Advertiser Disclosure

Building Credit, Credit Cards, Reviews

Georgia’s Own Visa Classic Review: Good Choice for Rebuilding Credit

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.

The Georgia’s Own Visa Classic card is made for those with low credit scores and helps you rebuild and re-establish your credit. If you’ve struggled in the past with getting approved for other credit cards due to poor credit, you may qualify for this card. By using this card, coupled with proper credit behavior, you will be able to improve your credit score.

Visa® Classic from Georgia's Own Credit Union

APPLY NOW Secured

on Georgia's Own Credit Union’s secure website

Visa® Classic from Georgia's Own Credit Union

Annual fee
$0 For First Year
$0 Ongoing
APR
12.99%-17.99%
Credit required
bad-credit
Bad

How the Card Works

This is a relatively straightforward credit card. There is no annual fee and no rewards. Lack of a rewards program makes this card predominantly for rebuilding credit. Look at it this way — there are no tempting rewards to lead you to overspend, allowing you to focus on rebuilding your credit.

The APR for this card is a fair 12.99% to 17.99%. Other cards charge upward of 20%, so this is reasonable. However, a lower APR shouldn’t encourage you to accrue a balance month to month. Always make it a point to pay your balance in full and on time.

A good way to start rebuilding your credit with the Georgia’s Own Visa Classic is to add a recurring payment, like Netflix or Spotify. You can solely have your monthly Netflix or Spotify charge on your credit card statement and increase your credit score as long as you pay your bill in full and on time. This will give you a low utilization (the amount of your credit limit you use), which is a key factor in determining your credit score. For example, if you have a credit limit of $100 and charge your recurring $7.99 Netflix bill, then you will have a utilization of 8% (below 20% is ideal).

How to Qualify

In order to qualify for this card, you need to have a stable source of income, so a job is needed. This will prove that you can afford to make your monthly payments on time and are responsible.

In addition, since this card is provided by a credit union, you have to join Georgia’s Own Credit Union. Don’t worry if you reside outside of Georgia; anyone can become a member regardless of residence. There are four free eligibility options that can qualify you for free membership. Otherwise you will have to join the GettingAhead Association, with a $5 annual membership fee. The best bet is to speak to a Georgia’s Own loan officer (404-874-1166) and see if you’re pre-approved for the credit card. If pre-approved, you can join the GettingAhead Association while completing your credit card application. All members will also need to keep $5 in a savings account that must remain in the account while you have the card open.

A note on the application process for Georgia’s Own — when you apply for a credit card on Georgia’s Own website, you are directed toward an application that is for all the credit cards they offer. This means that depending on your creditworthiness, you may not be directed to the Visa Classic as an option. Therefore if you want to apply directly for the card, the best bet is to speak with a loan officer, who will tell you if you’re pre-approved for the Visa Classic card.

What We Like About the Card

Good chance of getting approved

Georgia’s Own tailored this credit card toward those needing to rebuild or re-establish their credit history. This gives those with bad credit a greater chance of being approved. Also, if your score is above 620, you are more likely to be approved.

Fair APR

This card has a fair APR ranging from 12.99% to 17.99%. This is significantly lower compared to other cards targeted to people with less than perfect credit, with APRs as high as 23.99%. Although your goal is to pay every bill in full and on time each month, if you keep a balance this low, APR won’t accrue as much interest as other cards.

What We Don’t Like About the Card

Have to join the credit union

In order to get this card, you have to join Georgia’s Own Credit Union. There are four free eligibility options, and if you don’t qualify for free membership, you will have to join the GettingAhead Association, with a $5 annual membership fee. You will also need to keep $5 in a savings account that must remain in the account while you have the card open.

2% foreign transaction fee

Make sure to leave this card at home when you travel abroad as you’ll be charged a 2% foreign transaction fee on all purchases. This is slightly lower than most cards, which charge a 3% foreign transaction fee, yet high enough to increase your bill significantly if you make purchases abroad.

No rewards program

There is no rewards program for this credit card. Georgia’s Own offers a Visa Platinum card that has a rewards program, but you may have a harder time qualifying if you don’t have a good credit score.

Who the Card Is Best For

If you’re someone who has a low credit score and doesn’t mind working with a credit union, this card may be right for you. We recommend this no-frills card for people who want to rebuild their credit with a credit card. While you won’t earn any rewards with this card, if you practice proper credit behavior, you’ll be rewarded by a better credit score.

Alternatives

Secured Card with Rewards

Discover it® Secured Card - No Annual Fee

Annual fee

$0 For First Year

$0 Ongoing

Minimum Deposit

$200

APR

23.99% APR

Variable

If you don’t want to join a credit union, you might want to consider a secured credit card to help you build credit. With a secured card, you make a deposit – and receive a credit limit based upon that deposit. The good news is that your secured credit card will report to the credit bureaus. That means your good behavior can help you improve your credit score over time. One of our favorite secured credit cards is from Discover.

Rewards Card with Good Approval Odds

Walmart® MasterCard<sup>®</sup>

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

up to 3%

APR

17.65%-23.65%

Store cards are more likely to approve people with low credit scores, and the Walmart MasterCard can be a good option for you. The Walmart MasterCard has unlimited rewards with up to 3% cash back. Don’t worry if you don’t shop at Walmart since you can earn rewards on any purchase. Be aware that this card has a higher interest rate than the Georgia’s Own card, so compare which card is best for you.

