Bank of America customers will receive a 10% customer bonus every time cash back is redeemed into a Bank of America® checking or savings account. The bonus is even better if you’re a Bank of America® Preferred Rewards client — you could get a 25% – 75% bonus. Redeeming this way allows you to maximize your cash back rewards.
  • Free FICO® Score: The main reason to get a credit card as a student is to boost your credit score. So, actually being able to see your credit score is a huge help, especially as you can watch it climb over time with good credit management.

Cons Cons

  • Subpar cashback rate: The cash back rate for this card is lower than other cards. However, cards with higher cash back rates often charge foreign transactions fees, not making them ideal for students traveling abroad.
Bottom line

Bottom line

Students who are interested in studying abroad should consider the Bank of America® Travel Rewards Credit Card for Students. You’ll earn a good cash back rate on all purchases and will not be charge a foreign transaction fee on purchases made outside the U.S.

Best Secured Card

Discover it® Secured

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on Discover Bank’s secure website

Rates & Fees

Read Full Review

Discover it® Secured

Annual fee
$0
Minimum Deposit
$200
Regular APR
24.74% Variable
Credit required
bad-credit
Poor/New to Credit

Magnify Glass Pros

  • Cashback program: This card has a feature uncommon to other secure cards — a cashback program. You earn 2% cash back at restaurants or gas stations on up to $1,000 in combined purchases each quarter. Plus 1% cash back on all other credit card purchases.
  • Cashback Match™: Discover will match ALL the cash back you’ve earned at the end of your first year, automatically. There’s no signing up. And no limit to how much is matched (new cardmembers only). This is a great added bonus that increases your cash back in Year 1.
  • Automatic monthly reviews after eight months: Discover makes it easy for you to transition to an unsecured card with monthly reviews of your account starting after eight months. Reviews are based on responsible credit management across all of your credit cards and loans.

Cons Cons

  • Security deposit: You need to deposit a minimum of $200 in order to open this card. This will become your credit line, so a $200 deposit gives you a $200 credit line. If you want a higher credit limit, you need to increase your deposit. The security deposit is refundable, meaning you will receive your deposit back if you close the card, as long as your account is in good standing.
Bottom line

Bottom line

The Discover it® Secured is great for students who want to build credit. This card easily transitions you to an unsecured card when the time is right, and you can earn cash back. With proper credit behavior, you’ll soon be on your way to an unsecured card.

Read our full review of the Discover it® Secured

Best for No Credit History

Deserve® EDU Mastercard

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on Deserve’s secure website

Deserve® EDU Mastercard

Annual fee
$0
Rewards Rate
1% unlimited cash back on ALL purchases
Regular Purchase APR
20.49% Variable
Credit required
bad-credit
Fair/Good Credit or No Credit

Magnify Glass Pros

  • No credit history required: You can qualify for this card without any credit history, making this a great option for students new to credit. You don’t even need a Social Security number when applying.
  • Reimbursement for Amazon Prime Student*: This card will reimburse you for the cost of a year of Amazon Prime Student (valued at $49). You need to charge your membership to this card to qualify, and you will not be reimbursed for subsequent years’ membership fees.
  • No foreign transaction fee: Whether you travel abroad or study abroad, you can rest easy: There are no foreign transaction fees with this card.

Cons Cons

  • Low cash back rate: The rewards program has a subpar 1% unlimited cash back on ALL purchases. You can do better with some of the other cards mentioned in this post. Though as a student, rewards shouldn’t be your primary focus — instead, build your credit so you can qualify for better non-student cards.
Bottom line

Bottom line

The Deserve® Edu Mastercard for Students is a great choice for students who are looking to build credit. Deserve markets their cards for those who may have trouble qualifying for credit, and students who fall into this category may more easily qualify for this card than for cards from traditional banks. You can earn cash back, and receive a great promotional offer of a year of Amazon Prime Student for free*.

Also ConsiderAlso Consider

Golden 1 Platinum Rewards for Students

Golden 1 Credit Union Platinum Rewards for Students:

This credit card offers a snazzy rewards program: rather than accumulate points, you’ll get a cash rebate instead. All you have to do is make a purchase. At the end of the month, you’ll get a rebate of 3% of gas, grocery, and restaurant purchases, and 1% of all other purchases deposited back into your Golden 1 savings account at the end of the month. You can join Golden 1 by joining the Financial Fitness Association for $8 per year and keeping at least $5 in a savings account.

What should I look for in a student credit card?

