Credit Cards, Reviews

Chase Sapphire Preferred Review: What To Know Before You Apply

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

If you want a rewards credit card, Chase Sapphire Preferred is worth considering. However, the card is not right for everyone.

Here are the highlights:

  • A great sign-up bonus of 50,000 points if you spend $4,000 on purchases in the first three months from account opening.
  • No annual fee during the first year. There is an annual fee of $95 in subsequent years.
  • Earn 2 points for every $1 spent on travel and dining. If you spend a lot of money on travel and dining, this is a great way to boost your earnings.
  • If you redeem your points for travel using the Chase Ultimate Rewards portal, your points are worth 25% more. For example, that 50,000 point sign-up bonus could be worth $625 of travel purchases.
  • You can also transfer your points to leading airlines (like United and Southwest) or hotels (like Marriott or Hyatt) on a 1:1 basis.

The most value goes to people who spend a lot of their money on travel or dining and want to redeem their points for travel. If you are a foodie and traveler looking to get free trips faster, this card is a great tool to earn free travel fast. Depending upon how much you spend on travel, you might even want to consider the Chase Sapphire Reserve instead. The Reserve was just recently introduced and is Chase’s most exclusive card yet. You get a 100,000 point sign-up bonus (instead of 50,000 points). You earn 3 points for every $1 spent on dining and travel (instead of 2 points). But you have a $450 annual fee (instead of $95), and it is not waived during the first year.

The least value goes to people who spend very little or no money on travel or dining and want to redeem for cash back or gift cards. Spending on all other categories (outside of travel and dining) only earns 1 point per $1 spent. And every 100 points is worth $1 of cash back. That means you would only be earning 1% cash back, which is a very low rate. Using our guide to the best cash back credit cards, you should be able to earn at least 2% on your spending.

How to Earn Points

You can earn 2 points on every dollar spent on travel (from cabs to airplane tickets) and dining. In order to get 2 points, the merchant needs to be classified as a “restaurant” or “travel.”

Dining is a relatively simple classification. All restaurants should classify as dining. Many bars (even those that don’t serve food) can be classified as “dining.” And even most popular food delivery services are categorized as dining (although there have been some reports of GrubHub not always earning 2x points). Here is the exact definition from the Chase website:

  • Merchants in the restaurants category are merchants whose primary business is sit-down or eat-in dining, including fast food restaurants as well as fine dining establishments. Please note that some merchants that sell food and drinks located within larger merchants such as sports stadiums, hotels and casinos, theme parks, grocery and department stores will not be included in this category unless the merchant has set up such purchases to be classified in a restaurant category.

The “travel” category is actually a lot broader than you might imagine. Paying for airplane tickets and hotel stays definitely counts as travel. But Airbnb, New York taxis, and even highway tolls will also count as travel. Here is the exact definition from Chase:

  • Merchants in the travel category include airlines, hotels, motels, timeshares, car rental agencies, cruise lines, travel agencies, discount travel sites, campgrounds and operators of passenger trains, buses, taxis, limousines, ferries, toll bridges and highways, and parking lots and garages. Please note that some merchants that provide transportation and travel-related services are not included in this category; for example, real estate agents, in-flight goods and services, on-board cruise line goods and services, sightseeing activities, excursions, tourist attractions, merchants within hotels and airports, and merchants that rent vehicles for the purpose of hauling. In addition, the purchasing of points or miles does not qualify in this category.

You will earn 1 point per $1 spent on all other spending with your Chase Sapphire Preferred card.

There is no maximum to the number of points that you can earn.

How Much Are the Points Worth?

When you earn points with the Chase Sapphire Preferred card, you are earning “Ultimate Rewards” points. There are a number of ways that these points can be used. How valuable each point is depends on how you choose to use it.

Here’s a summary:

  • When you redeem points for cash, a statement credit, or a gift card: every 100 points earned = $1
  • When you redeem points for travel using Chase’s Ultimate Rewards travel portal: every 100 points = $1.25
  • When you transfer points to travel partners: It depends upon the award that you are able to get in the program. For example, you could get a round-trip ticket to Europe on United Airlines for as few as 115,000 miles round trip or as many as 300,000 miles. You just have to shop on the United Airlines website to see how many miles they are charging for the flight. Unfortunately, the number of miles is determined by the airline and is at their discretion.

Who the Chase Sapphire Preferred Card Doesn’t Work For

If your objective is to earn cash back on all your purchases, Chase Sapphire Preferred is not the best option for you.

Why? Every 100 points you earn is only worth $1. That means you will get a 2% return on restaurant and travel spending, and only 1% return on everything else. You can do a lot better with a cash back credit card like the Citi Double Cash, which offers 2% cashback on all purchases.

Redeeming Points for Travel Rewards

As a Sapphire cardholder, you can book travel using the Ultimate Rewards travel portal. You can book flights, hotels, car rentals, and other activities using the portal. The travel portal is like your own online travel agency:

who-the-chase-sapphire-preferred-card-doesnt-work-for

To pay for the travel, you can use Ultimate Reward points, your Chase card, or both. Your Ultimate Rewards points carry even more value when you book using the portal. You only need 80 points to cover $1 of travel expense. For example, if an airfare is $500, you would only need 40,000 points to pay for the ticket. If you only had 30,000 points, you could apply those toward the balance and use cash or your credit card to cover the rest. The 30,000 points would deduct $375 from the purchase price, and you could pay for the remaining $125 out of pocket.

Booking travel through the portal really boosts the value of your credit card. That means you are actually earning:

  • 2.5% on every $1 you spend on restaurants and travel
  • 1.25% on every $1 you spend on everything else — and you can boost this by using Chase Freedom Unlimited (see below)

Transfer to Travel Partners You have the opportunity to earn the best possible return when you transfer your points to a travel partner. Ultimate Rewards has an amazing coalition of travel partners where you can transfer your points 1:1. These include: =

  • Airlines: United Airlines, Southwest Airlines, and a number of foreign carriers (including British Airways, Air France, Korean Air, Singapore Airlines, and Virgin Atlantic)
  • Hotels: Hyatt, IHG, Marriott, and Ritz-Carlton

The value of your points when transferred depends upon how you redeem them. You will get some of the best returns (and the most fun) when you can you nab a coveted “saver” travel award through one of Chase’s partner airlines. Most airlines have different tiers of fares that are reserved for people who are booking using miles or points. “Saver” awards are often the most deeply discounted and that’s when you get the most bang for your buck when it comes to redeeming points.

For example, we recently looked up a trip to London from Newark on the United Airlines website for a four-day weekend in April. Using our award points, we found a round-trip “saver” award fare for just 115,000 points for business class flight. That same flight cost nearly $5,000 in cash.

If you use those 115,000 points to book travel on the Chase Ultimate Rewards portal, it is worth $1,725. And if you want to convert those points into cash deposited into your bank account, it would be worth $1,150.

With some advance planning, you can get the biggest returns on your Chase points by transferring your points to Chase airline partners and finding deals on international business class flights. But you have to plan in advance and have a flexible travel schedule if you want to get the best business class redemption opportunities.

Remember: You can transfer points from Ultimate Rewards to your existing frequent flier accounts. If you have 40,000 miles in your United Airlines account already and need more miles for an award, you can easily (and instantly) top up your existing account by transferring at a 1:1 ratio.

Boost Your Earning with Chase Freedom Unlimited

One of the weaknesses of the Chase Sapphire Preferred credit card is that you only earn 1 point on all of your spending outside of the restaurant and travel categories. Fortunately, there is a way to boost your earnings.

Chase recently introduced the Chase Freedom Unlimited credit card. With this credit card, you earn 1.50 Ultimate Rewards points for every $1 you spend. The good news is that you can combine those Ultimate Rewards points with your Chase Sapphire Reserve Ultimate Reward points. Even better: There is no annual fee on the Chase Freedom Unlimited credit card.

To get the best value, use:

  • Chase Freedom Unlimited for all purchases except dining and travel, and
  • Chase Sapphire Preferred for all dining and travel purchases, and
  • Use your points to redeem for travel on the Ultimate Rewards portal or get a great deal redeeming frequent flier miles with one of the travel partners

If you do that, you will be earning at least:

  • 2.5% on dining and travel (using Chase Sapphire Preferred), and
  • 1.875% on everything else (using Chase Freedom Unlimited)

The returns could be even higher if you transferred your points to a travel partner and snagged a great reward ticket.

What Are the Fees and Charges Associated with the Card?

Here are some of the key fees and charges that come with the Chase Sapphire Preferred card:

  • Annual Fee: $0 Introductory fee for the first year. After that, $95
  • Foreign Transaction Fee: None
  • Late Fee: Up to $15 if the balance is less than $100; up to $27 if the balance is $100 to less than $250; up to $37 if the balance is $250 or more

Having no foreign transaction fee is an excellent benefit, especially if you are a frequent traveler. There are still cards out there charging a hefty 3% on all foreign purchases.

Figuring out whether or not to pay the annual fee does take a little extra work. Remember that you can easily earn 2% cash back with the Citi Double Cash credit card, which has no annual fee. That is the baseline return. If you spend $2,000 a month, you could earn $480 a year in cash back. Can you beat that return?

If you are a foodie and world traveler, and you spend all $2,000 a month in the dining and travel categories, you can be much better off with Chase. If you use your card to redeem for travel or transfer to partners, you should be able to earn at least a 2.5% return. That means $20,000 of spend in the dining and travel categories would get you $600 of value before the annual fee. After the annual fee of $95, you would get $505 of value during the ongoing years — which is a better deal than the flat 2% card. And there is a reason the Chase Sapphire Preferred card is such a great option for travelers: you can get even better returns when you use your miles strategically, and the more you spend in dining and travel categories (above $20,000 a year), the better the card.

This card is not ideal for people who:

  • Do not spend a lot of money in travel and dining categories
  • Do not want to redeem their points for travel (would rather have the cash)

Other Card Benefits

In addition to earning points, there are a number of other benefits that come associated with the Chase Sapphire Preferred card. You can tell that this card is targeted toward the traveler because some of the richest (and, in our opinion, best) benefits are travel related. Make sure you understand them because if you are a regular traveler, you will likely have the opportunity to take advantage of them.

Car Rental Insurance

With this card, you get a primary auto rental collision damage waiver benefit. If you decline the auto rental company’s collision insurance and charge the entire rental cost to your card, you can receive coverage that provides reimbursement for up to the actual cash value of the vehicle for theft and collision damage for most rental cars in the U.S. and abroad. Having primary coverage is a big deal — it means you don’t have to submit a claim to your own auto insurance company first (which could result in higher insurance rates after a claim).

The insurance provided on the credit card only deals with collision. You need to have a strategy in place for other risks. Auto insurers typically sell four types of policies. They are:

  • Collision (Loss Damage Waiver): Your Sapphire card can replace this.
  • Liability: If you damage someone else’s property or person, you could be held liable (and the amount of the liability could be significant). You should check to see if your existing auto insurance provides liability coverage on your rental. If it doesn’t, or if you don’t have an auto insurance policy, consider buying that protection at the counter.
  • Personal Effects: This policy protects any items that are damaged while in the rental car. Depending upon your situation, you might not need this coverage.
  • Personal Accident Insurance: This is typically a health care policy that is not necessary if you have sufficient coverage from your existing health insurance.

If you are renting a car overseas, be sure to check with your credit card before traveling to make sure you are covered in that country.

Trip Delay

Remember when airlines used to provide you with a free hotel room if you got stuck somewhere overnight? Not any longer. Thankfully, Chase Sapphire Preferred steps in to the rescue.

If your common carrier travel is delayed more than 12 hours or requires an overnight stay, you and your family are covered for unreimbursed expenses, such as meals and lodging, up to $500 per ticket.

Baggage Delay

You can get reimbursed for essential purchases like toiletries and clothing for baggage delays over six hours by passenger carrier up to $100 a day for five days.

