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Sallie Mae Student Loans Review for 2021

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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Most students who borrow money for their education should start with federal student loans. The federal loan programs offer borrowers a variety of repayment, forgiveness, cancellation and discharge options that aren’t available from private lenders.

But if you’ve reached your federal loan limits, or examined your options and found you might be better off with a private student loan, you can compare loan offerings from private student lenders. One of the largest private student loan companies, Sallie Mae, has more than a dozen education loan products you can consider.

Here’s an in–depth look at the pros, cons and other details of Sallie Mae student loans.

Sallie Mae student loans: an overview

Started nearly 50 years ago, Sallie Mae has played a variety of roles in the student loan space, including lending federally guaranteed loans and private student loans, as well as servicing federal and private loans.

Sallie Mae spun off a portion of its student loan servicing business to form a new company, Navient, in 2014. Plus, due to changes in the federal student loan programs, Sallie Mae no longer originates federally guaranteed loans. Now, Sallie Mae only offers and services private student loans, while also offering other banking products, such as savings accounts.

Types of student loans Sallie Mae offers

Whether you’re a parent of a grade school student or about to begin your doctorate, Sallie Mae may have a student loan that fits your needs. Its loans are designed for undergraduate students, graduate students and parents or sponsors of students. It also has loans to cover the costs of medical or dental residency or preparing for the bar exam.

  1. K-12: For a parent or sponsor of a child who wants to take out a loan for a student’s private education from kindergarten through high school
  2. Career training: For students at eligible non-degree granting schools
  3. Undergraduate: For students at degree-granting schools who are earning an associate or bachelor’s degree
  4. Graduate: For students at degree-granting schools who are earning a master’s or doctorate degree
  5. Parent: For a parent or sponsor of a child who wants to take out a loan for an undergraduate, graduate or certificate program
  6. MBA: For business school students
  7. Medical school: For graduate medical degree students, including those in allopathic, osteopathic and podiatric programs
  8. Dental school: For graduate dental degree students, including those in dentistry, endodontics and orthodontics programs
  9. Health professions graduate: For graduate health profession students, including those in allied health, nursing, pharmacy and other graduate-level health degrees.
  10. Medical residency and relocation: For medical residency students to help pay for board examinations and residency-related travel and moving expenses
  11. Dental residency and relocation: For dental residency students to help pay for board examinations and residency-related travel and moving expenses
  12. Law school: For students studying for their law degree
  13. Bar study: For law students and recent graduates to help pay for bar review courses, registration and living expenses while you study

Sallie Mae Bank student loans in a nutshell

Most of Sallie Mae’s loans are identical when it comes to fees, cosigner release options and discounts.

Fees

  • Aside from the K-12 loan’s 3% disbursement fee, none of the loans have application, origination, disbursement or prepayment fees.
  • Late payments result in a fee that’s 5% of the amount due (capped at $25).
  • Returned checks carry a $20 fee.

Cosigner release

  • You can apply to release a cosigner after making 12 consecutive and on-time full interest and principal payments. However, parent loans don’t offer a cosigner release option.

Discounts

  • With all but the K-12 loans, you can receive a 0.25% interest rate discount if you sign up for automatic payments.
 K-12 loansParent loansCareer trainingUndergraduate loansGraduate loansMBA loans
Fixed APR range*Not available5.49% - 13.87%6.62% - 13.83%
3.50% - 12.60%4.75% - 12.11%
4.75% - 12.11%
Variable APR range*Check Sallie Mae website for current rates3.37% - 12.99%**
Check Sallie Mae website for current rates1.13% - 11.23%**
2.12% - 11.64%**
2.12% - 11.64%**
Loan terms3 years10 years5 to 15 years5 to 15 years15 years15 years
Loan amount$1,000 minimum

Borrow up to the school-certified cost of tuition
$1,000 minimum

Borrow up to the school-certified cost of attendance
$1,000 minimum

Borrow up to the school-certified cost of attendance
$1,000 minimum

Borrow up to the school-certified cost of attendance
$1,000 minimum

Borrow up to the school-certified cost of attendance
$1,000 minimum

Borrow up to the school-certified cost of attendance
Repayment plans (both in-school and post-school)Full interest and principal paymentsFull interest and principal payments