Bottom Line

With no annual fee and fair interest rates, the Georgia’s Own Visa Classic credit card is a good option for those with bad to fair credit who are looking to improve their credit score. If you don’t mind working with a credit union, this card is a good option to rebuild credit.

FAQ

If you don’t qualify for the four free eligibility options, you will have to join the GettingAhead Association, with a $5 annual membership fee. The best bet is to speak to a Georgia’s Own loan officer (404-874-1166) and see if you’re pre-approved for the credit card. If pre-approved, you can join the GettingAhead Association while completing your credit card application. All members will also need to keep $5 in a savings account that must remain in the account while you have the card open.

You should work hard to make sure you make payments on time every month. A missed payment will lead to a late fee and interest accruing on the balance. This will ultimately leave a negative mark on your credit report and lower your credit score. Try not to spend more than you are able to and stick to a budget with these helpful budgeting apps in order to rebuild your credit score.

There is no one way to increase your credit score; rather, there are numerous behaviors responsible cardholders practice to establish good credit history. Good practices include paying all of your statements on time and in full and keeping a utilization below 20%; these will help you rebuild credit.

Alexandria White
Alexandria White |

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

TAGS:

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score

Advertiser Disclosure

Best of, Credit Cards

Best Credit Cards for Fair Credit

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.

Having fair credit doesn’t mean you’re ineligible for great credit cards. We’ve rounded up the top credit cards with the best offers in a range of different categories that you’re still likely to be approved for, even with fair credit. These credit cards can help you build credit as long as you use them wisely. In this guide, we’ll show you the best credit cards for fair credit scores as well as how to use them to boost your credit score even higher.

Here are some of the products we will be discussing today:

Check If You’re Pre-qualified

Before applying for any credit card it’s helpful to check if you’re pre-qualified from a variety of institutions. The soft credit check the institutions perform does not harm your credit score and allows you to compare credit options. Sites such as CreditCards.com provide good tools that can match you to offers from multiple credit card companies without impacting your credit score. You can read our complete guide to getting pre-qualified for a credit card here.

Build Credit with Secured Cards

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

After you’ve consistently managed your secured card well over a period of time, you may be able to increase your credit line beyond your initial deposit or migrate to an unsecured credit card.

We’ve reviewed the best secured cards in the market and found our top pick — the Discover it® Secured Card. This card has no annual fee, a reasonable security deposit and offers an easy transition to an unsecured card. In addition, Discover offers a rewards program and free access to your FICO score. These reasons are why we recommend the Discover it® Secured Card for people with fair credit.

Build Credit with Secured Cards

Discover it® Secured Card - No Annual Fee

APPLY NOW Secured

on Discover’s secure website

Read Full Review

Discover it® Secured Card - No Annual Fee

Annual fee
$0 For First Year
$0 Ongoing
Minimum Deposit
$200
APR
23.99% APR

Variable

Credit required
zero-credit
No credit, 670 or less

Best for Cash Back

If you have fair credit and want a cash back card the QuicksilverOne® Rewards credit card from Capital One® is a good option. As a consumer with fair credit you may not qualify for all cash back cards, but you may qualify for the QuicksilverOne® Rewards card since it is made for those with fair credit. With this card you will earn unlimited cash back, with no changing categories, and the rewards never expire.

However, this card comes with a high APR and annual fee. To earn enough cash back rewards to pay for the card itself each year you’ll need to spend $2,600 annually ($217 per month). To net a cash back of $50 you need to spend $5,933 in a year ($494 per month). This card may be an option for you if you want to earn more than 1% cash back.

Best for Cash Back

QuicksilverOne® Rewards from Capital One

APPLY NOW Secured

on Capital One’s secure website

QuicksilverOne® Rewards from Capital One

Annual fee
$39 For First Year
$39 Ongoing
Cashback Rate
up to 1.5%
APR
24.99%

Variable

Credit required
fair-credit

Average

Best Low Ongoing APR

No one wants to carry a balance on their credit cards, but if you must, it’s best to get a card with a low ongoing APR. Many lenders charge high APRs around 25%, but you can potentially qualify for an APR as low as 9.15%. This card will charge you less money on your debt than the typical credit card, which can save you big dollars in the long run.

Best Low Ongoing APR

MasterCard Platinum from Aspire FCU

APPLY NOW Secured

on Aspire Credit Union’s secure website

Read Full Review

MasterCard Platinum from Aspire FCU

Intro Rate
0%

promotional rate

Intro Fee
2%
APR
8.90%-18.00%

Variable

Duration
6 months
Credit required
fair-credit

Average

Best for Small Business Owners

Running a business is hard. Small business credit cards can make it a bit easier for you by giving you rewards for everyday purchases. Nevertheless, be aware: Business credit cards forego certain protections that personal credit cards have under the Credit CARD Act. For example, card issuers can change the payment due date or interest rate without giving you prior notice.

Still, small business cards can be a great option for you to build your credit and save money, even if you don’t have a traditional brick-and-mortar business. You can apply for these cards with just a DBA or even your own name, if you’re a freelancer.