Trip Cancellation

If your trip is canceled or cut short by sickness, severe weather, and other covered situations, you can be reimbursed up to $10,000 per trip for your prepaid, nonrefundable travel expenses, including passenger fares, tours, and hotels.

Other Benefits

The Chase Sapphire Preferred card also offers purchase protection, price protection, return protection, and extended warranty protection benefits.

How to Get Approved

As you can tell from the details of the Chase Sapphire Preferred card, it comes rich with rewards and benefits. And it targets people with excellent or good credit.

If you have a low credit score (below 650) or you have missed a lot of payments historically, you will likely be rejected.

People with the best chance of being approved have scores well above 700.

If you have a bad credit score and are looking for a credit card, you can review our guide here.

An Example of Who Gets the Most from the Chase Sapphire Preferred Card

Here is a profile of an ideal Chase Sapphire Preferred customer:

Mary lives in New York City. She doesn’t have a car (because she uses the subway), and she spends a ton of money eating out and traveling. She has a good job and a good credit score but would love to travel even more.

This card is ideal for Mary because:

  • So much of her spending is on dining and travel, which earns at the highest level.
  • She wants to earn free travel, and the redemption opportunities are richest when redeemed for travel.
  • She doesn’t have primary auto insurance (because she doesn’t have a car) so the primary auto rental benefit is ideal.
  • She has excellent credit.

If that sounds like you, Chase Sapphire Preferred is a great addition to your wallet or purse.

An Example of Who Gets the Least from the Chase Sapphire Preferred Card

Here is a profile of someone who might be better off with a different card:

John is a father of three. He spends a lot of money on groceries (to feed his growing family) and gas (to drive to all of his children’s events). He just doesn’t have the money to eat out, and hopes to do some traveling later in life — once he funds three college educations.

There are other options that would be much better for John. Because none of his spending would be in dining or travel, he would only be earning 1 point for every $1 spent. Because he would not be redeeming his points for travel, he would likely be earning only 1% on his spending. John would be better with a cash back credit card that better rewarded his spending patterns.

Should I Consider the Chase Sapphire Reserve Instead?

In the last year, Chase also introduced the incredibly popular Chase Sapphire Reserve credit card. Here are the key differences between Sapphire Preferred and Sapphire Reserve:

  • There is an annual fee of $450. It is not waived during the first year. However, you can receive up to $300 in statement credits annually as reimbursement for travel purchases such as airfare and hotels charged to your card.
  • You earn 3 points on travel and dining, instead of 2.
  • When you redeem for travel on the Chase travel portal, you get 50% more value (compared to only 25% more value for Sapphire Preferred).
  • Just like the Sapphire Preferred, you earn 1 point for every $1 spent in all other categories (excluding dining and travel).

For spending in travel and dining that is redeemed on the Chase travel portal, you get incredible value. Every $1 spent on travel and dining is worth 3 points. And 3 points redeemed for travel on the Chase travel portal would be worth 4.5 cents. That means you could get an incredible 4.5% of value on the Reserve compared to 2.5% on Preferred.

When you decide between the two cards ask yourself the following question:

  1. Do you spend at least $300 a year on travel? If yes, answer the next question. If no, the Reserve card might not be for you.
  2. If you spend at least $300 on travel and more than $3,750 a year in travel and dining combined — you will be better off with the Reserve card.

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Personal Loans

Payoff Personal Loan Review

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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.

Payoff Personal Loan Review

Updated December 13, 2015

Payoff* is a company that offers personal loans. Their goal is to help consumers get out of debt, and they don’t even like to be described as a loan company. If their algorithm is able to detect that you are going to use this loan to go further into debt, rather than payoff your existing debt at a lower interest rate, they may decline you. The goal of their business is in their name: they want you to payoff your high interest rate credit cards so that you can accelerate your debt repayment.

They currently offer a personal loan product, and in this review we will describe:

  • The terms of the loan (price, maximum loan amount, interest rate)
  • The qualification criteria
  • The application process

Terms of the Loan

Interest Rate: Between 8% and 25% APR

Loan Amount: $5,000 – $35,000

Term: Up to 60 months

Origination Fee: Between 2% – 5% of the loan amount, deducted from your proceeds when you book the loan

There are no prepayment or penalty fees with the loan.

The Qualification Criteria

Payoff is extremely transparent about their requirements for a loan. If you don’t meet the minimum criteria outlined below, you should not bother applying. If you do meet these minimum requirements, you should then apply online to see what interest rate and loan amount you would be offered. The great thing about Payoff is that you will not hurt your credit score by applying online. They use a “soft pull” – not only for the initial application, but all the way through to funding. They do not believe that shopping for a faster way to get out of debt should harm your credit score.

Here are the requirements:

Minimum FICO Score: 660 or higher (these scores can vary month to month. If you have a score in the mid-600s, you should give an application a try)

Debt-to-income ratio: 50% or lower. Payoff uses an “unsecured debt-to-income” ratio. Take the monthly payment of personal loans, credit cards and other debt, and divide that by your monthly income. If that ratio is 50% or less, you can get approved. For example, if you make $1,000 a month and pay $500 towards your credit cards and personal loans, you will have a 50% deb-to-income ratio (= 300 / 1000).

Age of credit history: You need to have at least 3 years of credit. In other words, you oldest open credit card should have been opened at least 3 years. They are not looking to work with people who are brand new to credit, and already in a lot of debt.

Other credit requirements: You need to have at least 2 “open and satisfactory” accounts. That means you have at least 2 accounts that are open, and where you have been paying on time. In addition, you can not have opened more than 1 personal / installment loan in the last 12 months. Remember: they want to target people who have debt but want to get out, and a lot of recent borrowing could indicate that you are headed further into debt.

Delinquencies: You should be current on all of your debt. In addition, you should not have been 90 days or more delinquent on any debt in the last 12 months.

And you can not have any tax liens.

In summary: Payoff is looking for people who have found themselves in debt. If you make your payments on time and are responsible, but just feel like the balance on your debt is never going down (because all of your money goes to interest), Payoff could be for you. If you have bad credit, very little credit, or continue to take on more debt every month, Payoff is not the right option.

The Application Process

The application process is very simple. You start by visiting Payoff and applying online. You can do that here*.

You will be asked a few questions, and Payoff will look to see if you are qualified for the loan. They will give you an indication of the loan amount and interest rate. You can do all of that without hurting your credit score.

Payoff may want to verify some of your information. They will walk you through the process.

Once all of the verification is complete, they will transfer the funds to your bank account.

It is a very easy, digital process. But they also have a call center that can answer your questions along the way.

In Conclusion

We spoke to the management team at Payoff. They really are trying to be different. Their goal is to help people get out of debt, and they only want to work with people who share that goal.

If you have a score in the mid-600s, have never missed a payment and are serious about getting out of debt (so that you stop putting all of your money towards interest), Payoff could be the best option for you. And given that you can see your interest rate with a soft pull, you really don’t have anything to lose by checking.

You can apply at Payoff here:

Apply Now

You can see other personal loan options here.

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Get A Pre-Approved Personal Loan

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Won’t impact your credit score

Best of, Credit Cards

Credit Cards: Find the Best Credit Card Offers & Deals (0% for 24 mos, 6% cash back)

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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.

Credit Cards: Find the Best Credit Card Offers & Deals

Updated December 10, 2016

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

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

Should You Get a Credit Card?

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

There are two big risks associated with swiping plastic:

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

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

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

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

The CFPB has a good guide on what to be aware of with your first credit card, as does the Federal Reserve.

Which type of card is best for you?

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

Just remember this critical rule when selecting a credit card:

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

How to Choose and Use a Rewards Card

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

How to Choose

Best Cash Back Credit Cards

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

Citi Double Cash Card

1% When You Buy + 1% When You Pay

Citi Double Cash Card

The Citi Double Cash Card is the best overall cash back credit card. So long as you pay your statement balance in full and on time every month, you will earn 2% cash back. You earn 1% unlimited cash back on all of your purchases. You then earn an additional 1% on payments based on your purchases. The bonus cash back can take up to two billing cycles to post.

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

Key Information

Credit Score Required : Good or Excellent Credit

Purchase Interest Rate : 13.49% – 23.49%

Annual Fee : $0

Sign-on Bonus : None

Intro Purchase APR : None

Intro Balance Transfer : 0% for 18 months with a 3% fee

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

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Fidelity Rewards Visa Signature Card

Unlimited 2% Cash Back on Every Purchase

Fidelity Rewards Visa Signature Card

The Fidelity Rewards Visa Signature Card offers Fidelity customers a generous 2% cash back on all purchases, with no limits or category restrictions. The cash back you earn must be deposited into a Fidelity account, but you don’t need to have a Fidelity account to apply for the card.

If you do not have a Fidelity account, they will open a Fidelity Cash Management Account to deposit your cash back. It works like a checking account with no minimum balance requirement and no monthly fees. In addition, all domestic ATM fees are reimbursed (unlimited).

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

Key Information

Credit Score Required : Excellent Credit

Purchase Interest Rate : 14.49%

Annual Fee : $0

Sign-on Bonus : None

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

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Barclaycard Cash Forward Credit Card

1.575% Cash Back

Barclaycard CashForward Credit Card

You don’t need perfect credit to get a good cash back credit card. Barclaycard has just launched this card, which offers a generous 1.5% cash back rate on all purchases. You can earn a 5% bonus when you redeem, which creates an effective 1.575%.

There is a $100 bonus if you spend $500 in the first 90 days. The card has no annual fee.

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  • Cash back earning formula is easy to understand
  • There is a range of interest rates. You won’t know yours until after you apply

Key Information

Credit Score Required : Excellent Credit

Purchase Interest Rate : 15.24%, 20.24% or 25.24%

Annual Fee : $0

Sign-on Bonus : $100 after spending $500 in the first 90 days

Intro Purchase APR : Not available

Tip: Always pay your bill on time to avoid late fees.

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Best Category Bonuses (Gas, Grocery, Travel, Dining)

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

Fort Knox Credit Union Platinum Visa

Unlimited 5% Cash Back on Gas

Fort Knox Credit Union Platinum Visa

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

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

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 9.50%

Annual Fee : $0

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

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Blue Cash Preferred Card from American Express

6% Cash Back on Groceries (Up to $6,000 of Spend)

Blue Cash Preferred Card from American Express

The unparalleled 6% cash back rate on groceries makes this one of the best cards on the market for heavy grocery consumers. Even with the $75 annual fee, most grocery shoppers will come out ahead.

You will also earn 3% cash back on all gas station purchases, 3% at select department stores and 1% on all other purchases. You will earn a bonus offer of $150 after you spend $1,000 in the first three months. And, for a limited time, you can earn 10% back at Amazon.com, up to $200 within the first six months you have the card.

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  • Simple, easy to understand bonus offer
  • There is an Annual fee

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 13.49% – 22.49%

Annual Fee : $95 (no fee for additional cards)

Intro Purchase APR : 0% for 15 months

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

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PenFed Premium Travel Rewards American Express

4.25% Cash Back on Airfare Expenses

PenFed Premium Travel Rewards American Express

If you buy a lot of plane tickets every year, this card can be particularly lucrative. You will earn 5 points for every $1 spent on air travel. When you convert those points to a prepaid Visa card, those 5 points turn into a 4.25% earn rate. You earn 1 points per $1 on all other purchases.

There is no annual fee, no foreign transaction fees and 20,000 bonus points when you spend $2,500 within three months.

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  • No annual fee and no foreign transaction fees
  • The conversion from points to $ can be confusing
  • You must be a member of the credit union

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 9.24% – 17.99%

Annual Fee : $0

Intro Balance Transfer Offer : 0% for 12 months with a 3% fee

Tip: Keep an eye open on the redemption opportunities. You can sometimes find better deals than just prepaid Visa cards.