Interest-only payments
$25 a month

Interest-only payments
Deferment

$25 a month

Interest-only payments
Deferment

$25 a month

Interest-only payments
Deferment

$25 a month

Interest-only payments

*All rates are accurate as of May 4, 2021.
**Variable rates are capped at 25%.
 Health professionsDental schoolMedical schoolMedical residencyDental residencyBar studyLaw school
Fixed APR range*Check Sallie Mae website for current ratesCheck Sallie Mae website for current rates4.75% - 11.97%
Check Sallie Mae website for current ratesCheck Sallie Mae website for current ratesCheck Sallie Mae website for current rates4.75% - 11.98%
Variable APR range*Check Sallie Mae website for current ratesCheck Sallie Mae website for current rates2.12% - 11.48%**
Check Sallie Mae website for current ratesCheck Sallie Mae website for current ratesCheck Sallie Mae website for current rates2.12% - 11.48%
Loan termsCheck Sallie Mae website for current termsCheck Sallie Mae website for current terms20 yearsCheck Sallie Mae website for current termsCheck Sallie Mae website for current termsCheck Sallie Mae website for current terms15 years
Loan amount$1,000 minimum

Borrow up to the school-certified cost of attendance
$1,000 minimum

Borrow up to the school-certified cost of attendance
$1,000 minimum

Borrow up to the school-certified cost of attendance
$1,000 minimum

Borrow up to $30,000
$1,000 minimum

Borrow up to $30,000
$1,000 to $15,000$1,000 minimum

Borrow up to the school-certified cost of attendance
Repayment plans (both in-school and post-school)Deferment

$25 a month

Interest-only payments
Deferment

$25 a month

Interest-only payments
Deferment

$25 a month

Interest-only payments
No payments while enrolled at least half-time and during grace periodNo payments while enrolled at least half-time and during grace periodNo payments while enrolled at least half-time and during grace periodDeferment

$25 a month

Interest-only payments

*All rates are accurate as of May 4, 2021.
**Variable rates are capped at 25%.

How Sallie Mae compares with other lenders

Sallie Mae finished first among MagnifyMoney’s top five private student lenders. We compared undergraduate student loan products and began with the nation’s 10 largest national lenders. The ranking focused on loans’ APR ranges, discounts, fees and repayment terms, as well as lenders’ policies for releasing a cosigner, deferring loan payments and their online applications.

In addition to having a top-rated undergraduate loan, Sallie Mae differentiates itself by offering a wide variety of different student loans. Many of these other loans share characteristics with the undergraduate loan, including the 12-payment cosigner release requirement, lack of a specific maximum loan amount and a 0.25% interest rate discount for auto debit.

However, as with any lender, there are pros and cons to consider before taking out a loan from Sallie Mae.

LEARN MORE ABOUT SALLIE MAE Secured

on Sallie Mae Bank’s secure website

Lender Disclosure

Advantages of Sallie Mae Student Loans

You may be able to choose a repayment plan. Depending on the loan product, you may be able to choose from up to three different repayment plans. A plan that requires you make payments while you’re in school could help you save money in the long run; however, deferring your full payments can give you more money to cover education and living expenses now.

12-month payment requirement for cosigner release. With most Sallie Mae student loans, you can apply to release your cosigner once you make 12 consecutive, full and on-time payments (principal and interest). Other lenders may let you apply for cosigner release, but it could take longer to qualify.

In addition to the payments, you’ll need to pass a credit check and meet Sallie Mae loan requirements for releasing a cosigner.

Discharge due to death or permanent and total disability. Similar to the federal student loan guidelines, Sallie Mae will waive a borrower’s current balance if they die or become permanently and totally disabled. The benefit may be especially important to borrowers who have a cosigner or dependents, such as a spouse or child(ren), who could be affected if the debt isn’t waived.

No preset loan limit. While some federal student loans and private student loans set dollar-amount limits on how much you can borrow, most Sallie Mae student loans allow you to borrow up to your school’s certified cost of attendance.