Best for Small Business Owners

Spark Classic for Business from Capital One

APPLY NOW Secured

on Capital One’s secure website

Read Full Review

Spark Classic for Business from Capital One

Annual fee
$0 For First Year
$0 Ongoing
Cashback Rate
1% on all spend
APR
23.99%
Credit required
fair-credit

Average

Best for Students

You may have a fair credit score because you are a student. Student cards provide a great way for you to build your credit score and establish good credit history. The Discover it® for Students card is made with students in mind and offers ways to help you build credit and also earn rewards.

Best for Students

Discover it® for Students

APPLY NOW Secured

on Discover’s secure website

Read Full Review

Discover it® for Students

Annual fee
$0 For First Year
$0 Ongoing
Cashback Rate
up to 5%
APR
13.99%-22.99%

Variable

Credit required
zero-credit
New to Credit

FAQ

There’s a lot of math that goes into computing your credit scores, but at the end of the day, a fair credit score is defined as being between 649 and 699. Here’s how a fair credit score sits in relation to other credit scoring classes:

  • Excellent: Above 760
  • Good: 700-759
  • Fair/Average: 649-699
  • Poor: 600-648
  • Very Poor: Under 599

You can check your credit score for free on sites like Credit Karma, Chase Credit Journey, or AnnualCreditReport.com.

Having a good or excellent credit score unlocks a lot of advantages, such as lower interest rates and better approval odds for high-value credit cards and other financial products. These advantages will result in more dollars in your wallet at the end of the day. For example, having a high credit score can save you tens or even hundreds of thousands of dollars in interest payments over your lifetime, especially for big-ticket loans like a home mortgage.

But if you have a fair credit score, don’t fret! There is a reason that your score is less than optimal, and thus there are real, concrete steps you can take to boost your credit score into the good and excellent range.

If you play your cards right, you can even join the exclusive 800+ credit score club (unfortunately, it’s not an official club, and you don’t get a shower of balloons and confetti once you reach it — but you will get access to some of the most exclusive financial products).

There can be many reasons why your credit score is below 700. Here are some of the most common ones:

  • You have late payments on your credit report. Having even just one late payment on your credit report can seriously harm it because payment history makes up 35% of your credit score. Unfortunately, unless it’s an error, you’ll just need to wait for it to drop off of your credit report in seven years. To prevent this from happening, make sure all of your debt payments are set up on autopay. That way, you won’t have to worry about it.
  • You have a lot of credit card debt. Credit utilization ratio is one of the biggest factors in calculating your credit score — it affects 30% of the final score. It’s simply how much you owe relative to how much you are allowed to spend. For example, let’s say you have two credit cards with a $5,000 limit each, and you owe $2,000. Your credit utilization ratio is 20% because you owe $2,000 out of a possible $10,000. Luckily, this is one of the easiest factors to correct that will boost your credit score big time in the short run: Pay off your balance, and your score will bump up immediately.
  • You don’t have a long credit history. Although credit history doesn’t factor into the calculation of your credit score as much as the credit utilization ratio and payment history, it still makes up a sizable chunk at 15%. There’s not much you can do about this one: Simply wait for your accounts to age.
  • You have a lot of credit inquiries. Banks don’t like to see you applying for credit like an out-of-control spender in Las Vegas. Each time you apply for credit or a loan, it’s recorded on your credit report as a credit inquiry, and it stays there for two years. To minimize the number of credit inquiries you have, always shop around and make sure creditors use a soft pull credit check unless you’re absolutely ready to apply for the line of credit. This factor makes up just 10% of your credit score, but it’s an easy one you can affect as long as you’re careful about applying for credit.
  • You don’t have a wide variety of account types. You may be an ace at handling your student loans, but creditors also want to know you can handle other types of credit like mortgages and credit card debt, too. The more types of credit accounts you have on file, the better. However, we don’t recommend taking out a loan just for the sake of boosting your credit score — that costs money, and you’ll only receive a modest benefit from it because credit mix only makes up 10% of your credit score.

As you can see, you do have a lot of options when it comes to fine-tuning your credit score into the good or excellent category. We recommend the helpful credit score simulator at Chase Credit Journey to check your current score and see how these adjustments can potentially change your credit level. It’s available whether you’re a Chase customer or not. Give it a try!

Applying for a credit card is easy. You’ll need some basic information like name, address, and Social Security number. You’ll also need employment and income information. Simply enter it into the online form on the credit card company’s website, visit a branch of the bank (if they have one), or call the credit card company directly. You’ll usually receive instant notification if you’ve been approved or not.

There are many ways for you to increase your credit score. Ultimately practicing responsible credit behavior is the best way to see your score rise. Here are a few ways you can increase your credit score:

  • Have someone add you as an authorized user: If you have a willing (and very trusting) friend or family member with better credit, you can ask them to add you as an authorized user onto one or more of their credit cards. Their credit will not be harmed by this (as long as you don’t rack up charges or missed payments), and the credit card will show up on your credit report just as if you had applied for it — boosting your credit utilization ratio, number of accounts, and account age if you keep it for a long time.
  • Increase your credit history length: Unfortunately, you can’t go back in time, but you can still affect your credit history length. Your credit score is partially based off of average credit history length, and the more old accounts you have, the better. If you already have credit cards open, consider keeping them open so your average credit history won’t decrease and ding your credit. Each new credit card you get will drop your average account age, and it’ll take longer to boost this portion of your score.
  • Maintain a low credit utilization: Credit utilization (the percentage of available credit you’re using) is one of the biggest factors in calculating your credit score. The lower, the better. To decrease your utilization ratio, simply pay off your credit card. You can also request a credit limit increase from your credit card issuer to lower your credit utilization ratio — just make sure not to rack up a balance again with that extra credit or you’ll be back to square one.