GO TO SITE More Cards for Travel Spending

AARP Credit Card from Chase

3% Unlimited Cash Back at Restaurants

AARP Credit Card from Chase

You do not have to be over 55, or a member of the AARP, to apply for this credit card. When applying, you just need to keep the “AARP Membership Number” field blank. You can earn unlimited 3% cash back on your dining expenses. So, if you are a foodie, this is a great card. You also get a healthy 3% cash back on gas and 1% on all other purchases.

If you are interested in joining the AARP, you also don’t need to be older than 55. Anyone can join.

You can learn more about the offer by visiting AARP.org.

The information related to AARP Visa credit card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card.

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  • No limit to the cash back you can earn
  • You do not need to be an AARP member to get the card

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 16.49%

Annual Fee : $0

Intro Purchase APR : 0% for 12 months

Intro Balance Transfer Offer : 0% for 12 months with a fee of 3% or $5 (whichever is greater)

Tip: Joining AARP at a younger age isn’t as crazy as it sounds. There are a lot of benefits and discounts available to members.

More Dining Credit Cards

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

Best Travel Rewards Credit Cards

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

BankAmericard Travel Rewards

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

BankAmericard Travel Rewards

You earn 1.5 points for every $1 you spend. There is no limit to the number of points you earn.

The points can be used on any purchase. There are no restrictions and no blackout dates. Every 100 points can buy $1 worth of travel. The rewards get even better if you have “Preferred Rewards” at Bank of America. You can earn a bonus of between 25% and 75% if you have significant balances at Bank of America or Merrill Lynch.

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

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

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 15.49% – 23.49%

Annual Fee : $0

Intro Purchase APR : 0% for 12 months

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

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Amex Everyday Credit Card

Best No Annual Fee Travel Card – Earn Airline Miles & Hotel Points

Amex Everyday Credit Card

You can earn 2 points for every $1 spent at supermarkets, up to $6,000 per year. You will earn 1 point on all other purchases, including supermarket spend above $6,000. And there is an added bonus. If you use your credit card for 20 purchases per month, you will get a 20% bonus. That means you would get 2.4 points on grocery store spend (up to $6,000) and 1.2 points on everything else.

You will be earning Membership Rewards Points, which have a wide variety of redemption options. You can convert these points into frequent flier miles of airlines. Participating airlines include Delta, Virgin America, British Airways, Virgin Atlantic and more. You also have the option to convert points into hotel programs, including Hilton and Starwood.

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

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : Prime + 9.74% – Prime + 18.74%

Annual Fee : $0

Tip: Make sure you use this card for all of your everyday spend. The 20% bonus is based upon the number of transactions made, not the value of those transactions. Even buying a package of gum in the grocery store counts.

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Best Credit Cards for Foreign Travel

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

First Tech Credit Union Platinum Rewards MasterCard

No Annual or Foreign Transaction Fee + Chip and Pin Functionality

First Tech Credit Union Platinum Rewards MasterCard

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

The card also offers low credit union interest rates, starting at just 9.99%. It is easy to join the credit union. Membership is free if you work for a sponsor technology company. If you work for the state of Oregon or live in Lane County, Oregon membership is also free. Otherwise, you just need to join the Financial Fitness Association. There is a one-time fee of $8, and you are member. That membership gives you the right to join the credit union and apply for this card.

You will earn 1 point for every $1 you spend. This is not the best rewards program on the market.

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

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : from 10.24%

Annual Fee : $0

Tip: First, join the Financial Fitness Association. Then join the credit union. Finally, apply for the credit card. This can all be done online, and it is an easy process.

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Barclaycard Arrival Plus World Elite MasterCard

No Foreign Transaction Fee + Chip and Pin Functionality

Barclaycard Arrival Plus World Elite MasterCard

With this card, you earn 2 miles for every $1 you spend. When you redeem, you receive a 5% bonus, which gives you a 2.1% earn rate. Your miles can be used on any travel purchase with any airline, hotel or other travel expense. There is an annual fee of $89, which is waived during the first year. If you spend $1,000 a month, you would earn $252 of rewards during the year. After deducting the annual fee, you will have earned 1.4%.

There is a sign-on bonus of 50,000 miles after you spend $3,000 in the first 90 days. But the real strength of this card is for foreign travel. There are no foreign transaction fees and full chip and pin functionality is available.

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  • No limit on the bonus points you can earn
  • There is an annual fee

Key Information

Credit Score Required : Excellent

Purchase Interest Rate : 16.49%, 20.49% or 23.49%

Annual Fee : $89 (waived during the first year)

Intro Purchase APR : None

Intro Balance Transfer : 0% for 12 months with a 3% fee

Tip: Given the high annual fee, this card is only worthwhile if you expect to spend a lot on the card.

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Capital One Quicksilver One Rewards MasterCard

Best Foreign Travel for Fair Credit

Capital One Quicksilver One Rewards MasterCard

This card is designed for people with Average/Fair credit. If you have defaulted on a loan in the past five years (but not more than one), or if you have had limited credit history (at least one account for less than three years), you would be considered “average/fair.”

With this card, you can earn 1.5% unlimited cash back. There is also no foreign transaction fee. That combination of no fee and rewards can make this card lucrative. There is an annual fee of $39.

This card can be useful to build your credit score. Just keep your utilization low (ideally below 20% of the available credit) and make your payments on time and in full every month. Capital One provides free access to your FICO score. So, you can track your score and see when you are eligible for an upgrade to a no-fee card.

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

Key Information

Credit Score Required : Fair or Average

Purchase Interest Rate : 24.99%

Annual Fee : $39

Intro Purchase APR : 0% until September 2016

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

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How to Use

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

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

Brian Karimzad, Co-Founder of MagnifyMoney, explains how to get the most out of cash back credit cards in this video:

How to Choose and Use a Low Rate Credit Card

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

How to Choose

Best Balance Transfer Credit Cards

With a balance transfer credit card, you can transfer debt from a high interest rate credit card to a 0% introductory promotional rate. You can find no fee balance transfers for up to 15 months. If you are willing to pay a fee, you can find balance transfers for up to 24 months. The fee is usually worthwhile – if you want to do the calculation, you can use the calculator on our interactive tool.

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

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

Chase Slate®

$0 introductory balance transfer fee, 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee

Chase Slate®

With Chase Slate®, you can save with a $0 introductory balance transfer fee, 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee. Plus, receive your Monthly FICO® Score for free. At MagnifyMoney, this is our favorite balance transfer offer.

You cannot transfer debt from other Chase credit cards, including their co-brand cards. Chase operates credit cards for companies like United Airlines, Southwest Airlines and Marriott.

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  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is a range of interest rates. You won’t know yours until you apply.

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 15.49% to 24.24% variable

Annual Fee : $0

Intro Purchase APR : 0% for 15 months

Tip: Make sure you complete the balance transfer within 60 days of opening the account.

LEARN MORE Read Our Full Review

Alliant Platinum Visa

No Fee – 0% on transfers for 12 Months

Alliant Platinum Visa

With the Alliant Platinum Visa, there is no balance transfer fee and you pay no interest for 12 months. You can apply for the credit card even if you are not a member of the credit union. If you are approved for the credit card, you can then join

Anyone can join the credit union. You just have to make a contribution of $10 to Foster Care for Success and then you can become a member of the credit union. That is what we love about credit unions: joining requires a donation to a worthy charity.

There is one catch (that we don’t like). Even if you are approved for the credit card, you might not get the 0% offer. Depending upon your credit score, you might be given a much higher introductory interest rate.

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  • Interest is not deferred during the introductory promotional period. It is waived.
  • You might not get the 0% offer, depending upon your credit score
  • You have to join the credit union

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 9.49% – 21.49%

Annual Fee : $0

Intro Purchase APR : 0% for 12 months

Tip: If your credit score is not excellent, you might find it difficult to get the 0% offer. Pay close attention to the offer details once approved.

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Santander Sphere Visa

0% on transfers for 2 Years – 4% Balance Transfer Fee

Santander Sphere Visa

This is the longest 0% offer in the MagnifyMoney database. The only catch: it comes with a hefty 4% balance transfer fee. The fee could still be worthwhile, depending upon how long it takes for you to pay off the debt. You cannot transfer debt from other Santander credit cards.

The card also offers a rewards program, with 1 point for every $1 spent. And if you spend $1,000 in the first 90 days, you earn 10,000 bonus points.

You have 90 days from account opening to complete the balance transfer, otherwise you lose the promotional rate.

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  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is a range of interest rates. You won’t know yours until you apply.

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 12.99% – 22.99%

Annual Fee : $0

Tip: This card is a good option if you think it will take a long time to pay off your debt in full.

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Citi Simplicity

0% on transfers and purchases for 21 Months; 3% Fee

Citi Simplicity

Citibank has a strong balance transfer offer, with a long 21 months and a 3% fee. In addition, Simplicity has some added perks. There are no late fees, no penalty rate and no annual fee. Although you should always try to pay on time, it is nice that this card will not punish you for the occasional mistake.

In addition to the balance transfer offer, you pay no interest on purchases for 21 months.

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  • No late fee, no penalty APR and no annual fee
  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is a range of interest rates. You won’t know yours until you apply.

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 13.49% – 23.49%

Annual Fee : $0

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

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Barclaycard Cash Forward Credit Card

0% Balance Transfer

Barclaycard Cash Forward

The Barclaycard Cash Forward might be a good option if you have already used balance transfer offers from other banks.

The balance transfer has a 3% fee, but you will have 0% interest for 15 months on transfer you make in the first 45 days and there is no annual fee.

You interest rate after the transfer can be as high as 25.24%, so this is definitely a card you only want to use for a balance you know you’ll pay off in under 15 months.

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  • No annual fee.
  • A high ongoing rate if your credit isn’t great.

Key Information

Credit Score Required : Excellent

Purchase Interest Rate: 15.24%, 20.24% or 25.24% based on your credit worthiness.

Annual Fee : $0


Tip: Watch your credit score closely. As you pay down your debt, your score will improve.

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

Best 0% Purchase Credit Cards

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

Citi Simplicity

0% on Purchases for 21 Months

Citi Simplicity

If you are looking to finance a purchase, Citibank offers the longest 0% purchase promotion of any credit card in the MagnifyMoney database. The APR on purchases will be 0% for the first 21 months after opening the credit card.

Additionally, Citi Simplicity charges no annual fee, no late fee and has no penalty APR.

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  • No late fee, no penalty APR and no annual fee
  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is a range of interest rates. You won’t know yours until you apply.

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 13.49% – 23.49%

Annual Fee : $0

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

GO TO SITE Read Our Full Review

TruWest Visa Signature

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

TruWest Visa Signature

TruWest is a credit union with restricted membership. Unfortunately, you need to live in certain regions of Texas or Arizona, or work for a few select employers (like Motorola) to join. You can learn about membership eligibility here.

If you are able to join, you will find a long 0% promotional period. Even better, the credit card has reasonable credit union interest rates after the promotional period ends. There is no annual fee on the card.

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  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is a range of interest rates. You won’t know yours until you apply.

Key Information

Credit Score Required : Good or Excellent

Purchase Interest Rate : 8.15% – 9.15%

Annual Fee : $0

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

Best Low Interest (not 0%) Credit Cards

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

Barclaycard Ring

13.49% Variable Interest Rate

Barclaycard Ring

Barclaycard Ring was launched as a new type of credit card. Barclaycard has created a “community” that allows cardholders to share opinions and participate in a charity partner Giveback program.

There is a flat 13.49% APR (variable). That is a nice card to have in your back pocket in case of an emergency.

There are no rewards offered on this card.

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  • One flat interest rate
  • No annual fee

Key Information

Credit Score Required : Excellent

Purchase Interest Rate : 13.49% Variable

Annual Fee : $0

Tip: This is a good card to keep in your back pocket in case of an emergency

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Langley Select Visa Platinum Card

As Low as 7.50% from a Credit Union Anyone Can Join

Langley Select Visa Platinum Card

Anyone can join Langley Federal Credit Union by joining an association during the signup process for $5.