Loans for less-than-half-time students. Some private school lenders require borrowers to have at least a half-time course load to qualify for a student loan. Sallie Mae’s loans for students don’t have this requirement.

Forbearance and deferment options. Putting your loans into forbearance or deferment lets you temporarily stop making payments without getting charged late fees or hurting your credit. Forbearance is generally for when you have trouble making payments, perhaps due to losing a job or a medical emergency. Deferment, meanwhile, may apply to other circumstances, such as returning to school.

Sallie Mae could approve up to 12 months of forbearance in three-month increments and up to 60 months of deferment in 12-month increments. Interest continues to accumulate, and your long-term costs may increase, but forbearance or deferment are still better options than missing a payment or letting a loan go into default.

Extra perks. Many of Sallie Mae’s student loans also come with the Study Smarter benefit. With it, borrowers can get four months of free study tools and 60 minutes of live online tutoring.

All of Sallie Mae’s loans also give borrowers and cosigners quarterly access to a FICO® credit score.

Drawbacks of Sallie Mae Student Loans

No additional interest rate discount. Sallie Mae’s 0.25% interest rate discount for auto debit is standard for most federal and private student loans. But other private lenders offer borrowers opportunities to get an additional 0.25% to 0.50% interest rate discount by having other financial products from the same lender or making auto debits from an account with the same lender.

Sallie Mae assigns loan terms. Many Sallie Mae student loans have a repayment term that ranges from five to 15 years. Most other lenders that offer a range of terms let borrowers choose their term, along with the corresponding monthly payment and interest rate. Sallie Mae, however, will assign you a term.

No loan preapproval. Private student loans require a credit check. Some lenders will do a soft credit pull, which doesn’t hurt your score, to determine if you can qualify for a loan or need a cosigner and to show you estimated interest rates if you qualify. Sallie Mae will only show you rates after a hard credit inquiry, which could hurt your score slightly.

What it takes to qualify with Sallie Mae

All products have the same basic Sallie Mae loan requirements:

Minimum credit score: Sallie Mae doesn’t disclose a minimum credit score requirement. In 2020, 94% of applicants that were approved for a Sallie Mae student loan had a FICO Score of 670 or above at the time of their loan’s origination.

Minimum age for borrowers: Borrowers must be the age of majority in their state (often 18 years old). Younger applicants will need an eligible and creditworthy cosigner.

State residency requirements: Sallie Mae student loans are available in every state.

Eligible schools: Sallie Mae doesn’t publish a list of eligible schools, but you can search for the name of a school at the beginning of the loan application to see if your school qualifies.

 Additional requirements
K-12 loansThe student you’re taking the loan out for has to be enrolled in a private school.
Parent loansThe student you’re taking the loan out for has to be pursuing a certificate or an associate, bachelor’s or graduate degree at a degree-granting school.
Career trainingYou must be enrolled at a non-degree-granting school and pursuing professional training or a certification.
Undergraduate loansYou must be enrolled at a degree-granting school and pursuing a certification or an associate or bachelor’s degree.
Graduate loansYou must be enrolled at a degree-granting school and pursuing a master’s or doctorate degree.
MBA loansYou must be enrolled at a degree-granting school and pursuing a masters of business administration degree.
 Additional requirements
Health professionsYou must be enrolled at a degree-granting school and pursuing a degree in one of the eligible areas of study.
Dental schoolYou must be enrolled at a degree-granting school and pursuing a degree in one of the eligible areas of study.
Medical schoolYou must be enrolled at a degree-granting school and pursuing a degree in one of the eligible areas of study.
Medical residencyYou must either have a half-time course load and be in your last year at an eligible school, or graduated from an eligible school in the previous 12 months.

If you didn’t already earn your medical degree, you must expect to earn the degree in the current academic program year.
Dental residencyYou must either have a half-time course load and be in your last year at an eligible school, or graduated from an eligible school in the previous 12 months.

If you didn’t already earn your dental degree, you must expect to earn the degree in the current academic program year.
Bar studyYou must either have a half-time course load and be in your last year at an eligible school, or graduated from an eligible school in the previous 12 months.