Missing a payment can single-handedly cause your credit score to drop by 100 points or more. To avoid this, simply set up your credit card on autopay for the minimum amount due — that way you’ll never have to worry about missing a payment.

You can always apply for a personal loan if you need some cash right now for something. You can use this tool to shop around for the best interest rates without hurting your credit score. It’s smart to avoid hard inquiries until you’re ready to actually apply for a personal loan so that your credit isn’t dinged with multiple inquiries.

Each credit card is different, so you’ll need to check the fine print. Usually, though, you’ll need to both charge a purchase and pay off your bill before you’re eligible for those cash back rewards. Then, they’ll tally up this amount and periodically either send you a check, or offer a statement credit.

If you’re running a small business, it’s often easy to mix your personal and business accounts, especially if you’re self-employed. This creates an accounting nightmare to sort through, so it’s recommended (but not required) that you have a separate business banking account and credit card, if you need one.

Lindsay VanSomeren
Lindsay VanSomeren |

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

TAGS:

Advertiser Disclosure

Building Credit, Credit Cards, Reviews

Discover it® Secured Card Review: Rebuild and Establish Credit

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.

Secured cards are great if you have little to no credit history or have poor credit history. With proper credit behavior they are a great way to build credit. The Discover it® Secured card is an excellent secured card that lets you build credit while also earning cash back. There is no annual fee associated with this card, making it easier to put your money where it’s needed.

Discover it® Secured Card - No Annual Fee

APPLY NOW Secured

on Discover’s secure website

Discover it® Secured Card - No Annual Fee

Annual fee
$0 For First Year
$0 Ongoing
Minimum Deposit
$200
APR
23.99% APR

Variable

Credit required
zero-credit
No credit, 670 or less

How the card works

The Discover it® Secured card is meant to help you rebuild or establish credit. You need to make a $200 security deposit that will become your credit line. If you want a credit limit that is higher than $200, you will need to put down a larger security deposit.

Discover reviews your account monthly starting at eight months to see if you can be transitioned to an unsecured card. This is a feature that makes the Discover it® Secured card unique. If you have responsible credit management, you may benefit from this feature and be transitioned to an unsecured card. If moved to an unsecured card, you will receive your security deposit back. This is hassle free and another reason the Discover it® Secured card is a great option.

This card offers 2% cash back at restaurants or gas stations on up to $1,000 in combined purchases each quarter and 1% cash back on all other purchases. This is a great bonus, but the main goal of a secured card is not to earn rewards, but to be responsible and build credit. Don’t let the prospect of cash back lead you to overspending. That will only defeat the purpose of this card.

To get the most benefit from your secured card, keep a low utilization rate and pay your statements in full and on time every month. Utilization is the amount of your total credit limit you use. It is calculated by dividing your statement balance by your available credit. A low utilization is not spending more than 20% of your credit limit. So if you have a credit limit of $200, that means don’t spend more than $40.

By following these two practices, you will begin to see your credit score rise. You can even build credit with $10 a month using a secured card.

How to qualify

To qualify for the Discover it® Secured card, you need to be at least 18 years old, have a Social Security number, U.S address, and U.S bank account and provide all the required information in the online application. Be sure to have your bank routing number and account number ready when you apply as they will be needed for the $200 security deposit. Don’t worry if your credit history is nonexistent or unfavorable — this card is great for people who are new to credit or are looking to rebuild credit.

What we like about the card

Earn cash back

You will earn 2% cash back at restaurants or gas stations on up to $1,000 in combined purchases each quarter and 1% cash back on all other purchases. This is a great added bonus that most secured cards do not offer. Discover will automatically match all of the cash back you earned at the end of your first year as a cardholder.

Automatic monthly reviews after 8 months

Discover takes the guessing out of wondering when you will qualify for an unsecured card by reviewing your account monthly starting at eight months. If you have responsible credit management across all of your credit cards, you may be transitioned to an unsecured card. This is hassle free and another reason the Discover it® Secured card is a great option.

Free FICO Score

It is important to monitor your credit score and each month you will receive your FICO Score for free. If you practice proper credit behavior, you will see your score increase.

What we don’t like about the card

High APR

This card, like most secured credit cards, has a high APR. If you pay your statement balance in full and on time every month, the APR will not matter (because no interest will be charged). And if you do that every month, your credit score will improve over time — making it cheaper to borrow money (if you need to) in the future.

Who the card is best for

This Discover it® Secured card is best for people looking to rebuild or establish credit. In addition to an easy transition to an unsecured card when the time is right, the Discover it® Secured card provides a cash back program and has no annual fee. By using this card coupled with proper credit behavior you can see a boost in your credit score.