If you have excellent credit and just want a place for emergency spending with no rewards, consider keeping this card on hand. Although the rates start as low as 7.50%, not everyone will get a rate that low.

It’s more of a hassle than a regular bank card, but if you insist on the very lowest rate consider this.

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  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is a range of interest rates. You won’t know yours until you apply.
  • You have to join the credit union

Key Information

Credit Score Required : Excellent

Purchase Interest Rate : from 7.50%

Annual Fee : $0

Tip: You need to have an excellent credit score in order to qualify for the lowest interest rate. And unfortunately the online banking is not as good as some of the bigger banks.

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

How to Use

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

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

Nick Clements is the Co-Founder of MagnifyMoney. He also used to run a large credit card company and explains how to use balance transfers in this video.

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

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

How to Choose

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

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

Best Secured Credit Cards for People with Bad or No Credit

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

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

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

Discover it® Secured Credit Card – No Annual Fee

This is our favorite secured credit card. There is no annual fee. You will get free access to your credit score. You can watch your good behavior being rewarded, and you will know when it is time to convert to a fully unsecured credit card.

In order to open the card, you will need to deposit at least $200, depending upon your creditworthiness. With this secured credit card, you will actually be able to earn cash back rewards. If you have previously filed bankruptcy, you still have the chance to be approved.

Our favorite part of the product is the automatic graduation. After seven months, Discover will start monthly automated reviews. If you qualify for a standard card, you will be graduated (and get your deposit back).

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  • No annual fee
  • Free FICO credit score

Key Information

Credit Score Required : Anyone can apply

Purchase Interest Rate : 23.49% variable APR

Annual Fee : $0

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

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Community Secured Visa from Coastal Credit Union

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

Community Secured Visa from Coastal Credit Union

This card has no annual fee, and you only need to deposit $100 in a Collateral Savings Account to get started. If you’re not a member of Coastal Credit Union, you can join an organization for $18, which is deducted from your initial deposit, and become a member. So you’ll need $118 to get started.

While the initial deposit is a bit higher than the Capital One card, you get the peace of mind that your interest rate will be more reasonable in case you get into trouble. This one takes more work to open than the Capital One card, since it involves joining a credit union, but you deal with less fine print once you have the card.

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

Key Information

Credit Score Required : Anyone can apply

Purchase Interest Rate : 15.50%

Annual Fee : $0

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

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

Best Credit Cards for People with Fair Credit

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

Here are some good cards for people with fair credit:

Capital One Quicksilver One

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

Capital One Quicksilver One

Capital One has created a credit card specifically for people with fair or average credit. If you have defaulted on a loan (but not more than one) in the last five years, or you have limited credit history (at least one account for less than three years), you would meet the definition of fair credit.

You will earn 1.5% cash back, unlimited. There is also 0% interest on purchases until September 2016 as well.

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  • Interest is not deferred during the introductory promotional period. It is waived.
  • There is an annual fee

Key Information

Credit Score Required : Fair or Average

Purchase Interest Rate : 24.99%

Annual Fee : $39

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

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

A Special Note: Beware Predatory Companies

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

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

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

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

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

Other Benefits of Using a Credit Card

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

Available on Most Credit Cards

$0 Liability on Fraudulent Activity: Credit cards are the best way to protect yourself from fraud. So long as you report the fraud to your credit card company, you will not be liable for any losses on any major credit card.

Car Rental Collision Insurance: If you waive collision coverage when renting a car, your credit card may provide secondary coverage of $50K or more.

Available on Some Credit Cards

Retail Purchase Protection: Protects you from loss, theft, fire or accidental damage for a limited period of time after your purchase has been made. Not all cards protect you from loss, so look it up in the Purchase Protection Coverage Description Document.

Price Protection: If you buy something in stores and you see an advertised price, you will receive the difference between the two prices.

Extended Warranties: Duplicates both manufacturers and store warranties for a limited length of time and for limited dollar values (varies by card).

Travel Accident Coverage: If you are injured during travel, and you purchased the tickets via credit card, your company fully insures you.

Lost Luggage Coverage: You can receive compensation for lost, stolen or damaged luggage if you purchased flight or travel tickets using your credit card.

Trip Interruption Cancellation Coverage: If travel delays keep you from completing a trip, and you purchased the tickets on your credit card, the full value of the tickets will be refunded

Concierge Services: Certain cards offer free access to local concierge services that can help you make dinner reservations, purchase event tickets, and locate items while you are abroad.

FAQ

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

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

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

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

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

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

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Young Couple Moving In To New Home Together

When it comes to qualifying for a mortgage, your credit score is everything.

If your credit score is below the minimum cutoff, you will be rejected. But even if you are approved, your exact credit score will have a big impact on the total cost of your mortgage. The higher your credit score, the lower the interest rate you will pay.

The vast majority of mortgages in America are either “conventional” (which means the mortgage will be purchased by Fannie Mae or Freddie Mac) or “FHA.” If you are applying for a conventional or FHA mortgage, this post applies to you.

We will explain:

  • Which version of FICO will be used to determine your score
  • Which credit score will be used when your score differs by bureau
  • Which credit score will be used if you have a co-signer with a different score
  • What minimum credit score you must have in order to qualify and what scores generally get the best interest rates
  • Why you could still be rejected even if your score is above the minimum required
  • What to do if you don’t have a credit score

Which Version of FICO Will Be Used

There are a lot of “free credit scores” available. You might see your “official FICO” on your credit card statement, or you could be a customer of Credit Karma. Unfortunately, none of these scores are being used by conventional or FHA mortgage lenders. Ironically (and almost shockingly), older versions of FICO are still being used to make lending decisions. The version of the FICO score depends upon the credit bureau, and most lenders will pull reports from all three bureaus. Here are the scores you need:

  • From the Equifax credit bureau: FICO Version 5 (also called Equifax Beacon 5.0)
  • From the Experian credit bureau: FICO Version 2 (also called Experian/Fair Isaac Risk Model V2SM)
  • From the TransUnion credit bureau: FICO Version 4 (also called TransUnion FICO Risk Score, Classic 04)

The only way to get access to the credit scores used by mortgage lenders is to purchase your credit score from FICO. For $59.85 you can make a one-time purchase of all of your credit scores, including the relevant mortgage scores at myFICO.com. This is a steep price to pay, and for many people it is not necessary. Although the VantageScore (available at Credit Karma) and FICO Version 8 (which many credit card issuers share) are not the exact scores used in mortgage lending, they can be useful. If your credit score is above 740 on all of your “free” scores, you can feel highly confident that your mortgage scores will also be above 740. However, if your score is below 740, you might want to invest in knowing exactly what mortgage lenders will see.

Although FICO has made enhancements with each new credit scoring model (for example, there is now a FICO 9), the general rules have not changed. You will have a good score if you make your monthly payments on time, keep your credit card balances and utilization low, and avoid collection items and judgments. (You can learn more with our credit score guide).

What If My Score Differs Between Bureaus?

There are three national credit bureaus: Equifax, Experian, and TransUnion. Sometimes creditors or collection agencies do not report to all three bureaus. As a result, your credit score could be different at different bureaus. For example, a collection agency might have registered a collection item on only one credit bureau. As a result, your score could be 750 on one bureau (without the collection item) and 650 on the other bureau (with the collection item).

The rules are relatively simple:

  • If the mortgage company pulls a credit report from all three credit bureaus, it will use the middle credit score (not the lowest or the highest score). For example, if you have a 650, 680, and 710 across the three bureaus, the middle score of 680 will be used.
  • If the mortgage company only pulls two credit bureaus, the lower credit score will be used.

Most mortgage companies will not tell you their methodology. The only reason a mortgage company would limit the number of credit bureaus it uses is to save on costs. And it would not be in the interest of a mortgage company to advertise that it “does not pull from Experian.” If it did advertise that way, people with something to hide on the Experian credit bureau would apply in droves.

What If I Have a Co-Signer?

When two people apply for a mortgage, the rules are simple: the lower credit score is used.

A credit score will be assigned to each borrower, using the methodology described in the previous section (the middle of three scores or the lowest of two scores). The lower of those two scores would then be used.

Imagine two borrowers had the following scores:

  • Borrower A: 660, 680, and 700
  • Borrower B: 710, 720, and 730

Borrower A’s score would be 680 (the middle score), and Borrower B’s score would be 720 (the middle score). For the purpose of the loan application, the lower of the two scores would be used. So the official credit score for this application would be 680.

What FICO Score Do I Need to Qualify?

Each agency (Fannie Mae, Freddie Mac, and FHA) sets its own minimum credit score requirements. If your score is below the minimum, you will be rejected. However, having a credit score above the minimum does not mean you will automatically be approved. You will still have to pass other credit criteria (for example, debt burden and other rules).

Here are the minimum credit scores required by agency:

  • Fannie Mae and Freddie Mac: minimum credit score of 620.
  • FHA: minimum credit score of 500 with a 10% down payment. Once your score is above 580, you only need a 3.5% down payment.

In order to have the lowest rate, you will want your credit score to be above 740 and your LTV — loan-to-value ratio — to be below 60%. However, regardless of LTV, the lowest interest rates tend to go to people with scores above 740.

Lower credit scores become even more expensive when you have a smaller down payment. For example, if you have a 30% down payment and a 620 credit score, you would pay 1.25% more than someone with a 740 credit score. However, if you only have a 10% down payment, a 620 credit score will have a 3% higher interest rate than someone with a 740.

If you have a low credit score and a small down payment, it almost always pays to wait. Increase your down payment (by saving) and improve your credit score before applying, because the savings can be significant.

3 Reasons You Can Still Be Rejected for a Mortgage Loan

You might have a great credit score, but your mortgage application could still be rejected. Here are the three main reasons why:

  1. Many mortgage lenders have stricter requirements than the “minimum” set by the mortgage agencies. The government agencies (Fannie Mae, Freddie Mac, and FHA) set minimum standards. As a mortgage company, so long as your mortgages meet those minimum standards, you can sell the mortgages to the agencies. However, if too many borrowers of a mortgage company default, the government agency can stop working with the mortgage company. Even worse, the agency could sue the mortgage company. So (especially after the 2008 crisis), most mortgage companies have minimum score requirements that are a bit higher than the minimum. For example, one of the lowest FICO requirements for FHA mortgages is 540, even though — technically — a 500 score is allowed.
  2. Mortgage lenders set other credit policy rules. If your credit score is low because you don’t have a lot of history, you have a much better chance of being approved. However, if your credit score is low because you have a lot of negative marks on your credit report, it will be a lot harder to get approved. For example, a lender could have a minimum credit score of 640, but will not approve anyone who was 60 days or more delinquent in the last year. If your score is 640 because of a 60-day late payment, you are still out of luck.
  3. Down payment, verification, documentation, and all of the other requirements can still stop you. Just because you have a good credit score and pass all of the credit policy rules, there are still a number of other hurdles you need to jump over. You need to prove that you have sufficient income to handle the payments. You will need to have a down payment and sufficient reserves. And you will need to have a lot of documentation, especially if you are a freelancer.

You should think of the credit score as the minimum, first requirement. But don’t celebrate once you have the required score — there is still a lot more to do.

What If I Don’t Have a Credit Score?

If you do not have a credit score, you can still qualify for a mortgage. Just remember: there is a big difference between a bad score and no score. No score means that there is not sufficient information on your credit report to generate a credit score.

There is a special, manual underwriting process for people with no credit score. In general, you will have a higher burden of proof for both your income and your payment history. That means you will probably have to document proof of up to two years of income, and you will need to be able to document proof of payment. Some acceptable forms of payment history would include:

  • Rent payments made on time
  • Utility bill payments made on time
  • Phone or cable bills made on time

There are mortgage companies that specialize in helping people with no credit score. However, the best rates and easiest processes are available to people with scores above 740. If you want to start building your credit score now, open a secured credit card.