You must take the bar exam within 12 months of graduating.
Law schoolYou must be enrolled at a degree-granting school and pursuing a J.D. degree.

What borrower is Sallie Mae best for?

Sallie Mae offers a variety of student loan products that could be a good fit for parents or students. If you, or a student you’re supporting, can’t take out additional federal student loans but need more money for school, Sallie Mae’s lack of a predefined loan limit could make it a good option.

The medical and dental residency programs and the bar study loan do have a loan limit — but, even then, it’s higher than the limit of some competitors who offer similar types of loans.

You also may want to consider Sallie Mae if you think you’ll need a cosigner and would like to release the cosigner later. Although you still may not qualify, depending on your creditworthiness, the 12 months of consecutive full payments is shorter than what some other lenders require.

Get more details via the online platform

You can learn a lot of details about Sallie Mae’s student loans on its website. There are specific pages for each loan product that have a lot of the basic information you’ll want to know. Plus, there are additional pages with generally helpful information, such as how to make a loan payment or options if you’re having trouble making payments.

Some of the informational pages, such as on the one about interest rates and interest capitalization, also have quick video explainers to help you understand the topic and why it’s important to student loan borrowers.

The actual loan application doesn’t have quite as nice of a design as the other parts of the Sallie Mae website, but it’s still relatively easy to navigate and fill out.

The fine print: What to watch out for

The Sallie Mae product and informational pages give you a lot of the basic information you’ll want if you’re comparing student loans from several lenders. There are also loan application and solicitation disclosure forms for many of the loans online. In these, you can see fine-print items, like the variable-rate loans’ interest-rate cap and late payment fees.

It’s more difficult to find fine-print information on some of the loans, though. The K-12, residency and bar loans don’t have application and disclosure forms on their pages, for example.

While you would have a chance to review your loan details after agreeing to a credit check but before signing the loan agreement, it would be nice to have that information up front. Many reputable lenders offer the ability to prequalify and view rates while submitting to only a soft credit check.

We were also disappointed in how difficult it is to understand how loan terms work with Sallie Mae student loans.

Some private lenders only offer one term. Others offer a variety of terms and let borrowers choose their loan term. Most of Sallie Mae’s undergraduate and graduate student loans have terms of five to 15 years, but Sallie Mae chooses which term to offer you.

The loan-term range and the fact that Sallie Mae chooses the term rather than the borrower aren’t clearly disclosed on the loan’s main page.

What to expect during the application process

Sallie Mae has an online loan application system that makes the process fairly uniform for all its student loans. A few questions may differ, but you can expect the process to be similar to the following steps. Applicants with cosigners may need the cosigner’s personal information, including their Social Security number and date of birth.

Basic information

General information. Basic information about the student and borrower:

  • Your name, email address and phone number
  • Your date of birth, citizenship status and Social Security number
  • Your relationship to the student, if you’re taking out a loan for someone else

Address. Your permanent address and a previous address if you moved in the last year. If you have a different mailing address you’ll have to fill that in, too.

Student and school information. If you’re taking out the loan for a student, you’ll need the student’s name, date of birth, citizenship status and Social Security number.

Enter the name of the school and your (or the student’s) academic information:

  • Degree type or certificate of study
  • Major or specialty
  • Enrollment status
  • Grade level
  • Academic period that the loan will cover
  • Anticipated graduation or certification graduate date

Loan application

Loan amount. The cost of attendance (which the application can help you estimate), as well as your estimated financial assistance.

You’ll automatically have a loan amount for the difference between your cost of attendance and financial assistance. You can choose to request less money, and even if you’re approved, Sallie Mae could offer you less than what you requested.

Employment info: Fill in information about your work, including:

  • Employment status
  • Employer’s name
  • Your occupation
  • Work phone number
  • Years with the current employer
  • Gross annual income

Financial info: You can list additional income and assets you have, such as:

  • Income from alimony, child support or a rental property
  • Investments
  • Disability
  • Social Security
  • Income from a household member, such as a spouse
  • Your current assets that could be in checking, savings, CD or money market accounts

You’ll also be asked about your expenses, including monthly housing payments (when applicable).