Alternatives

If you want a smaller security deposit

Secured MasterCard from Capital One Bank

Annual fee

$0 For First Year

$0 Ongoing

Minimum Deposit

$49

APR

24.99% APR

Fixed

The Secured MasterCard from Capital One is made for people who want to rebuild credit. There are lower security deposit options than the Discover it® Secured card, making it a good alternative if you can’t afford a large security deposit. However, it’s important to note that the lower security deposit is not guaranteed. This card also has no annual fee and offers your free credit score; however, there are no rewards. Just remember: A lower security deposit also means a lower credit limit.

An unsecured card from a credit union

Visa® Classic from Georgia's Own Credit Union

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

-

APR

12.99%-17.99%

The Visa Classic from Georgia’s Own Credit Union offers a competitive APR that is lower than Discover. There is no annual fee associated with this card and no rewards, making this card strictly for rebuilding credit. Keep in mind you will need to join the credit union, and the application process is more complicated compared to Discover. This card is a good alternative if you prefer to have an unsecured card and don’t mind working with a credit union.

FAQ

No, your cash back does not expire as long as your account remains open.

If you pay your balance in full and close your credit card account, your security deposit will be refunded. This can take up to two billing cycles plus 10 days. Also, during Discover’s monthly automatic reviews of your credit card account starting at eight months, they will see if they can return your security deposit while you continue to enjoy your card benefits.

The maximum credit limit is $2,500. This will be determined by your income and ability to pay. Keep in mind your security deposit must equal your credit limit, so you will have to deposit $2,500 if approved for this credit limit.

Alexandria White
Alexandria White |

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

TAGS:

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score

Advertiser Disclosure

Credit Cards, Reviews, Small Business

Capital One Spark Classic for Business Review: Unlimited Cash Back for Small Business Owners

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.

The Spark Classic for Business card is a good card for small business owners with average credit. This card has unlimited 1% cash back and no annual fee, making it a great way to earn rewards from everyday business purchases. If you’re a business owner who frequently travels abroad, there are also no foreign transaction fees, which can save you money compared to other cards.

Spark Classic for Business from Capital One

APPLY NOW Secured

on Capital One’s secure website

Spark Classic for Business from Capital One

Annual fee
$0 For First Year
$0 Ongoing
Cashback Rate
1% on all spend
APR
23.99%
Credit required
fair-credit

Average

How the card works

The Spark Classic for Business card offers unlimited 1% cash back on all purchases; there are no changing categories to keep track of each quarter. To redeem cash back, you can request a statement credit or a check. You can also set up automatic redemption either at a set time each calendar year or when a specific threshold ($25, $50, $100, or $200) has been reached. This can be done online at capitalone.com or by contacting the Rewards Center. Cash back can also be redeemed for credits on previous purchases, gift cards, and more.

This card also offers credit-building tools that help you monitor your credit score. Frequently monitoring your credit score will allow you to build and strengthen credit for your business as long as you practice responsible credit behavior.

Capital One offers quarterly and year-end summaries of your spending that break down what you purchased. This simplifies planning, budgeting, and taxes. Your purchase records are also easily downloadable to multiple formats such as Quicken®, QuickBooks™ and Excel®, making accounting easier for your small business.

How to qualify

This is a small business credit card. But to qualify, Capital One will consider both you and your business. That means your personal credit score matters — and you need to have average credit to qualify. Capital One defines average credit as someone who has defaulted on a loan in the past five years or has limited credit history (having a credit card or other credit for less than three years). Your business will need to have an average credit score and an EIN. You will also need to provide details regarding your business’s revenue. Remember — even though this is a business credit card, you will be personally liable for any charges on the card — even if your business goes bankrupt.

What we like about the card

No annual fee

You won’t pay an annual fee with this card. Many small business rewards cards charge a fee, making this card unique.

No foreign transaction fees

There are no fees when you travel abroad and use this card. This is beneficial if you travel for business frequently or only on occasion, as you will avoid foreign transaction fees that most other cards have.

Unlimited cash back

This card offers unlimited 1% cash back on all purchases. There is no minimum amount to redeem cash back. This is a great way to earn rewards on your business purchases.

Free employee cards

Employee cards come at no additional cost. No longer do you have the hassle of reimbursing employees when they use personal cards. You will also earn rewards points from their purchases. Just remember — any spending by an employee on a small business card will be your personal liability.

You don’t need perfect credit

Capital One is willing to work with people and companies that have less than perfect credit.

What we don’t like about the card

High APR

There is a high APR for this card. Make sure that you pay all of your bills on time and in full in order to ensure you will not rack up debt. Keeping a balance on your card will defeat any cash back you earn.

Who the card is best for

The Spark Classic for Business card is best for small business owners with average credit who want to earn rewards with minimal additional fees. We recommend this card for business owners who travel abroad and plan on having multiple employee cards, as you will not be charged any fees. With unlimited 1% cash back and no annual fee, this card is a great option for business owners.

Alternatives

If you frequently spend on gas

Sam's Club Business MasterCard<sup>®</sup>

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

-

APR

15.40%-23.40%

The Sam’s Club Business MasterCard offers 5% cash back on gas purchases for the first $6,000 in a year (except when purchased from other wholesalers) and 1% cash back on all other purchases. This is a great added bonus for business owners who frequently spend on gas. Keep in mind that there is a $5,000 cap on cash back rewards you can earn each calendar year. Once you hit this cap, you will not earn any more rewards that year.