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Featured, Pay Down My Debt

Debt Snowball Vs Debt Avalanche — Which Strategy Works Best?

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The typical American household carries $15,762 of credit card debt. With the average credit card interest rate hovering around 13.35% today, that means households could easily spend more than $2,000 each year on credit card interest alone.

As more and more interest accrues, paying off what might have once been a relatively small amount of debt can easily start to feel like an impossible feat.

That’s why getting out of debt — especially when you have several different types of debt to deal with — requires a strategy.

Two of the most popular debt payoff strategies out there are the “debt snowball” and the “debt avalanche.” The snowball method has been popularized by personal finance celebrities like Dave Ramsey. By comparison, the debt avalanche is lesser known.

But which method actually works best? We did the math to find out.

Debt Snowball

Senior man playing with snow

First, list your debt from the smallest balance to the largest balance. Your goal is to eliminate the smallest debt first. You accomplish that by making only the minimum payment required on all your other debts. Then, take every extra dollar you have and put it toward the smallest debt. Once it’s paid off, you will throw everything into the next largest debt, plus an additional amount that is equal to whatever the previous debt’s minimum required payment was.

As you move from one debt to the next, you are creating an even bigger “snowball” to tackle your larger debts. That’s because you’re not only paying however much you can afford to set aside each month. You’re also adding to that amount when you add in the minimum required payments for each card that you pay off.

Why it works:

The snowball has two advantages. First, it provides you with a clear plan. Second, you build a lot of positive momentum by achieving wins early on, which will help you keep going. A recent study found most people do better with this approach because of the positive reinforcement of quick wins.

Debt Avalanche

Debt Avalanche - Man Skiing In Winter

To create a debt avalanche plan, list your credit card debt from the highest interest rate to the lowest. Pay the minimum due on all debt except the card with the highest interest rate. Put all extra money toward the most expensive debt until it is eliminated. Once that debt is paid off, take whatever you were paying on that bill and apply it to the next debt on your list, plus the minimum required payment from the debt you just paid off.

Why it works:

By dealing with debt that has the highest interest rates first, you can get out of debt faster and actually save more money on interest in the long run. It can feel more challenging than the snowball method, because you might be facing larger debt balances to start with. But the payoff is how much you’ll save on interest charges.

MagnifyMoney created a calculator that can easily help you see the difference between the snowball and avalanche methods.

Imagine you have three credit cards and can afford to pay $500 a month toward your debt:

  • $2,000 on a credit union credit card with a 6% interest rate
  • $6,000 on a credit card with a 19% interest rate
  • $8,000 on a store card with a 28% interest rate

Using the MagnifyMoney calculator, you see you could save $1,301 by using the avalanche method instead of the snowball method. And that is not surprising: by eliminating high interest rate debt first, you will end up paying less interest overall. You would also be out of debt faster.

The bottom line:

Both strategies will work, but you should pick the one that best fits your personality. If you easily feel overwhelmed by debt and feel like quitting, you should probably try the snowball method. You’ll get early “wins” and feel lots of motivation to keep going. If you’re more disciplined, the debt avalanche strategy might be your best fit.

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Earning Cashback

Best Rewards Credit Cards: Double miles, 5% cash, and more

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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.

Rewards Credit Cards Illustration

Looking for a rewards credit card to earn cash or travel from the spending you’re already doing? There are hundreds of rewards cards out there, and we’ve combed through our database to hand pick the very best rewards credit cards, most with no annual fee.

If you’re just looking for one card to earn cash rewards, your best bet is to use our calculator to get a personalized recommendation based on your spending habits. Otherwise, read on for our top picks. This guide will help you understand whether you are ready to earn rewards, and whether earning cash back or miles for travel rewards is your best bet.

1. Cash back rewards credit cards

Start here: No annual fee, 2x cash

The most important recommendation we can make is to start with either the Citi Double Cash or Fidelity Rewards Visa Signature in your wallet.

Both earn double cash on everything you purchase and pay off with no limits, and no annual fee.

If you prefer MasterCard or have less than perfect credit, go with the Double Cash. If you prefer Visa or plan to use the card abroad, go with the Fidelity (it has a low 1% foreign transaction fee).

If your credit is fair or you have no credit history, then consider one of these options with a slightly lower cash back rate.

Once you have one of these base cards, you can look at our other favorite cards to earn 3%, or even 5% on some of your other spending. You can scroll down this page to see our top picks, or go to our full directory of dozens of cards that earn 3% or better cash back in many categories.

 

Citi Double Cash Card

Easy double cash rewards

Citi Double Cash Card

The Citi Double Cash card offers easy double cash rewards with no annual fee.

You get 1% cash back when you make a purchase, and another 1% when you pay your bill, so it’s easy to earn double cash on everything you buy with the card.

And since there’s no annual fee, you don’t have to miss out on the seductive 5% cash back you sometimes see on other cards. Just keep the Citi Double Cash in your wallet for most of your spending, and if you have a card that earns 5% in special categories, just use it for that spending, so you can really rack up the cash rewards.

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  • Earning cash back is simple – there are no special categories or limits
  • There is a fee on foreign transactions, so only use this card for purchases in the U.S.

Tip: You need to earn or use rewards at least once every 12 months, or else your rewards will expire.

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Fidelity Visa

2% cash back with a lower foreign fee

Fidelity Rewards Visa Signature Card

Fidelity has been the long time king of offering 2% cash back on everything. And now instead of having to get an American Express card, it’s available as a Visa card, so you’ll be able to use the card for purchases at Costco. The foreign transaction fee is also lower for this card than the Citi Double Cash at 1%, so it’s a better card for international spending.

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  • You know the interest rate when you apply – the Fidelity Visa offers one variable rate for all approved accounts
  • There is a 1% foreign transaction fee, which is better than most cards
  • There are late payment and cash advance fees

Tip: You don’t need a Fidelity account to apply for this card. They’ll open a free cash account for you automatically, and you can access the cash rewards you earn from any ATM free of charge when you get a debit card for your account.

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Up to 5% rewards with a little effort

Once you have a double cash rewards card in your wallet, you’re ready to start considering cards that earn 5% cash back in special categories. If you’re really serious about earning the most cash from your spending, you can get all of these rotating category cards and leverage the fact they earn 5% in different categories. Then, use your base double cash rewards card for everything else.

All of these cards have a limit on how much cash back you can earn at 5%, so you’ll want to pay attention to that, and some of them require you to enroll each quarter to activate your 5% cash back, so if you miss the deadline you’ll earn just 1%.

Our pick for small spenders & travelers

Chase Freedom Card

With Chase Freedom you can earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases.

If you spend the full $1,500 in bonus categories each quarter all year long, you could earn $300 cash back a year from your bonus category spending.

A good introductory bonus for small spenders. Earn a $150 Bonus after spending $500 on purchases in your first 3 months from account opening. That’s like earning 30% cash back on your first $500 in purchases with the card and gets you off to a fast start.

Boost your travel rewards. If you have a Chase Sapphire Preferred card for travel rewards, you can combine your points with those from the Chase Freedom, letting you turn your Chase Freedom points into real airline miles with Ultimate Rewards partners like United MileagePlus and Southwest Rapid Rewards, which can make your points worth even more.

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  • There’s a nice, simple sign on bonus
  • You have to enroll every quarter to earn 5% in bonus categories
  • There are late payment and cash advance fees.

Tip: You generally have about 2 and a half months during the quarter to activate your 5%. For example, for January – March 2016, you can activate by March 14, and still get the 5% in your bonus category spending for the whole quarter, even if you made purchases in the category before you activated.

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Best 5% cash for bigger spenders

Discover it® –Cashback Match™

The Discover It and Chase Freedom are pretty similar when it comes to rewards, but if you spend more than about $1,000 a month, the Discover It is your better bet if you’re looking to choose just one.

Double cash back better for big spenders. As an introductory offer for new cardmembers, the Discover It will match your cash back on everything you purchase with the card at the end of your first year with no limits. That includes matching your 5%. So big spenders get more out of this than the introductory offer on the Chase Freedom.

Plenty of 5% categories. Earn 5% cash back in rotating categories each quarter like gas stations, restaurants, Amazon.com, wholesale clubs and more, up to the quarterly maximum each time you activate.

From January until March of 2017, the bonus categories are gas stations, ground transportation and wholesale clubs.

If you spend the full $1,500 in bonus categories each quarter all year long, you could earn $300 cash back a year from your bonus category spending.

 

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  • There’s a nice, simple sign on bonus
  • You have to enroll every quarter to earn 5% in bonus categories
  • There are late payment and cash advance fees.

Tip: One gotcha about the Discover It is that you only get the 5% in bonus categories for spending you do after you activate your bonus each quarter. For example, for the January – March 5% categories, if you activate on February 15, only spending from February 15 to the end of March will qualify, even if you made purchases in a 5% category before then.

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Platinum Rewards Card By Nusenda CU

Best 5% with no enrollment hassle

Platinum Rewards Card By Nusenda CU

If you want 5% in rotating categories each quarter without having to enroll each quarter, consider the NUSENDA Credit Union’s Platinum Cash Rewards card.

Automatic 5% categories. You’re automatically eligible for 5% cash rewards each quarter, up to $1,500 worth of spending across the categories each quarter. Currently that’s typically a $1,500 per quarter maximum, like the Chase Freedom. But the categories where you can earn 5% are a bit broader.

For 2016 the 5% cashback bonus categories include:

  • January – March: Groceries and Gas
  • April – June: Restaurants, Movies, and Home Improvement
  • July – September: Gas and Education
  • October – December: Restaurants, Hotels, Airfare

The introductory bonus is the weakest of the bunch, and offers 2% on all your purchases for the first 90 days. You’d have to spend $15,000 in 90 days to beat the Chase Freedom’s $150 offer.

 

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  • No need to enroll every quarter to earn 5% in bonus categories
  • You need to join a credit union, though anyone can join NUSENDA

Tip: When you apply, you’ll be asked where you live or work to determine your eligibility to join NUSENDA Credit Union. If you don’t live in one of the New Mexico counties listed on the application, just enter the company you work for, and they’ll call you to offer you a non profit organization you can join for a small one time fee to be eligible.

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Cash back for frequent diners

What’s better than 2% cash rewards? 3%.

While you can get 5% cash back on dining some quarters with the 5% foursome cards above, to get consistently good cash back on dining all the time, read on.

You can also check out our full list of the best cards for dining cash back.

Chase AARP Visa Card

Best unlimited dining cash back rewards

Chase AARP Visa Card

You don’t need to be over 55 to be a member of AARP, and in fact you don’t have to be a member of AARP to get this card.

If offers unlimited 3% cash back rewards on purchases at restaurants and 3% cash back rewards on purchases at gas stations, along with 1% cash back rewards on all other purchases.

You can learn more about the card (including the most recent product specifics) at AARP.org.

The information related to AARP Visa credit card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card.

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  • There’s no annual fee.
  • There is no limit to the cash back rewards you can earn.
  • There are late payment fees.

Tip: You get your choice of cash rewards via direct deposit or a statement credit.

Grocery cash rewards

Groceries are one of the most popular spending categories, and you can check out our full list of the best cards for grocery cash back.

But if you’re out to earn the most possible cash back from your grocery shopping, here is our pick:

Blue Cash Preferred Card

Best grocery cash back for heavy shoppers

Blue Cash Preferred Card from American Express

The Amex Blue Cash Preferred is the card that can earn the most straight cash from supermarket purchases, at 6%, but there are two big hoops to deal with.

  1. There’s a cap of $6,000 a year in supermarket spending that earns 6%, so you can get a maximum of $360 a year in rewards at the 6% rate.
  2. There’s a $95 annual fee. So, this is really offering 4.4% cash back on supermarket spending if you spend the full $6,000 a year at supermarkets and take the annual fee out of your rewards.