Personal contacts: Unless you’re taking out a loan for someone else, you’ll have to share two personal contacts that Sallie Mae can use as references. These could be a relative or family friends, and you’ll have to have their full name and phone number.

Submit application: Choose to apply on your own or add a cosigner. You’ll be prompted to read and agree to an electronic delivery consent form, and may then get a copy of the loan’s disclosure form and Sallie Mae’s privacy policy.

You’ll have to agree to let Sallie Mae review your credit history to submit your application.

Finalize the loan

Once you’ve completed an application, you may need to send verification information, such as pay stubs or tax returns. Generally, Sallie Mae will offer a quick response based on your credit.

If you’re approved, you can choose your type of interest rate and repayment plan before accepting the loan. Once you accept the loan offer, Sallie Mae will contact your school to verify that you’re eligible for the loan and loan amount.

The school certification process may take several weeks, and it could even be put on hold until about a month before your term begins. As long as everything checks out, Sallie Mae will send the loan to you or your school, depending on the type of loan.

Andrew Pentis contributed to this report.

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Switching From a Student to a Non-Student Bank Account

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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If you’re wondering how to change your student account to a normal account, we’ve got good news for you: Your bank will probably do this for you automatically. You’re only eligible for a student account and the incentives that come with it while you’re enrolled in school or meet another requirement.

Once you graduate, age out or otherwise become ineligible, your bank will likely switch your student account over to a standard account. At this point, it’s up to you to decide whether to stick with your current bank or change to a new one.

Let’s take a closer look at what causes a student account to change to a standard one, as well as how to choose the right bank account for you.

How to change your student account to a normal account

As a college student, you’re seen as a hot commodity to banks. To entice you, banks will offer exclusive deals, such as free banking during your college years. However, when you become ineligible, your account will switch to a standard one, and all those perks and savings will come to an end.

Here are some common requirements you may need to meet to have a student account (note that these may vary by bank, so check with yours to see its specific criteria):

  • You’re enrolled in college
  • You’re between the ages of 17 and 24
  • You’ve had your student account for 5 years

Once you graduate, turn 25 or have your account for longer than the specified time frame, the bank will likely change your student account to a normal one. If you have extenuating circumstances, such as not graduating on time, let your bank know. It might be able to extend your eligibility while you’re in school.

Whether or not you’ve already switched to a standard account, it’s worth exploring your options to find the best bank account for you. After all, you don’t want to waste your money on unnecessary fees when you can switch banks and protect your cash.

Fees to avoid when choosing a non-student bank account

Here are a few tips on how to avoid costly banking fees while you’re shopping around for the best “non-student” banking deal for you. Specifically, let’s look at the following:

Monthly fee

When you first graduate from college, you may be living from paycheck to paycheck, with minimal money in your account. Monthly fees for bank accounts can add up quickly, so look for a bank that has no minimum deposit amount and no monthly fees.

A minimum deposit is a set amount of money you’ll need to keep in checking, or else the bank will slap you with a monthly charge. As an example, for Bank of America’s Advantage Plus account, you need to either have a qualifying direct deposit of $250 each month or a daily minimum of $1,500 in your account. Otherwise, Bank of America will charge you a maintenance fee of $12.

These fees are waived for students, but college grads get the unhappy gift of a “real-world” account. Beware — if you’re searching for a job and don’t have a direct deposit going into your Bank of America account each month (or a spare $1,500 sitting in there each day), you’re going to get charged a monthly fee.

Try to keep up with any requirements to avoid fees, or search for a bank with more lenient rules.

Overdraft fee

Big banks can charge you a fee per incident when you go overdraft. These fees can be as high as $35 per overdraft charge. Charges like this can add up quickly, and when you have a low balance in your checking account, it’s easy to make a mistake.

You may have signed up for overdraft protection, but many of the big banks still charge a fee to transfer money from your savings account to cover the cost of overdraft. Make sure you choose an account that doesn’t punish your mistakes with massive fees or nonsense charges to move your money.

ATM fee

Many internet-only banks offer free ATM visits at any ATM in the country. In some cases, you’ll be charged initially, but your bank will reimburse you for the fee.

