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Target REDcard Credit Card: A Good Deal If You Know How to Use It

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

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When the words “retail store branded credit card” (or some variation of the phrase) are uttered, your response should be to turn and run. Store cards are notorious for being “bad” financial products for a variety of reasons.

The incentive that’s meant to rope you in – like 10% of your purchase – is temporary; the interest rates on the cards are upwards of 20%; the minimum payments are incredibly low, which encourage people to maintain high balances that rack up that nasty amount of interest; and many come with hidden fees (or just high fees) that can cost you even more money.

But there’s one store card that might offer a slight exception to the rule that says avoid store credit cards at all costs: the Target REDcard™ Credit Card. Let’s take a look at this card to see if it can benefit frequent shoppers – or if it’s just another credit trap waiting for uneducated consumers.

How the REDcard Works

The Target REDcard™ Credit Card offers shoppers 5% off in the form of an instant discount on every purchase made in stores or online (some restrictions apply). It’s a store branded card that does not have an annual fee – or a complicated rewards program, as again, the reward is given immediately upon purchase. The card can only be used at Target stores and Target.com.

Target REDcard vs. Target Prepaid REDcard

The Target REDcard™ Credit Card is a regular credit card, not to be confused with Target's prepaid REDcard product.

A prepaid card is loaded with funds each month by the user who can then use those funds as they wish, like a regular debit card. Most people use prepaid cards as a budgeting tool or as an alternative to a checking account. Prepaid cards do not factor into your credit report and, as a result, have no impact on your credit score.

With a credit card, you are borrowing funds from a bank and must pay them back each month or face penalties, fees, and a likely hit to your credit score.

What Do You Get with a REDcard? 

The best thing about a Target REDcard™ Credit Card is that you get your 5% at Target & Target.com discount at every checkout, no gimmicks or strings attached. It applies to everything you can buy in the store, including items already marked down or on sale, and you can use it while applying other coupons to your purchase.

The exception is that you will not receive 5% off the following purchases:

  • Prescriptions, over-the-counter items located behind the pharmacy counter and clinic services at Target
  • Target Optical™ eye exams
  • Target gift cards and prepaid cards, and Stockpile and Gift of College gift cards
  • Certain restaurant merchants in Target stores, such as D’Amico & Sons Italian Kitchen and Pret A Manger
  • Gift wrap and shipping and handling charges on Target.com purchases
  • Wireless protection program purchases and deposits required by a mobile carrier

In addition to the 5% discount, you’ll receive free shipping on any purchase online, an added benefit if you’re an online shopper.

There are no points to earn and redeem, no statement credits to request, no hoops to jump through. Just straight-up 5% off on your purchase – and free shipping if you’re shopping Target.com.

The Pitfalls of Target’s REDcard You Must Avoid

Of course, the benefits quickly evaporate should you make one tiny mistake with your Target REDcard™ Credit Card. The variable interest rate – at 25.15% Variable APR – is high, and makes the 5% savings completely inconsequential if you’re only paying the minimum.

Ultimately, despite the better-than-average perks, the Target REDcard™ Credit Card is a store branded credit card and comes with the typical pitfalls: high interest rate, high fees, low minimum payment requirement designed to encourage people to revolve balances.

Not to mention, most REDcards come with low limits since you can only use them at Target stores. This could hurt your credit utilization ratio – and therefore, your credit score as a whole – if you don’t have many other credit cards. Remember, credit utilization is based on your total credit limit, not per card.

If you’re just starting to build your credit, the REDcard’s 5% may not be worth the downsides of holding the card.

Fine Print

To sum up, here’s what you need to know before considering this credit card:

  • The REDcard grants you a 5% discount on nearly every purchase at Target and Target.com. This discount is immediate upon checkout, so it’s more like a guaranteed discount on your Target purchase than other forms of money back.
  • You’ll receive free shipping online at Target.com when you use your Target credit card.
  • The APR can be as high as 25.15% Variable.
  • Minimum payments are low, which encourages consumers to make small payments on balances over long periods of time – costing an incredible amount in interest fees.
  • Late payment fees run up to $38. Returned payment fees run up to $27.

If you miss a payment, are late on a payment, or only pay the minimum balance, your 5% savings will be automatically negated.

Only use the Target REDcard™ Credit Card if you have established a history of paying your balances in full and on time – and can manage your money so you only purchase what you budgeted for and truly need.