If you need to finance a purchase

Blue Business℠ Plus Credit Card from American Express

Annual fee

$0 For First Year

$0 Ongoing

Rewards

up to 2x points

APR

12.24%-20.24%

Variable

Owning a small business can be overwhelming, and at times, though not ideal, you may have to carry a balance on your credit card. If this is the case, the Blue BusinessSM Plus Credit Card from American Express offers competitive interest rates and a 0% introductory offer. This can help you save money while you pay off your purchase. In addition, there are rewards points you can earn on purchases. Keep in mind you need excellent credit to apply for this card.

FAQ

No, cash back does not expire as long as your account remains open.

No, you can redeem your cash back for any amount, anytime.

You can get your cash back upon request in the form of a statement credit or a check. You can also set up automatic redemption either at a set time each calendar year or when a specific threshold ($25, $50, $100, or $200) has been reached. Just go online to capitalone.com or contact the Rewards Center. You can also redeem for credits for previous purchases, gift cards, and more.

Alexandria White
Alexandria White |

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

TAGS:

Advertiser Disclosure

Building Credit, Credit Cards, Reviews

OpenSky Secured Visa Review: No Checking Account Required

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.

The OpenSky Secured Visa secured credit card can be helpful for those who have bad or no credit history. This card is designed for consumers who want to rebuild or create a credit history. OpenSky does not require a checking account or credit check when you apply, which makes the application process simple. Take note that this card does come with an annual fee, unlike other secured cards. With responsible use, you could see an increase in your credit score and move to an unsecured card.

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

APPLY NOW Secured

on Capital Bank N.A.’s secure website

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

Annual fee
$35 For First Year
$35 Ongoing
Minimum Deposit
$200
APR
18.39% APR
Credit required
zero-credit
New to Credit, Bad

How the card works

Since this is a secured card you will have to make a security deposit. This money will become your line of credit and must remain in your account while your card is open. There are four options to make your security deposit and fund your account. The first is using a debit card. Simply provide your debit card information on your application, and OpenSky will process your transaction right away. You can also complete a wire transfer to Capital Bank. If you don’t have a checking account, you can use Western Union or mail a check or money order. An email with instructions on how to fund your security deposit will be sent after your application has been approved. Note that, depending on the method of payment that you choose, it may take up to five business days for your security deposit to clear.

If you’re looking to improve your credit score, the best way to take advantage of this card is to start off with a low credit limit and find a recurring expense you can put on the card. For example, you can put your utility bills on the card. Make sure that you pay this on time and in full every month. To ensure it’s paid on time, you can enroll in their auto pay program, which will guarantee you never miss a payment. Once you enroll in auto pay, the credit card company will make a scheduled monthly payment automatically on the day you choose. This way, you will have a purchase every month that OpenSky can report to all three major bureaus.

How to qualify

To quality for this credit card you do not need to have credit history, but you do need a job. By having a job you will show a stable source of income, which shows credit lenders you are responsible and can pay your bills. In addition you will need a security deposit. That means if you want a $1,000 credit limit, you’ll need to have $1,000 deposited at account opening. The online application is four simple steps that can be completed in 10 minutes. They request basic personal and financial information, have you choose the starting credit limit you prefer, and fund your security deposit. Your requested credit limit is subject to approval based on your creditworthiness.

What we like about the card

No credit check

OpenSky does not check your credit history during the application process. This is great if you lack a credit history or have poor credit, therefore improving your approval odds.

Simple application process

The application process takes place solely online, making it easy to apply at your convenience. It only takes 10 minutes according to OpenSky to complete the application. There are four easy steps: provide your personal and financial information, customize and fund your card, review your information, and accept the terms and conditions.

No checking account needed

OpenSky does not require you to have a checking account to apply for this card. This is great for those who want to establish credit but don’t have a bank account. The majority of credit cards require bank accounts, so this is a good option if you don’t have a bank account.

What we don’t like about the card

Annual fee

OpenSky charges cardholders a $35 annual fee. Be sure to review your credit options, because you can find other secured cards that do not charge an annual fee. However, note that those cards may require a checking account, so make sure to review your options.

Foreign transaction fee

Make sure this card remains at home when you travel abroad since there is a high 3% foreign transaction fee. This will increase your bill if you make purchases abroad, so it’s best left at home.

No option for an unsecured card

If you’re ready to move onto an unsecured card, there is no option with OpenSky. That means you’ll have to look to another company, which could be a hassle because of the process of applying for the card, getting a credit check, and closing your current card.

Who the card is best for

If you’ve struggled with being approved for credit cards in the past due to bad or nonexistent credit history, the OpenSky Secured Visa may be right for you. With no credit check during the application process, you have good approval odds. This card is also for those who do not have a checking account but want to build credit, as you won’t find many credit cards that are offered to people without checking accounts. However, the annual fee and lack of transition to an unsecured card can make you think twice about this card. You can find MagnifyMoney’s ranking of the best secured credit cards here.

Alternatives

Secured MasterCard from Capital One Bank

Annual fee

$0 For First Year

$0 Ongoing

Minimum Deposit

$49

APR

24.99% APR

Fixed

This credit card doesn’t require that you have your security deposit equal your credit limit. You can make a deposit as low as $49, unlike the OpenSky card, which is $200. However, this card will check your credit history and will determine your deposit requirement based on your creditworthiness. There is no annual fee associated with this card, unlike OpenSky.