So the rule is this: if you spend about $300 – $800 a month at supermarkets, consider this card. Otherwise, get 3% back at supermarkets with no annual fee with the Amex Blue Cash Everyday or Consumers Credit Union Visa Signature Cash Rebate Card (anyone can join their credit union).

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  • The biggest supermarket cash back rate.
  • There is a $95 annual fee and a cap on the supermarket cash rewards you can earn at 6%.

Tip: If you shop at big box stores like Walmart or Target, those aren’t considered supermarkets, even when you’re buying groceries, and spending there won’t earn the grocery cash back bonus.

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Cash rewards for less than perfect credit

If you’re credit’s not perfect, but you’re now able to pay your cards in full each month, you won’t yet qualify for the very best cash rewards, but you can do well with no annual fee.

Barclaycard CashForward

Best rewards card for fair credit

Barclaycard CashForward World MasterCard

Barclaycard is trying to grab business from the big credit card companies, and they’re a bit more flexible when it comes to dealing with less than perfect credit with a good cash back rewards rate.

The CashForward offers a simple 1.5% cash back on everything you buy with no limits and no annual fee.

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  • No annual fee.
  • There are late fees and a wide range of APRs you may be charged depending on your credit profile.
  • You need at least $50 worth of rewards to redeem, which is high for a cash rewards card.

Tip: When you redeem your points, you’ll get 5% of the cash rewards back as a bonus for your next redemption. So it’s actually a card that earns 1.575% cash back.

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3021_cardDiscover secured

Best cash rewards for rebuilding credit

Discover It® Secured Credit Card – No Annual Fee

If you have little or no credit history, or are rebuilding credit, the Discover It Secured Card is the best way to do it while earning rewards.

Please only do this if you can pay your balance in full every single month on time. You can earn 2% cash back at restaurants and gas stations (up to $1,000 of spend each quarter) and 1% on everything else. There is no annual fee. You just need a $200 deposit to secure your card.

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  • No annual fee.
  • The Regular APR is 23.49% variable.

Tip: You will get your official FICO credit score for free with this card. Watch it closely, because the goal of a secured card is to graduate to an unsecured card as quickly as possible.

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2. Travel Rewards Cards

Real airline miles

If you’re serious about travel, you want points that give you the option to turn them into real airline miles. Yes, there are ‘no hassle’ cards out there that promise to avoid the rules and traps of airline miles, but you’ll often pay more in points if you use those cards, especially if you’re flying on expensive international flights.

Amex Everyday

Best real airline miles with no annual fee

Amex EveryDaySM Credit Card By American Express

The Amex Everyday earns Amex Membership Rewards points.

With Membership Rewards points, you can turn your points into real airline miles with several frequent flier programs, including Delta SkyMiles, JetBlue True Blue, Virgin America Elevate, and British Airways Avios.

If you fly Delta and use SkyMiles this is a no brainer way to build on the SkyMiles you already have without a fee. Real airline miles are the best way to get expensive international flights and you can check here to see if focusing on convertible points that can turn into real airline miles is a good plan for you.

Even better, if you don’t want to deal with airline miles, you have the flexibility to use your points for travel on almost any airline. Just book your flight via the American Express website and pay for it with points.

 

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  • No annual fee.
  • There are late fees and a wide range of APRs you may be charged depending on your credit profile.
  • You get 2x points per dollar on gas spending, and a 20% bonus on all of your spending each statement period when you use your card to make 20 or more purchase in any category.

Tip: Some people find the Chase Sapphire Preferred we mention below (which has an annual fee) has more useful travel partners, because it lets you transfer points to both United MileagePlus and Southwest Rapid Rewards.

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Chase Sapphire Preferred

Best for serious travel rewards

Chase Sapphire Preferred Card

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

Serious travel rewards are all about being able to earn points you can transfer into real airline miles or hotel points with several travel partners, and the Chase Sapphire Preferred’s roster of partners is one of the most useful round. It’s why so many travel enthusiasts love this card.

Transfer to real airline miles and hotel points. You can transfer your points into you accounts with United MileagePlus, Southwest Rapid Rewards, Hyatt Gold Passport, and more anytime you want. Between United and Southwest you’re covered for getting around in the U.S. or just about anywhere in the world at attractive point prices. And as you learn more about travel rewards you can take advantage of other partners like Singapore KrisFlyer and Virgin Atlantic Flying Club.

A fallback for when mile seats aren’t available. You always have the option to book flights directly via Chase on most airlines without the restrictions of frequent flier programs. Every 10,000 points is worth $125 in flights, hotels, or rental cars booked via the Chase website.

A big introductory bonus. The Sapphire Preferred comes with a big introductory bonus offer that can earn you award travel fast.

2x points on dining and travel. You get double points on all dining and travel purchases you make, even cab rides, fast food, and subway tickets.

Check to see if trying to convertible points that can turn into real airline miles makes sense for your habits, but if it does, this is a great card to get started earning big travel value fast.

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  • There are no foreign transaction fees.
  • There is a $95 annual fee, after a $0 introductory fee the first year.

Tip: For a real powerhouse combo, pair this up with a no annual fee Chase Freedom. The points you earn from the Chase Freedom can be added to those from your Sapphire Preferred, letting you take advantage of the fact the Freedom earns 5x points in special bonus categories.

And if you really want to turbocharge rewards, but can deal with a higher annual fee, the Chase Sapphire Reserve offers 3x points on travel and dining.

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Points that work like cash for travel

If you don’t want to put in the work to get the extra value real airline miles can offer, but like rewards for travel, consider a card that earns points that work like cash. With these cards you just pay for your flight or hotel with the card, and then use points to get statement credit.

 

Venture Rewards Credit Card

Best for not messing with miles

Venture® Rewards Credit Card

If you’re a big traveler, the action is with real airline miles. But if you don’t want to keep track of rules, and still want great rewards for travel, the Venture® Rewards Credit Card is one of the biggest earners available.

Pay for travel, get it reimbursed. Instead of using an airline mile program, with the Venture® Rewards Credit Card you just pay for travel with your card, then use your Venture® miles to get it reimbursed on your statement. 10,000 miles is worth $100 toward any travel.

2x miles on everything. Everything you buy with the card earns 2x miles, so you can earn up to twice as fast as many airline cards.

A big introductory bonus. The Venture® Rewards Credit Card comes with a big introductory bonus offer that can save you hundreds on your next trip.

 

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  • There are no foreign transaction fees.
  • There is a $59 annual fee, after a $0 introductory fee the first year.

Tip: You can’t mix and match Venture® miles with any regular airline miles you already have. Venture® miles are simply like cash you can use to pay for travel charged to your card.

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Bank of America Travel Rewards

Best for savers with no fee

BankAmericard Travel Rewards Credit Card

This card has a pretty basic 1.5x points per dollar on everything you spend, and you can use those points to cover any travel purchase. There is no annual fee and no foreign transaction fee.

$50,000+ in Bank of America accounts = big earning. Where it gets interesting is if you have $50,000 or more in retirement, savings, checking, or other account balances with Bank of America. That qualifies you for the Bank of America Preferred Rewards program which lets you earn 2.25x – 2.6x points per dollar with no limits.

That’s because Platinum and Platinum Honors level members of Preferred Rewards get a 50% – 75% bonus on all the points earned with many Bank of America credit cards, including the Travel Rewards card.

You can rollover any of your 401k or IRA accounts to a Merrill Edge account with no maintenance fees, so you don’t need a huge checking or savings account balance to get this benefit.

No other card offers so much straight cash for travel earning potential off your spending across any category.

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  • There are no foreign transaction fees.
  • You need a big balance in Bank of America accounts to get the most out of the card.

Tip: Bank of America cards have the option to request a PIN that you can use for foreign purchases at places that don’t accept a signature.

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3. Learn more

Are you ready to earn rewards with a credit card?

Rewards credit cards can be great, and earn you hundreds of dollars a year in savings, but they are still credit cards, with all the dangers that come with them.

 

Answer these questions

If you answer yes to any of these questions, you’re not ready for a rewards credit card.

  • Are you unsure if you’ll be able to pay your balance in full every single month?
  • Do you plan to do a balance transfer to your card?
  • Do you sometimes make late payments?
  • Do you tend to max out your current credit limit, even if you pay it off?

 

Even if you can safely say ‘no’ to the questions, be aware that the lure of rewards can cause you to spend more than you otherwise would.

 

Credit card companies make money every time you spend on the card, so they want you to spend more. And the more you spend, the greater the chance you spend more than you can afford, which makes them even more money in interest payments.

 

How rewards work

This video explains how rewards work, and why banks offer them.

Cash back or miles for travel?

We don’t think most people should be messing with travel rewards.

Cash rewards cards are more generous than ever and choosing our favorite cash rewards cards will earn you 2% or better on your spending, which is hard to beat even with travel rewards.

You’ll get rewards you can use anywhere – to pay down bills, give a gift, or whatever you want – all with the same good value.

Travel rewards require extra effort, and they tend to penalize you if you use your rewards for something besides travel.

If you already travel twice a year or more, then travel rewards can sometimes offer you more rewards than straight cash back and you should read on.

We’ll cover cash back for travel, real airline miles, and a newer development, convertible points that can turn into real airline miles, but give you more flexibility.

 

Cash back for travel

Cards with cash rewards let you book travel with any airline or hotel, any time.

You don’t have to think about award rules or restrictions, but you get less value for your points if you try to use them for rewards that don’t involve travel, but you’re usually better off just earning straight cash rewards via a card like the Citi Double Cash.

Best for: People who want to keep it simple (but a regular cash rewards card Is usually better)

Pros

You can use the rewards for any travel. You can pay for travel with your card and use points to get credit back. No worrying about airline award seats or

There are lots of special category bonuses. If you’re really into maximizing things, cash rewards have the biggest array of extra points you can earn from special categories like grocery, gas, or dining spending. We keep a full list of them here.

Usually no annual fee. Cash rewards cards mostly have no annual fee to worry about.

Cons

They don’t have the biggest intro bonuses. The very biggest introductory offers are typically reserved for cards that earn airline miles or other travel rewards.

Expensive tickets aren’t as good a deal. If you spend a lot and can earn a lot of airline miles, you can save a lot on tickets that are expensive in cash, like big international trips or first class tickets.

 

Real airline miles

These are cards that earn miles directly into your account with one airline, like a Delta SkyMiles American Express. They’re usually not the fastest way to earn miles, but they often come with other benefits like a free checked bag.

Our rule of thumb is you should only consider airline miles if you typically spend $2,000 or more in a month on a credit card, so you can earn enough miles for an award in a reasonable amount of time. Otherwise, stick with a cash back rewards card.

But spending $2,000 a month isn’t the only factor. You should also be able to answer YES to at least one of these three questions:

  1. Do you have 5,000 or more existing airline miles?
  1. Are you planning to fly in business or first class?
  1. Do you want to go to expensive destinations like Asia, Europe, Africa, South America, or Australia?

If you can answer YES to one of them, then airline miles are a good choice for getting the most out of your card spending.

Pros

They can get you luxurious flights. If you’re really flexible with dates and times, a good chunk of real airline miles can get you flights that would otherwise cost thousands of dollars in cash.

You can build on miles you earn from flying.

If you fly more than a few times a year, this can be really lucrative since the miles you earn from your credit card get to build on the ones you already have, getting you to an award ticket a lot faster than spending on a card that just earns regular cash rewards.

They have big intro bonuses

Often, the most generous deals that offer you a bonus to open a new account are on cards that offer travel rewards, rather than regular cash rewards. That’s because travel rewards are more restricted, and not appealing to everyone.

Cons

If you don’t have a big balance, they can be hard to use. To get the most out of airline miles, you really need to pay attention to things like what airline partners you can use with which miles, where to search for award seats, and how many miles is a ‘good’ price to pay.