Returned deposit fee

If you deposit a check that bounces, some banks charge a fee. Big banks can charge up to $19 for returned deposit items, and $40 for an internationally returned deposit item — however, some smaller banks and credit unions don’t charge a fee. Hopefully you won’t encounter any bounced checks, but it’s better to be safe than sorry.

Lost debit card fee

If you’ve misplaced your debit card, it will typically cost you up to $7.50 to replace — and if you need it replaced ASAP, then it could cost you up to a hefty $25 expedited delivery fee for a new shiny piece of plastic.

To lessen the blow, you don’t have to request expedited delivery on your new card — you can simply use cash you have on hand or a credit card for payments until the new debit card arrives.

Paper statement fee

Some banks charge customers $5 for paper statements. To avoid this fee, search for a bank that waives this fee or look into an account that enables you to bank entirely electronically.

Returned mail fee

When you move, a mail-forwarding request with your post office may not be good enough for your bank. Many banks print “return service requested” on their envelopes, so your mail gets sent back to the bank if it can’t be delivered, upon which a number of banks charge a fee.

These fees can add up, so make sure you update your address with your bank upon moving.

Human teller fee

Some banks charge a fee for using a person to handle transactions. If you’d like the ability to consult a teller, seek out bank accounts that don’t levy this charge.

How to eliminate bank fees

Don’t limit your banking options to banks with branches. Consider internet-only banks, like Ally, Axos Bank and Charles Schwab’s online banking, which often don’t have monthly maintenance fees or ATM fees and offer higher interest rates. Credit unions also tend to levy fewer (and cheaper) fees than traditional banks.

In fact, if you’re interested in opening a savings account, credit unions and internet-only banks often pay higher interest rates on savings accounts than brick-and-mortar banks. Luckily, you don’t have to do all of the work when searching for a fee-free checking account with perks — MagnifyMoney’s got you covered. Just fill out the simple tool here to find a checking account.

Now that you’re aware of these fees, you can take necessary steps to avoid the ones that may put a strain on your finances. After all, as a new graduate, these pesky fees should be the last of your worries.

When all else fails, keep in mind that you’re not obligated to stay with your current bank. If you’re not too fond of the features they offer, consider switching to a different one. Chances are, you’ll find a convenient institution where you can bank without being charged these annoying fees.

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Beginner’s Guide to Using a Credit Card

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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Opening a credit card in high school or college can be a savvy way to start building up your credit history. But if you’re not careful about making on-time payments on your credit card, opening a line of credit could do more harm than good. To introduce you to the ins and outs of credit card usage, we’ve put together this “credit cards for dummies” guide.Read on to learn about how credit cards work, the common fees you may encounter and how to use your credit card wisely while avoiding credit card debt.

Credit cards for dummies: How credit cards work

On a basic level, credit cards are lines of credit that you can use over and over again as long as you pay off your balance. They’re a handy way to pay for purchases and can help you build credit when used responsibly.

Credit cards usually have detailed terms and conditions that list fees, rewards, benefit restrictions and more. As a new cardholder, you may be confused by these terms, but our credit card guide is here to help you understand common features so you can avoid unnecessary fees.

Typical credit card terms

  • Annual fee: This is the fee you’ll be charged each year to keep using your card. Not all cards have an annual fee.
  • Credit limit: The maximum amount of credit you can charge on your card.
  • APR: This is the annual percentage rate or, simply, the interest rate you’ll be charged on balances carried. Since the rate is annual, divide it by 12 to get your monthly interest rate. Most often, this rate is variable and fluctuates with the prime rate, so your APR may change at any time.
  • Cash advance APR: If you use your card to take out cash, you’ll be charged at a higher interest rate versus regular purchases.
  • Penalty APR: This is a higher APR than you are typically charged and is often the result of a late payment or returned payment. The penalty APR can be in effect for several months or indefinitely, depending on the issuer.
  • Intro 0% period: You may be fortunate to have a credit card that offers an introductory period — upward of six months — where you can benefit from carrying a balance and not being charged interest during that time. The terms for these intro periods vary.
  • Late payment fee: If you pay late, you’ll incur a fee typically greater than $30.
  • Returned payment fee: Payments you submit that aren’t approved may be subject to a fee usually upward of $30.
  • Foreign transaction fee: Some cards charge a fee for purchases made outside the U.S. that is typically around 3%.
  • Cash advance fee: Cash advances you request most likely will be charged a fee of 2% to 8% of the amount requested.
  • Balance transfer fee: Any balances you transfer from an existing credit card to an eligible new card may be subject to a balance transfer fee, on average 3%-5% of the amount transferred.