Discover it® Secured Card - No Annual Fee

Annual fee

$0 For First Year

$0 Ongoing

Minimum Deposit

$200

APR

23.99% APR

Variable

This card has no annual fee, unlike OpenSky. It also features 2% cash back on up to $1,000 per quarter on gas and restaurant purchases and 1% on other spending. In addition, after eight months you may be eligible for an unsecured credit card, which you can’t do with OpenSky. These are great benefits that make the Discover it® Secured card a good alternative.

DCU Visa Platinum Secured from Digital FCU

Annual fee

$0 For First Year

$0 Ongoing

Minimum Deposit

$300

APR

12.50% APR

There is also no annual fee for this card, as well as no cash advance or balance transfer fees. The APR is lower than OpenSky, which is beneficial if you think you might carry a balance month to month. According to a DCU representative, the maximum credit limit is $2,000. However, it is determined by your overall creditworthiness. Also, you’ll need to be a member of Digital Federal Credit Union, which may be difficult to get into. You can learn about eligibility requirements here.

FAQ

No, OpenSky does not check your credit history. So any bad history you may have will not affect your approval odds.

A security deposit is the amount of money you deposit into your account and acts as collateral. It also becomes your line of credit. That means if you make a $1,000 security deposit, you’ll have a $1,000 credit line.

There are four options to make your security deposit.

  1. Debit card- Simply provide your debit card information on your application, and OpenSky will process your transaction right away.
  2. Wire transfer to Capital Bank

If you don’t have a checking account:

  1. Western Union
  2. Mail a check or money order

An email with instructions on how to fund your security deposit will be sent after your application has been approved. Note that, depending on the method of payment that you choose, it may take up to five business days for your security deposit to clear.

Additional reporting by Alexandria White

Sarah Li Cain
Sarah Li Cain |

Sarah Li Cain is a writer at MagnifyMoney. You can email Sarah Li here

TAGS:

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score

Advertiser Disclosure

Building Credit, Credit Cards, Earning Cashback, Reviews

QuicksilverOne Review: Unlimited 1.5% Cash Back for Average Credit

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.

For people with “average” or “fair” credit, Capital One offers QuicksilverOne Rewards. Every credit card issuer has a different definition of what “average” or “fair” credit means. Generally speaking, it means a FICO score between 580 and 669.

The QuicksilverOne Rewards card gives you an unlimited 1.5% cash back, which is a pretty sweet opportunity for consumers with less-than-perfect credit.

Just beware of the two catches: There’s a $39 annual fee and a high purchase APR.

QuicksilverOne® Rewards from Capital One

APPLY NOW Secured

on Capital One’s secure website

QuicksilverOne® Rewards from Capital One

Annual fee
$39 For First Year
$39 Ongoing
Cashback Rate
up to 1.5%
APR
24.99%

Variable

Credit required
fair-credit

Average

QuicksilverOne Card Overview

The QuicksilverOne Rewards program is low maintenance.

Unlike other programs with revolving categories and spending caps, this card doesn’t hold you to either. You will earn 1.5% cash back every time you swipe.

You can redeem cash back at any time for a check, account credit, or gift card. Cash back you earn never expires.

What We Like About This Card

No fuss.

We like that the cash back program terms are uncomplicated. There are no preset bonus categories that you have to adapt your spending to each month. You can also redeem cash back at any time without having to wait for the balance to reach a certain threshold.

Low credit score requirement.

The QuicksilverOne is one of the only cash back rewards cards around town for average credit. If you’re having trouble getting approved elsewhere, this is a card you need to seriously consider.

What We Don’t Like About This Card

The annual fee.

Since this card costs $39 per year, you need to spend at least $2,600 per year (or $217 per month) for the cash back to break even with the fee. Ideally, you’ll want to spend more than just the bare minimum for the rewards card to be worthwhile.

High APR.

This is a high interest rate. Avoid carrying a balance at all costs if you choose this card.

Who This Card Is Best For

Again, the QuicksilverOne is our top unlimited cash back pick for consumers who have trouble getting approved for other cash back cards.

According to Capital One, you may qualify for this card if:

  • You have defaulted on a loan in the past five years
  • You have limited credit history
  • You have had your own credit card or other credit for less than three years (this may include students, people new to the U.S., or authorized users on someone else’s credit card)

Keep in mind, these are just guidelines to give you a general sense of whether you’ll qualify. Your income, debt, and other credit limits are also factors used to make a decision.

Capital One has a nice feature where you can get preapproved online for offers without a hard credit inquiry. See if you prequalify for the QuicksilverOne card here.

Keep an eye out for the Quicksilver alternative while checking offers as well.

Quicksilver Rewards is the “big brother” of the QuicksilverOne card. It has no annual fee, and it’s for people with excellent credit. There’s no harm in checking to see if you prequalify for the Quicksilver card.

Is the QuicksilverOne card good for rebuilding credit?

Despite the lenient qualifying criteria, the QuicksilverOne card is not our top recommendation if you’re rebuilding credit, because of the annual fee.

Your focus should be keeping your credit utilization very low when rebuilding credit. You shouldn’t worry about having to earn enough cash back each month to cover a card’s annual fee.