There’s also one more issue that consumers should be aware of, although whether it’s “good” or “bad” is probably a matter of personal preference. In the interest of full disclosure, however, we believe in making note of the fact that Target does use its branded store cards to collect data and information about you and what you buy.

In Conclusion

Target’s REDcard is a great financial product for people who frequently shop at the store for everyday purchases on necessary items like toiletries, household goods, school supplies, and clothing. There’s no annual fee and the automatic 5% discount is an excellent way to save even more money when you do your regular shopping.

However, there are big consequences for missing payments or getting trapped into revolving your balances month to month. The late payment and missed payment fees are high, and the variable interest rate is alarming at 24.15%.

You may want to avoid picking up this card if you’re not a normal Target shopper – and the promise of a “reward” will encourage you to spend money that you would not otherwise. And most certainly avoid this store card like you would any other if you struggle to manage your money and your credit.

Otherwise – if you’re experienced in managing your purchases and your credit, and already have good credit – the REDcard is a great option if you’re looking to save even more on necessary purchases and spending you already do.

Target REDcard™ Credit Card

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Target REDcard™ Credit Card

Annual fee
$0
Rewards Rate
5% at Target & Target.com
Regular Purchase APR
25.15% Variable

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

Kali Hawlk
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Kali Hawlk is a writer at MagnifyMoney. You can email Kali at [email protected]

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Building Credit, College Students and Recent Grads, Credit Cards, Earning Cashback

How You Can Have a Good FICO Score Just One Year After Opening a Credit Card

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

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When I moved to the U.S. from my hometown of Hangzhou, in China, to pursue my undergraduate degree, the thought of establishing a credit history wasn’t even on my radar. I was, after all, an international student from China, where day-to-day credit card use had only recently caught on.

It wasn’t until I returned to the U.S. a few years later to pursue my master’s degree in Chicago that I realized I’d need to establish credit if I planned to launch my career in the States.

Just one year after I opened the card, I already had a solid FICO score – 720, to be exact. This score landed me safely in the “good” credit range, meaning I probably would not have trouble getting approved for new credit. I still had work to do if I wanted to get into the “very good” credit category, which starts at 740. But as a credit card newbie, I was not disappointed in my progress.     

Here’s how I did it.

I selected the right card for my needs

I wish I could say I diligently researched credit cards to choose the best offer and best terms, but honestly, I just got lucky.

Shortly before graduate school started, I visited friends in Iowa. When we were about to split the bill after dinner at a Japanese restaurant, I noticed that all my friends had a Discover card with a shimmering pink or blue cover. The Discover it® Student Cash Back was known for its high approval rate for student applicants, and had been popular among international students.

I thought, “Oh, maybe I should get this one, too.”

One of the friends sent me a referral link that very night. I applied and got approved quickly. We both received a $50 cash-back bonus after I made my first purchase — an iPhone — using the card through Discover’s special rewards program. I even received 5% cash back from the purchase.

Besides imposing no annual fee, the card had other perks, such as rewarding me with a $20 statement credit when I reported a good GPA (up to five consecutive years), letting me earn 5% cash back on purchases in rotating categories and matching the cashback bonus I earned over the first 12 months with my account. For me, it was a great starter card, but there are plenty of other options out there.

Check out our guide on the best credit cards for students.

I also could have explored other options of establishing credit, like opening a secured card, for example, which would have been a smart option if I hadn’t been able to qualify for the Discover it student card.

I never missed a payment

Despite my very limited financial literacy at the time, I attribute my strong credit score to the old, deeply ingrained Chinese mentality about saving and not owing.

I never missed payments, and I always paid off my balance in full each month, instead of just making the minimum payment. I didn’t want to pay a penny of interest.

Credit cards carry high interest rates across the board, but student credit cards generally have some of the highest APRs. This is because lenders see students like me — consumers without much credit history — to be risky borrowers, and they charge a higher interest rate to offset that risk.

Best Student Credit Cards June 2019

It wasn’t until much later that I learned payment history is critical to good credit. In fact, it is the biggest factor there is, accounting for 35% of my FICO score.

A Guide to Getting Your Free Credit Score

I was careful not to use too much of my available credit

My friends with more experience advised me to use as little of my available credit as possible. They warned me that overuse had hurt their credit scores in the past. This didn’t much sense to me, but I followed their advice, for the most part diligently.