They can expire. Many airline miles expire after a year or so if you leave your account dormant. It’s easy to avoid it by earning or spending just one mile, but a lot of people forget and end up losing their miles, so unless you’re willing to make them a habit, stay away from regular airline miles.

You need a lot of them to get a good value award. Here’s how much you can expect to pay for flights with miles:

  • 25,000 – 50,000 miles: domestic roundtrip ticket in Economy class (typical value: $300 – $1,000)
  • 50,000 – 100,000 miles: domestic roundtrip ticket in First Class (typical value: $500 – $1,500)
  • 60,000 – 100,000 miles: international roundtrip ticket in Economy Class (typical value: $800 – $1,500)
  • 100,000 – 200,000 miles: international roundtrip ticket in Business Class (typical value: $2,500 – $5,000)

That’s a lot of miles. And if you’re just sticking to one credit card, don’t fly much, and

They have annual fees. Most cards that can earn you real airline miles carry a hefty annual fee, which isn’t worth it if you don’t travel much.

You’re locked into one program. Miles you earn via a traditional airline miles card are stuck in that one program, so if the airline suddenly raises prices or changes rules you’re stuck. Instead, consider convertible points (below) which we prefer over plain airline miles.

 

Convertible points

These are the newest kind of rewards on the block, and cards like the Chase Sapphire Preferred earn points you can convert into real airline miles with certain airlines anytime.

For example, the Chase Sapphire Preferred will let you convert points into miles with United MileagePlus and Southwest RapidRewards, so you’re not locked into just one airline program.

Best for: People who want to take advantage of real airline miles, but want extra flexibility

Pros

You get all the advantages of airline miles. With convertible points like Chase Ultimate Rewards or Amex Membership Rewards, you can turn your points into real airline miles with several airline programs at any time. The catch is once you turn points into real airline miles, you can’t convert them back.

You’re not stuck with one airline. Convertible points cards let you turn points into real airline miles with several participating airlines, so you have even more options than a traditional airline miles card.

You get some of the cash rewards benefits. Points from convertible points cards can be used for a lot of things besides travel, like gift cards, merchandise, and sometimes statement credit, though your points tend to go much further using them for travel.

Cons

Cash rewards aren’t as generous. If you don’t have a need for airline miles at all, don’t go for a convertible points card. Stick to a straight up cash rewards card and your points will stretch further. Convertible points cards tend to be less generous for straight cash rewards because they use the savings there to help fund the cost of being able to convert your points into real airline miles.

There are usually annual fees. You’ll generally have to pay an annual fee to get a card that earns convertible points. The Amex Everyday card is a notable exception. So again, only use these cards if you can answer “yes” to the 3 questions you should ask before earning airline miles with a credit card.

 

Questions and Answers

With most cash rewards credit cards, your rewards won’t expire as long as you keep your account open. But some like the Citi Double Cash require you to either earn or use rewards at least once every so often. For the Citi Double Cash that’s once every 12 months.

With cash rewards, you may lose all of your unused rewards if you close your account, so make sure you use them before closing. With travel rewards, miles you hold in an airline program aren’t affected if you close your credit card account, but they will be subject to whatever expiration rule the airline has.

No – you can earn rewards, even if you pay off your entire balance each month before it’s due.

Most cash rewards cards have no annual fee. But if you have an annual fee card, and don’t want to pay the fee, you can sometimes ask your bank to ‘downgrade’ you to a version with no fee. It might earn fewer rewards, but you can avoid the hassle of closing your account altogether.

Many cards won’t give you the rewards from your spending in months where you are late on your payment, so always make your payments on time with a rewards card.

Usually mortgage servicers and other loan providers don’t accept credit card payments. Some companies will make payments on your behalf with a credit card, but you’ll be charged a fee, and often that fee is more than the rewards are worth.

Most cards don’t offer rewards for ‘cash equivalent’ transactions like using a cash advance. Some will offer you rewards for completing a balance transfer, but you’re likely to get hit with fees or a less favorable deal than if you use a good card designed for balance transfers..

If you have cash rewards, just send the cash to whomever you want. If you have travel rewards, many cards will let you combine your points with your spouse or domestic partner. Otherwise, you can just book tickets for someone else using your points if you want to make a gift. Airline miles usually can’t be shared with other people unless you want to pay a fee.

You shouldn’t be carrying a balance month to month on rewards cards, because the interest rates on them is sometimes higher than on cards with no rewards. But if you do end up carrying a balance over from one month to another, your rewards won’t disappear as long a you make your payment on time.

5% cards are designed to catch people who aren’t paying attention. So if your card has an enrollment requirement to earn 5% each quarter, and you miss it, you’ll be out of luck for earning 5%.

Yes, many cash rewards cards offer rewards in the form of statement credit, and that reduces the balance you need to pay on your account.

Some cards require you keep your account open for a certain number of months, or else you will lose any sign on bonus you earned. It’s usually best to keep a card open for about a year or more.

Usually authorized users earn rewards in the same account as the primary user.

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Earning Cashback

What’s the Best Costco Credit Card for Rewards on Purchases?

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Trying to figure out how to make a payment? Read this

As of June 20, Costco now allows you to use any Visa credit card for purchases, and no longer accepts American Express cards.

This also marks the end for the Costco True Earnings Card from American Express, which is replaced by the new Costco Anywhere Visa credit card from Citibank

costcoanywhereYou can now apply for the card even if you didn’t have a Costco Amex.

The Costco Anywhere Visa is still a no annual fee card if you have an active Costco membership, and the rewards are much better than the old Costco True Earnings Amex.

It offers:

  • 4% cash back on gas worldwide (not just at Costco) up to $7,000 in purchases each reward year – vs 3% before
  • 3% at U.S. restaurants and on eligible travel (airfare, hotels, car rentals from major companies listed here, Costco Travel, cruise lines, and travel agents) – vs 2% before
  • 2% on all Costco and Costco.com purchases – vs 1% before
  • 1% on all other purchases

That’s great news for Costco True Earnings cardholders who haven’t seen a change in rewards for many years.

But if those rewards aren’t good enough, you can use any Visa card you’d like at Costco. You don’t have to only use the Costco Visa from Citibank, which opens up a lot of options.

Trying to make a payment?

You will need to go to Citi’s online portal and log into your account in order to make a payment.

So, can you do better than the new Citibank Costco Visa?

If you have a Chase Freedom card, which is issued as a Visa, you can earn up to 5% on wholesale club purchases for the rest of 2016, so you’ll have over 6 months to enjoy up to 5% cash back shopping at Costco.

Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate with the Chase freedom.

And if you have a Navy Federal Credit Union Visa, you can get an extra 2% cash back on all warehouse club purchases until December 31. That’s on top of the rewards you’re already earning, and there’s no limit to the extra cash back, so this could get you up to 4% in reward value with cards like the Flagship Rewards card.

The Visa Rewards Card from InFirst Credit Union has the exact same earning as the Costco Anywhere Visa, including 4% gas, 3% travel / dining, and 2% at warehouse clubs. The difference is it has no cap on 4% gas earning, and even if you aren’t a Costco member you can get this card. There’s no annual fee, but you need to join the NARFE for $40 to be eligible to be a member of the credit union unless you have another affiliation.

For the longer term, thanks to Fidelity and US Bank, earning good rewards on Costco purchases with your credit card is easy.

The Fidelity Rewards Visa Signature earns unlimited 2% cash back on every purchase, including at Costco.

fidelityrewardsvisaYou don’t have to be a Fidelity customer to get the card, though if you want the full 2% rewards you need to deposit them in a Fidelity account, which they’ll open automatically when you apply.

If that’s not appealing, we mined our card database to find no annual fee Visa cards that you’ll be able to use at Costco to earn 2% cash rewards at more places than Costco:

2% on Costco purchases: BankAmericard Cash Rewards Visa

This card offers 2% cash back at warehouse clubs like Costco and Sam’s Club, but only up to $2,500 in spending each quarter. There’s no annual fee. It also offers 3% back on gas and 2% at grocery stores, and spending in these categories counts toward the $2,500 per quarter limit.

2% on Costco purchases: NASA Federal Credit Union Platinum Cash Rewards Visa

nasaplatinumcashOnce you spend $2,000 on the card each year, all your purchases beyond $2,000 earn 2% cash back, unlimited, with no annual fee. Anyone can join the NASA Federal Credit Union by becoming a member of the National Space Society, which costs $20.

Your first $1,000 a year in purchases earns 1% cash back, $1,001 – $2,000 earns 1.25%, and $2,001 or more earns 2%.

And if you like travel rewards, remember, any Visa card you have can be used at Costco starting June 20th, so if you like those rewards better than cash back, you’re in good shape with the cards you already have.

What about Costco gas purchases?

4% on Costco gas with the Citibank Costco card is pretty decent, but you can do a bit better without limits.

One of the most lucrative gas rewards cards is the PenFed Platinum Rewards Visa which earns 5x points on gas purchases, which when you use the points for Visa gift cards gets you a touch over 4% cash back on gas.

The catch is PenFed requires your purchase to be for gas ‘at the pump,’ which is signaled by Visa merchant code 5542.

According to MyFICO forum readers Costco doesn’t use that merchant code for gas purchases.

The Fort Knox Credit Union’s Visa Platinum earns 5% cash back on gas, but doesn’t have the ‘at the pump only’ limitation, though we’ve seen no confirmation it will work for 5% cash back at Costco gas stations.

Same goes for the AARP Visa which offers 3% back on gas with no annual fee, but doesn’t specifically limit gas purchases to those made ‘at the pump.’

Here’s what Chase’s website (which issues the AARP Visa) has to say about how it classifies gas purchases:

“Merchants in the gas stations category sell automotive gasoline that can be paid for either at the pump or inside the station, and may or may not sell other goods or services at their location. Please note that some merchants that do not specialize in selling automotive gasoline are not included in this category; for example, truck stops, boat marinas, oil and propane distributors, and home heating companies.”

So there might be a chance it works, but for now no guarantees until Costco switches to Visa on June 20, 2016 and it’s put in use.

 

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Building Credit

Minimize Rejection: Check if You’re Pre-qualified for a Credit Card

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Check if You're Pre-qualified for a Credit Card

Updated September 28, 2016

Are you avoiding a credit card application  because you’re afraid of being rejected? Want to see if you can be approved for a credit card without having an inquiry hit your credit score?

We may be able to help. Some large banks give you the chance to see if you are pre-qualified for cards before you officially apply. You give a bit of personal information (name, address, last 4 digits of your social security), and they will tell you if you are pre-qualified. There is no harm to your credit score when using this service. This is the best way to see if you can get a credit card without hurting your score.

What does pre-qualified mean?

Pre-qualification typically utilizes a soft credit inquiry with a credit bureau (Experian, Equifax, TransUnion). A soft inquiry does not appear on your credit report, and will not harm your credit score.

Banks also create pre-qualified lists by buying marketing lists every month from a credit bureau. They buy the names of people who would meet their credit criteria and keep that list. When you see if you are pre-qualified, the bank is just checking to see if you are on their list.

A soft inquiry provides the bank with some basic credit information, including your score. Based upon the information in the credit bureau, the bank determines whether or not you have been pre-qualified for a credit card.

If you are not pre-qualified, that does not mean you will be rejected. When they pull a full credit report or get more information, you may still be approved. But, even if you are pre-qualified, you can still be rejected. In my experience, over 80% of pre-qualified applications are approved. So, why would you be rejected?

  • When you complete a formal credit card application, you provide additional personal information, including your employment and salary. If you are unemployed, or if your salary is too low relative to your debt – you could be rejected. There are other policy reasons that can be applied as well.
  • When a full credit bureau report is pulled, the bank gets more data. Some of that incremental data may result in a rejection.
  • Timing: your information may have changed. The bank may have pre-qualified you a week ago, but since then you have missed a payment. Final decisions are always made using the most up-to-date information.