Other common credit card features

  • Sign-up bonus: Your card may offer a sign-up bonus, which typically requires you to spend a certain amount within a given time period (usually three months) to receive a bonus.
  • Rewards: Many credit cards offer rewards programs that can earn you points, miles or cash back for purchases. This can be a great way to be rewarded for your spending, but you shouldn’t overspend and risk falling into debt for the sake of earning rewards.
  • Alerts: Issuers often let you set up fraud or balance limit alerts and reminders when it’s time for a payment.
  • Autopay: If available, set this up so you avoid late or missed payments.

Choosing a card that fits your needs

There are numerous credit cards available for a wide range of needs, including building credit, earning rewards, getting out of debt and more. You should decide what your goal is with a credit card, then compare cards from various issuers prior to applying.

Some issuers allow you to fill out a prequalification form that performs a soft pull on your credit to see if you may qualify for a card. This doesn’t affect your credit score and is a great way to shop around for the best deals. Note, however, that prequalification is not a guarantee of approval.

Read the terms and conditions

An important step prior to applying for a credit card is to review the cardmember agreement. Each card has different rates and fees that vary based on any number of reasons, including credit history, actions you take (or don’t take), the prime rate in the market and more.

It’s key to review the cardmember agreement so you’re aware of any fees you may be charged, as well as how the card works.

Practice responsible credit behavior

Make on-time payments. Perhaps the most important part of maintaining a credit card is to make timely payments. By doing so, you avoid late payment fees and penalty APRs that hurt your credit score. Autopay is a helpful feature to ensure your bill is paid on time, or you can set up reminders.

Pay your balance in full. A great goal is to always pay your bill in full so you don’t carry a balance. Any unpaid balance will be charged interest (unless associated with a promotion) and can cause you to rack up debt. This also negatively affects your credit score.

Avoid overspending. It’s common for people to mismanage their credit cards and be tempted to overspend, but with proper budgeting, you can avoid falling into debt. A good rule of thumb is to only spend what you can afford to pay at the time of purchase — this way, you know you can pay off your balance. And if you have a rewards card, don’t overspend just to earn rewards — the debt you incur can counteract any rewards.

Keep a low utilization rate. The percentage of available credit you use is known as utilization, and is a factor in your credit score. It’s important to keep a low utilization rate so issuers see you’re not a risk. Constantly maxing out your card raises concerns for issuers and can cause you to fall into debt.

Check your monthly statements. By simply reviewing your monthly statements, you can proactively notice any fraud that may occur on your account and isn’t flagged by your credit card company. Most companies send notifications if they think there’s fraud on your account, but they may not catch every instance of suspicious behavior.

Check your credit score and credit report. Checking your credit score on a monthly basis is a good habit to get into and can promote positive credit behavior. Read our guide to learn where to access your free credit score and other credit tips. It’s also a good idea to check your credit report every few months to make sure everything checks out and there are no unknown accounts open in your name. AnnualCreditReport.com is the only source for authorized credit reports from the three major credit bureaus, and you can go there to access reports of each bureau for free once a year (although during the pandemic, this has been temporarily changed to free reports every week).

Secure your card. Don’t leave your card unattended or loan it to a friend — neither of those actions have a positive result. Your card is your responsibility and should be treated with care. If your card is lost or stolen, contact your issuer immediately and put a hold on your account until it’s found or can be replaced.

Don’t request a cash advance. Cash advances are notorious for high fees and tricky terms that can draw you into debt, so it’s best to avoid them at all costs. If you need cash, look to personal loans, which may have better terms.