I later learned this is almost as important as paying bills on time each month. Your utilization rate is another major factor in your FICO score. Credit experts urge cardholders to keep their credit utilization ratio below 30%. The lower, the better.

That means if you have three credit cards with a total available limit of $10,000, you should try to never carry a total balance exceeding $3,000, and you really should aim for much lower than that.

A Guide to Build and Maintain Healthy Credit

I beefed up my score with on-time rent payments

Keeping in mind the importance of not maxing out my credit card, I never considered paying my rent with the card. In fact, some landlords charge credit card fees for tenants who try to pay with plastic.

But I did find a way to establish credit by paying rent using my checking account.

I paid rent to my Chicago landlord through RentPayment, an online service. RentPayment gave me the option of having my payments reported to TransUnion, one of the three major credit-reporting agencies (the other two are Experian and Equifax). Because I knew I’d always pay bills on time, I signed up for the program.

This likely helped me improve my credit mix, another key factor influencing a credit score. The more types of accounts you show on your report, the better your score can be — if you make all your payments on time.

Yes, I made mistakes. This was my biggest one

My first foray into the world of credit wasn’t completely blip-free.

The only thing that hurt my credit, besides my short credit history, was that I had tried signing up for a Chase credit card, along with other ways to finance my iPhone, just a few days before I applied for my Discover card.

None of the other banks approved my applications, and my score went down at the very beginning, due to the number of “hard inquiries” against my credit report. Hard inquiries occur when lenders check your credit report before they make decisions regarding your application. Having too many inquiries in a short period of time can result in a ding to your credit score.

I’ve learned my lesson, though, and I’ll be cautious in the future when it comes to applying for a lot of credit in a short time period. Overall, it should be noted that you should not be afraid to apply for new credit — even when hard inquiries do hurt your score in the short term, it typically isn’t disastrous, and your score should recover fairly quickly as long as you are a responsible user of credit. Having more available credit can also help your utilization rate — as long as you don’t increase your charges, of course.

You can also check to see if you have prequalifed for any credit cards without triggering a hard inquiry.

If you’re new to the world of credit cards, consider taking the steps I outlined above, and you, too, may have a healthy credit score before you know it.

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

Shen Lu
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Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at [email protected]

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The Best Cash Back Credit Cards for Every Category – 3% and More in June 2019

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

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The information related to SimplyCash® Plus Business Credit Card from American Express credit card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

MagnifyMoney keeps a database of over 2,000 credit cards and their features, including cash back cards you can compare with our tool. We used it to find the absolute highest cash back rewards you can earn in each spending category, more than the standard 1-2% you usually see.

In our analysis, there are over 25 categories where you can earn 3% or more in pure cash back on your credit card purchases.

Scroll down and you’ll find links to the best cash back credit cards that earn more than 2% cash back in special categories. These are cards that let you get pure cash value, not complicated points that can be used only for travel.

Before you dig into categories, every cash rewards wallet should have one of these cards, with double cash back on everything you spend and $0 annual fee:

Citi® Double Cash Card – 18 month BT offer

The information related to Citi® Double Cash Card – 18 month BT offer has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Citi® Double Cash Card – 18 month BT offer

Annual fee
$0*
Rewards Rate
Earn 2% cash back on purchases 1% when you buy and 1% as you make payments for those purchases
Regular Purchase APR
15.74% - 25.74%* (Variable)

Fidelity® Rewards Visa Signature® Card

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on Fidelity’s secure website

Fidelity® Rewards Visa Signature® Card

Annual fee
$0
Rewards Rate
Unlimited 2% cash back on everyday purchases.
Regular Purchase APR
16.24% Variable

Once you have one of these, you can add other cards that earn more than 2% in special categories to really boost your cash rewards.

The best cash back credit cards with no limit rewards

Maybe you don’t want to mess with rotating categories or remembering limits on cash back. If that’s you, there are only a handful of cards that you need to carry to get the most in totally unlimited cash back.

As you’ll learn below, you may be leaving about $500 a year or more on the table by not holding at least some of these cards.

They are all no annual fee cards, and they ensure you will earn more than 2% cash back on your total spending with absolutely no limits. Some cards have higher cash back rates with limits, and you can see those below this list in our review of cards for each category.

Airfare – 3%

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

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.
Regular Purchase APR
17.24% - 25.99% Variable

The Uber Visa Card* earns 4% back on dining, 3% back on hotel and airfare, 2% back for online purchases, and 1% on everything else. There are also no foreign transaction fees — great if you travel outside the U.S.