The most important thing to consider when looking for a student credit card is that it charges no annual fee. You should never have to pay to build your credit score. Fortunately, most student cards don’t charge you an annual fee, but it’s still something to watch out for.

The second most important thing you should keep an eye out for are tools that help you learn about credit or even promote good credit-building habits. For example, some student credit cards will give you a free monthly FICO® score update. You can use this freebie to see in real time how your credit score changes as you build credit history by keeping the card open, or paying down your credit card balance, for example.

The last thing you should be considering when picking out a student credit card is the rewards program. I know, I know, it seems counterintuitive. But stick with me — I’ll show you why in the next question.

Why shouldn’t I be concerned about maximizing my rewards while in college?

Rewards cards are nice to have. But if you’re a college student, here’s the truth: you probably won’t spend enough to earn meaningful rewards.

Why? With a good rewards program, you can earn points or cash back. A small percentage of your monthly spending can add up quickly. However, given the tight budget that most college students live on, it will probably take a while to earn meaningful rewards. For example, if you earn 1.25% cash back and spend $300 a month on your card, you would earn $45 of cash back during the year.

College students are very good at making good use of $45. And our favorite card offers a great cash back rewards program. Just don’t expect to earn a lot of cash back, given the tight budget of a college student.

Why should I get a credit card as a college student?

There are a lot of great reasons why you should get a credit card, as long as you can commit to using it responsibly.

The single biggest reason why you should get a credit card as a college student is because you can start establishing a credit history now. When you graduate from college, you will need a good credit score to get an apartment. And your future employer will likely check your credit report. Building a good credit history while still in college will help prepare you for life after graduation.

Getting a credit card while in college can also train you to develop good credit habits now. But you need to be honest with yourself. If you find that you can’t avoid the temptation of maxing out your credit card, you might want to switch to a debit card or cash.

Finally, getting a credit card now can be the motivation you need to start learning about credit. These skills aren’t hard to learn, and they could save you thousands or even hundreds of thousands of dollars later in life (when you want a mortgage, for example).

What is the CARD Act and why should I care about it?

Many years ago, credit card companies would market on college campuses. You could get a free beer mug or t-shirt in exchange for a credit card application. And you would be able to qualify for a credit card without having any income. The Credit Card Accountability Responsibility and Disclosure (CARD) Act was signed into law in May 2009 to change a number of practices.

How did the CARD Act change student credit cards?

The CARD Act made a lot of changes in how credit card issuers do business with students. One of the biggest changes was requiring students to be able to demonstrate an ability to pay. If you are under 21 and do not have sufficient income (a campus job, for example), you would need to get a co-signer.

In addition, colleges must now limit the amount of credit card marketing on campus. The days of free t-shirts and pizzas in exchange for credit card applications are gone. But that doesn’t mean it is impossible for a college student to get a credit card. Some highly reputable banks and credit unions still offer student cards. And building a good credit score while still in college is still highly recommended.

How can I protect myself from racking up debt?

When used properly, credit cards are a very convenient method of repayment. However, when not used properly, you can end up deep in credit card debt. It is important to establish a healthy relationship to credit now, with your first credit card.

You should try to ensure that you pay off your credit card bill in full and on time every month. Ideally, you should set up an automatic monthly payment. And to keep yourself on track, take advantage of alerts offered by most credit card companies. You can even get daily text messages reminding you of your balance.

How can I automate my credit card usage?

If all of this sounds confusing, don’t worry. There’s actually a way you can automate your payments so you never even have to bother with the hassle of using a credit card. All it takes is a few minutes of upfront work.

First, you’ll need at least one recurring monthly bill of the same amount, such as Netflix or Spotify. Log in to your account and set up an automatic payment each month using your credit card. Make a note of how much your monthly bill costs.

Next, log in to your bank account. Set up a second automatic payment to go to your credit card each month for the same amount as the bill. If your bank doesn’t offer the option to set up automatic payments, you may also be able to set up your credit card to automatically withdraw the amount of the bill from your bank.

Because you know this bill will be for the same amount each month (barring any price increases), you can literally just leave this running in the background each month on autopilot. You don’t even have to carry your credit card in your wallet if you don’t want to. Then, when you graduate, you’ll automatically have an improved credit score!

What happens to my student credit card when I graduate?

Congratulations! You’ve made it to the finish line. But what about your student credit card? You will have a few options once you graduate and we detail them here.

Here is a summary of our favorite cards:

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.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

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