Where can I see if I have been pre-qualified?

We have put together a list of the main banks. This list is kept updated regularly.

CreditCards – CardMatch is a very good tool developed by CreditCards.com that can match you to offers from multiple credit card companies without impacting your credit score. This is the best first stop.

Bank of America

Barclaycard – unfortunately Barclaycard has taken down their pre-qualification tool, but we will keep looking to see if it comes back.

Capital One (Click Credit Cards and then “See if you’re pre-qualified”)

Chase

Citibank

Credit One  – This company targets people with less than perfect credit.

Discover

U.S. Bank

American Express – this one is a little roundabout. After following the link, click ‘Your Pre-Qualified Card Offers’ on the left hand side of the page.

Consider A Personal Loan (No Hard Inquiry and Lower Rates)

If you need to borrow money, you may also want to consider a personal loan. A number of internet-only personal loan companies allow you to see if you are approved (including your interest rate and loan amount) without a hard inquiry on your credit report. Instead, they do a soft pull, which has no impact on your credit score. Personal loans also tend to have much lower interest rates than credit cards. If you need to borrow money, personal loans are usually a better option.

You can use our online tool to see if you can qualify for a loan. You only need to fill in one application, and MagnifyMoney will check your rate with multiple lenders (and without hurting your score). Check your rate without hurting your score here.

Not pre-qualified but still want to apply?

We still believe that people are too afraid of the impact of credit inquiries on their score. One inquiry will only take 5-10 points off your score.

If you pay your bills on time, do not have a ton of debt (less than $20,000) and want to apply for a new credit card, an inquiry should not scare you. The only way to know for certain if you can get approved is to do a full application.

How We Can Help

Don’t forget to follow us on Twitter @Magnify_Money and on Facebook.

*We’ll receive a referral fee if you click on the “Apply Now” buttons in this post. This does not impact our rankings or recommendations You can learn more about how our site is financed here.

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Get A Pre-Approved Personal Loan

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Won’t impact your credit score

Balance Transfer

Citi Simplicity Review: Now 0% Balance Transfer for 21 Months

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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.

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If you have credit card debt, a balance transfer may be the best way to get out of debt faster. And Citi has just made balance transfers a whole lot more appealing. You can now have a 0% interest rate for 21 months. That is a massive increase from the 18 months that they were offering earlier. You have to pay a 3% fee to transfer the debt. If you can’t afford to pay off your debt in 6 months or less, the savings can be dramatic.

Here is a simple example of how much you could save. If you have $10,000 of credit card debt at a 17% interest rate and make a payment of $300 per month, you will end up saving $2,069 over 21 months if you transfer the debt to Citi Simplicity. That savings includes the cost of the transfer fee.

Citi Simplicity

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Credit cards do not have a great reputation. They lure you in with flashy marketing and a big sign-on bonus, only to hit you with late fees and penalty interest rates if you make a mistake. Citi has tried to create a simpler credit card that eliminates the confusing fine print. And they have rather ambitiously named the card “Citi Simplicity.”

How the card works

If you are looking for rewards on your spending, this is not the credit card for you. The Simplicity credit card does not offer rewards.

There are two parts to the Citi Simplicity story:

  1. An amazing introductory offer on spending and balance transfers that can help you save a lot of money, and
  2. A rather ordinary-looking credit card that has eliminated the most egregious credit card charges, but is still an expensive way to borrow money and has some other hidden costly traps

The Introductory Offer

The Citi Simplicity credit card has one of the best introductory offers in the market. There are two parts to the intro offer:

  • 0% interest charged on purchases for 21 months, and
  • 0% interest charged on balance transfers for 21 months. There is a 3% balance transfer fee

The offer used to be 18 months at 0%, and Citi has extended that offer dramatically, to 21 months. The savings for people with credit card debt can be enormous.

If you need to finance a purchase, then applying for a Citi Simplicity credit card and using it to make a purchase is the best way to get a true 0% offer.

There is a big difference between deferred interest and waived interest. In a deferred interest offer, you have to pay the balance in full before the promotional period is over. If you don’t pay the balance in full, than you will be charged interest retroactively from the date of the purchase. Fortunately, Citi Simplicity waives the interest. So, if you still have a balance remaining in month 22, interest will only be charged on a go-forward basis. It’s truly 0% for the first 21 months.

If you want to compare Citi Simplicity to the other balance transfer offers available on the market, you can do that here.

If you have debt, Citi Simplicity can be a great way of cutting your interest expense and paying off your debt faster. Just remember that:

  1. You have to complete your balance transfer within four months of opening the account, otherwise you do not receive the promotional rate
  2. If you are 60 days late on a payment, you can lose your promotional rate

Life After the Intro Offer

After the intro offer, the card starts to look a lot more ordinary. Like most cards without rewards, Simplicity does not charge an annual fee. There are three places where Simplicity has decided to stand out:

  1. No late fee
  2. No penalty pricing
  3. The same interest rate on purchases and cash advances

Lets look at each of those promises in more detail:

Late Fee

Late fees can be outrageous on credit cards, with some banks charging $30 or more. We applaud Citi for waiving the late fee on this account. However, they still have a returned payment fee up to $35. So, if you write a check that bounces, be prepared to pay for it.

And remember that late fees can still get you into trouble in other ways. Once you are 30 days late, Citi would report that information to the credit bureau. That will hurt your credit score, which could result in higher interest rates elsewhere, on other products. Just because there is no late fee does not mean that there aren’t expensive consequences elsewhere.

Penalty Pricing 

Penalty pricing used to be easy money for the credit card industry. They could find a reason to increase the interest rate on your existing balance, and then just do it. I have seen some horrible examples of people receiving massive interest rate increases without ever having missed a single payment. However, the CARD Act made that illegal. Now, the only way that credit card companies can reprice is on your go forward purchases. And Citi has taken a leading role, promising not to charge penalty interest rates. Although mistakes can be expensive, Citi is making them cost a bit less with this feature.

Same Interest Rate for Purchases and Cash Advances

Credit card companies have, over time, increased the interest rate on cash advances dramatically. It is not unusual to see a cash advance APR near 30%, and without a grace period.

Citi has decided to keep the same price for purchases and cash advances.

There is only one problem: the interest rates are high, and you don’t know your interest rate until after you apply and are approved. The interest rate on Citi Simplicity ranges from 13.99% to 23.99%, depending upon your score.

If you plan on traveling outside of the country, Citi Simplicity still charges the pesky 3% foreign exchange fee. That can add up quickly.

In Conclusion

If you already have debt and are looking for a way to reduce the interest rate and pay down your debt quicker, the 21 months balance transfer offer from Citi Simplicity is an excellent deal that could take years off your debt repayment.

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Just make sure you complete the balance transfer within four months, make your payments on time and don’t spend on the card. Your goal should be to get out of debt, and this card can be a great tool.

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Building Credit, Credit Cards, Earning Cashback

The new Discover it Secured Credit Card wins: No fee, Free FICO and up to 2% cash back

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Discover it Secured Credit Card Review

Updated July 31, 2016

Discover has just launched a new product, the Discover it® Secured Credit Card – No Annual Fee . Secured credit cards are an excellent way to build or rebuild your credit history. With this product launch, Discover has created one of the best secured cards on the market. You do need to make a deposit of at least $200 to open the account. If you are unable to afford the $200 deposit, you should consider the Capital One Secured MasterCard, which only requires a $49 deposit. But if you can afford the $200 deposit, this new card is clearly one of the best no fee secured credit cards available.

Discover it

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Key Product Features

Here are the key product features:

No annual fee: There is no annual fee on this card. You do need to make a deposit of at least $200, and your credit limit will be based upon the amount of your deposit. If you want a bigger limit, you will have to make a bigger deposit.

NEW – Eligible for an upgrade in just 7 months: After just seven months, Discover will start monthly automatic reviews of your account. Once you qualify for a standard credit card, you will be upgraded. At the time of the upgrade to a standard card, you can expect to have your deposit refunded. Even better, you could be eligible for a bigger credit limit. When the product first launched, you had to wait a full year. With a 7-month review, Discover has one of the best upgrade policies in the market.

Earn cash back: Most secured credit cards do not offer any rewards. With Discover it, you have the opportunity to earn cash back while earning rewards. You can earn 2% at restaurants and gas stations (on up to $1,000 of spend each quarter) and unlimited 1% on everything else. Earning cash back is not the primary reason to select a secured credit card, but it is a nice option to have available.

Free FICO Credit Score: Discover will provide you with a copy of your official FICO credit score. If you use a secured credit card properly, you should expect to see your score increase over time. And by providing your FICO score for free, you will be able to watch your improvement.

You can learn more and apply by clicking on the link below:

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How to Use a Secured Credit Card

A secured credit card is an excellent way to build or rebuild your credit history. In order to gain the most number of points in the shortest amount of time, you need to have a strategy. We recommend the following strategy (and describe how it helped someone build an excellent score in one year here):

  1. Avoid spending more than 10% – 15% of your available credit limit. Yes, that means if your credit limit is only $200, you should not spend more than $20 – $30 a month. Utilization is a very important part of your credit score. To calculate utilization, divide your statement balance by your available credit. People with the best credit scores have utilization well below 20%. Because you want to build an excellent credit score, you should keep your utilization low.
  2. Pay your statement balance on time and in full every month. To ensure your payments are made on time every month, you should consider automating the monthly payments. At the Discover website, you can sign up to have your monthly payment debited automatically from your checking account.
  3. Just continue to repeat Step #1 and Step #2. Your credit score should improve over time, which will help you qualify for a standard credit card.

If you have less than perfect credit and need to borrow money, you should consider shopping for a personal loan.

Who is Eligible to Apply?

According to disclosures on the Discover website, you are eligible to apply if:

  • You are at least 18 years old.
  • You have a Social Security Number.
  • You have an address in the United States.
  • You have a bank account in the United States. Note: You will need to provide your routing number and account number when you apply. If your account is overdrawn, it is highly unlikely that you will be approved.

Your credit history will be reviewed, and not all applications will be approved.

The Application Process

You can apply online and Discover usually provides a decision instantly. You will need to make your security deposit as part of the application, which is why Discover asks for the routing number and account number of your bank.

Please remember that when you apply for the secured credit card, you will have an inquiry on your credit report just like an application for a normal credit card.

The Fine Print

There are some additional fees and terms that you should understand.

  • If you take out a cash advance, you would be charged a fee of 5% or $10, whichever is greater. The APR for cash advances is 25.49%, and there is no grace period.
  • The card offers balance transfers. If you transfer a balance by May 10, 2016 you will be charged a 6 month intro APR of 10.99%. After the intro expires, and for any transfer completed after May 10, 2016, the balance transfer rate is 23.49%. A balance transfer fee of 3% will always be charged.
  • The first late payment fee is waived. But, afterwards, you would be charged $37. Returned payments also cost $37.

Alternate Secured Credit Cards

Discover it has one of the strongest offerings in the market. However, it might not be right for everyone. Here are some other good options.

If you cannot afford the $200 minimum deposit, you should consider the Capital One Secured MasterCard. There is no annual fee and a minimum deposit of $49. You will also be able to receive your FICO score for free. Capital One is known for accepting people with more adverse credit histories. So, if you are rejected by Discover, you might want to consider trying Capital One instead.

Capital One Secured MasterCard

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You should also consider a secured credit card from your local credit union. MagnifyMoney has a list of some of the best no fee secured credit cards offered by credit unions here.

Build Your Score, Not Your Balance

Secured credit cards are a great way to build your credit score. And, with this product launch, Discover has created an excellent tool. Just make sure you don’t use your credit card to build a balance and borrow money. Keep your balance well below 20% of your available credit, and pay your statement balance on time and in full every month. If you do that, you should start to see real improvement in your score.

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