Travel – 3%

The AAA Member Rewards Visa® Card offers 3 points for eligible travel & AAA purchases, 2 points on gas, grocery store, wholesale club and drugstore purchases, and 1 point per $1 everywhere else. You don’t have to be a AAA member to get the card.

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

U.S. Supermarkets – up to 6% (on up to $6,000 per year in purchases, then 1%)

Blue Cash Preferred® Card from American Express

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on American Express’s secure website

Terms Apply | Rates & Fees

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Blue Cash Preferred® Card from American Express

Regular Purchase APR
15.24%-26.24% Variable
Intro Purchase APR
0% for 12 months
Intro BT APR
0% for 12 months
Annual fee
$95
Rewards Rate
NEW 6% Cash Back on select U.S. streaming subscriptions & 3% Cash Back on transit including taxis/rideshare, parking, tolls, trains, buses and more
Balance Transfer Fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
Credit required
good-credit
Excellent/Good

The Blue Cash Preferred® Card from American Express offers the highest rate we could find for U.S. supermarket shopping: 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%). This card does have a $95 annual fee, but if you spend $1,584 a year at U.S. supermarkets, you’d earn enough cash back to recoup the annual fee.

Gas – 5%

Fort Knox Federal Credit Union Visa® Platinum Card

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on Fort Knox Federal Credit Union’s secure website

Fort Knox Federal Credit Union Visa® Platinum Card

Annual fee
$0
Rewards Rate
Earn an unlimited 5% cash back on gas and 1% cash back on all other purchases.
Regular Purchase APR
11.50% - 18.00% Variable

You might not have heard of this credit union, but anyone can join. You just need to pay $5 to join the American Consumer Council / Kentucky and you’re eligible.

Another option includes the Sams Club® Mastercard® with 5% at the pump on up to $6,000 worth of gas purchases a year, then 1%, but you need to be a Sam’s Club member to hold the card.

Dining – 4%

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

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.
Regular Purchase APR
17.24% - 25.99% Variable

*This card earns 4% back on dining, 3% back on hotel and airfare, 2% back for online purchases, and 1% on everything else.

Everything else: Citi® Double Cash Card – 18 month BT offer (up to  1% + 1%) or Fidelity® Rewards Visa Signature® Card (2%)

If you’re willing to pay an annual fee, the Alliant Cashback Visa® Signature Card card earns Unlimited 3% cash back during the first year; 2.5% cash back afterwards. There is a $99 annual fee, waived the first year. This offer is worthwhile if you spend over $1,000 a month on the card. Alliant is targeting this card to people with high income who spend $10,000 or more a month, so it might be tough to get approved.

Just mark each of the cards you pick in your wallet with a sticker for each category so you remember which to use, and you’ll rack up lots of cash with minimal hassle. And afraid to have more than one card? Well if you’re responsible with credit, a few additional inquiries might have less of an impact than you think. See our experience with scores and getting several cards for the rewards.

For unlimited retailer-specific discounts, also consider:

If you want to maximize absolutely everything, read on…

We’ve organized cash back cards for each of the over 25 spending categories that are currently eligible for more than 2% in cash back rewards.

They include both year round and quarterly rotating categories like those on the Discover it® Cash Back. Pick the categories that matter most to you, and you’ll see the opportunities you have to earn 3-5% if you’re willing to keep track of some limits and quarterly changes.

Remember, these are all cards that let you earn cash value rewards, with no restriction on where you spend the rewards, unlike travel points.

You’ll find three flavors of cash back rewards, in the order of hassle factor:

  • Unlimited cash back – This is the simplest form. You usually won’t find the very highest 5%+ rewards this way, but we’ve found some great cards that get you 3% or more in some popular categories.
  • Cash back with limits – This is where a card limits the cash back you earn by putting a cap on the spending which earns the cash back in the specific category, on a combination of categories, or the card as a whole.
  • Quarterly rotating categories – These are the cards with the big headline 5% rates. Don’t be fooled. While you can earn the 5% rate, you may have to opt in to categories each quarter manually and be hit with caps on how much you can earn.

Advertising Services

With Limits

3%: SimplyCash® Plus Business Credit Card from American Express – up to $25,000 in purchases in bonus categories. Terms Apply.

Airfare

Unlimited

With limits

  • 3%: Huntington Voice Credit Card® – 3X points in one of 10 categories (capped at $2,000 each quarter or 6000 points), and all other purchases earn 1X points.

Quarterly category in June 2019

  • 5%: Nusenda Credit Union Cash Rewards – Oct. – Dec. June 2019 – up to $1,500 – Anyone can join the Nusenda Credit Union (formerly the New Mexico Educators Credit Union) by becoming a member of the La Montanita Food Co-op.

Amazon.com

Unlimited

Quarterly category in June 2019

Bookstores

With limits

  • 5%: U.S. Bank Cash+ up to $2,000 / quarter across two 5% categories you choose

Car Rentals

Unlimited

With limits

Cell phone

With limits

  • 5%: U.S. Bank Cash+ up to $2,000 / quarter across two 5% categories you choose
  • 5%: SimplyCash® Plus Business Credit Card from American Express– up to $50,000 in bonus purchases a year. Terms Apply.

Cellular Phone / Landline / Internet / Cable TV

  • 5%: Ink Business Cash℠ Credit Card – up to $50,000 in bonus purchases a year

Clothing Stores

With limits

  • 5%: U.S. Bank Cash+ up to $2,000 / quarter across two 5% categories you choose
  • 3%: Huntington Voice Credit Card® – 3X points in one of 10 categories (capped at $2,000 each quarter or 6000 points), and all other purchases earn 1X points.

Commuting, Taxis

Unlimited

Department Stores

Select U.S. department stores. See the list here.

With limits

  • 5%: U.S. Bank Cash+ up to $2,000 / quarter across two 5% categories you choose
  • 3%: Huntington Voice Credit Card® – 3X points in one of 10 categories (capped at $2,000 each quarter or 6000 points), and all other purchases earn 1X points.

Discount stores

With limits

  • 3%: Huntington Voice Credit Card® – 3X points in one of 10 categories (capped at $2,000 each quarter or 6000 points), and all other purchases earn 1X points.

Drug stores

With limits

  • 3%: Huntington Voice Credit Card® – 3X points in one of 10 categories (capped at $2,000 each quarter or 6000 points), and all other purchases earn 1X points.

Quarterly category in June 2019

  • 5%: Chase Freedom® – up to $1,500 when you activate – January – March June 2019

Education

Quarterly category in June 2019

  • 5%: Nusenda Credit Union Cash Rewards – July – Sept. June 2019 – up to $1,500 – Anyone can join the Nusenda Credit Union (formerly the New Mexico Educators Credit Union) by becoming a member of the La Montanita Food Co-op.

Electronics

With limits

  • 5%: U.S. Bank Cash+ up to $2,000 / quarter across two 5% categories you choose
  • 3%: Huntington Voice Credit Card® – 3X points in one of 10 categories (capped at $2,000 each quarter or 6000 points), and all other purchases earn 1X points.

Furniture

With Limits

  • 5%: U.S. Bank Cash+ up to $2,000 / quarter across two 5% categories you choose

Gas

Unlimited

With limits

Quarterly category in June 2019

Supermarket Spending

Unlimited

With limits

Quarterly category in June 2019

Gyms

With Limits

  • 5%: U.S. Bank Cash+ up to $2,000 / quarter across two 5% categories you choose

Home improvement

No limits

With limits

Quarterly category in June 2019

Hotels

Unlimited

With limits

Quarterly category in June 2019

Movie Theaters

With Limits

  • 5%: U.S. Bank Cash+ up to $2,000 / quarter across two 5% categories you choose

Quarterly category in June 2019

Office Supply Stores

With limits

Restaurants

Unlimited

With Limits

Quarterly category in June 2019

Shipping

  • 3%: SimplyCash® Plus Business Credit Card from American Express – up to $25,000 in purchases in bonus categories. Terms Apply.

Sporting Goods Stores

With limits

Target

Unlimited

Trains, Cruises, Other Vacation

Unlimited

With limits

Utilities

Walmart

Warehouse Clubs

  • 2%: Costco Anywhere Visa® Card by Citi – at Costco warehouse clubs
  • 2%: InFirst Credit Union Visa Rewards (no annual fee – can join FAPAC at a reduced rate of $10, using discount code INFIRST)

*The information related to the Uber Visa Card and Bank of America® Cash Rewards credit card - $200 Cash Rewards Offer has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

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

Alexandria White
Alexandria White |

Alexandria White is a writer at MagnifyMoney. You can email Alexandria at [email protected]

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