Try a no-fee secured card like the Capital One Secured MasterCard or the Discover it Secured Credit Card instead.

QuicksilverOne Credit Card Benefits

QuicksilverOne offers:

  • Travel accident insurance and 24/7 roadside assistance. Travel insurance for death or loss of limbs. You can call in for help if your car breaks down.
  • Auto rental insurance. Insurance covers rental damage from collision or theft.
  • Extended warranty. Purchases made on your card will get an extended warranty.
  • Price protection. You can get reimbursed the difference if you find items you purchased on sale within 60 days.
  • Fraud coverage. Covered by $0 fraud liability if your card is lost or stolen.

Alternatives to the QuicksilverOne

QuicksilverOne doesn’t have much competition since it’s the best card for consumers with average credit. The following no-fee cash back cards officially require good to excellent credit but allow you to prequalify without a hard inquiry.

1.5% cash back, no fee

Chase Freedom Unlimited<sup>SM</sup>

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

1.5%

APR

14.24%-23.24%

The Chase Freedom Unlimited card gives you an unlimited 1.5% cash back on all spending without category restrictions or caps. What’s great about Chase is it’s another credit card issuer that lets you prequalify for offers without a hard pull. Check out offers you may prequalify for here.

You can redeem cash back from your Chase Freedom Unlimited card at any time, and cash back never expires as long as you keep your account open. At times there is an intro APR deal or cash back bonus offer that add benefits to this card, and ongoing rates are sometimes lower than what you’d see on the QuicksilverOne.

Double cash back, no fee

Citi® Double Cash Card

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

1% when you buy, 1% when you pay

APR

14.49%-24.49%

Variable

The Citi Double Cash card is another good choice for low-maintenance cash back rewards. It gives double cash back on all purchases. You earn 1% cash back when you spend on the card and another 1% cash back when you pay off the bill.

This is a card that members report qualifying for with a credit score in the high 600s. Citi lets you shop for prequalified offers on the website as well. If you’re interested in this card, see if you can get prequalified here. In addition, there are changing intro APR deals for this card that allow you to save interest early on, and ongoing interest rates are sometimes lower than with the QuicksilverOne.

Bottom Line

The QuicksilverOne Rewards is a good rewards card for those with average credit. If you have had difficulty being approved for other higher cash back rewards cards, you may be approved for the QuicksilverOne Rewards, which offers unlimited 1.5% cash back. Be aware that this card comes with an annual fee and high APR, so make sure to do your research and see if this card is right for you.

FAQ

You should not keep a balance on this credit card to benefit from the cash back. The high APR is a large amount of interest to be paying on purchases. If the interest charges you experience on this card coupled with the annual fee surpass the cash back you earn, this card is pointless.

No. You’re free and clear to spend money on anything, and it’ll earn 1.5% cash back. This is the beauty of an unlimited cash back card. However, cash advances and balance transfers will not qualify for cash back.

No, you can redeem cash back for any amount at any time.

No, cash back does not expire as long as your account remains open.

You can, but not with average credit. The QuicksilverOne card is the best unlimited cash back card there is specifically targeting people with fair credit. Another option you have is working to improve your credit first before applying for a credit card to qualify for a card that gives you more cash back.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor at taylor@magnifymoney.com

TAGS: ,

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score

Advertiser Disclosure

Best of, Credit Cards

Best Credit Cards for Bad Credit

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.

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

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

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

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

Check if You’re Pre-qualified

Before you apply for a credit card check if you’re pre-qualified from a variety of institutions. This does not hurt your credit score. Sites such as CreditCards.com provide good tools that can match you to offers from multiple credit card companies without impacting your credit score. This is a good first step when looking to apply for credit. You can read our complete guide to getting pre-qualified for a credit card here.

Build Credit with Secured Credit Cards

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

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

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

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

Discover it Secured Card

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

Build Credit with Secured Cards

Discover it® Secured Card - No Annual Fee

APPLY NOW Secured

on Discover’s secure website

Read Full Review

Discover it® Secured Card - No Annual Fee

Annual fee
$0 For First Year
$0 Ongoing
Minimum Deposit
$200
APR
23.99% APR

Variable

Credit required
zero-credit
No credit, 670 or less

Also Consider Also Consider

OpenSky Secured Visa

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

Read MagnifyMoney’s full Secured Credit Card Guide.

Our Credit Union Favorite

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

Georgia’s Own Visa Classic

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

Our Credit Union Favorite

Visa® Classic from Georgia's Own Credit Union

APPLY NOW Secured

on Georgia's Own Credit Union’s secure website

Read Full Review

Visa® Classic from Georgia's Own Credit Union

Annual fee
$0 For First Year
$0 Ongoing
APR
12.99%-17.99%
Credit required
bad-credit
Bad

Best for Cash: Personal Loans

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

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

LendingTree

LendingTree offers a one-stop tool that will recommend numerous personal loan offers. You can see offers from Avant, LendingClub, and more all in one place and in a matter of minutes. If you prefer to go directly to the lender’s site you can use one of the options listed below.

LendingTree

Loan Amount
up to $35,000
Term
up to 60 Months
APR Range
5.99%-35.99%
Origination Fee
Varies
Credit Required
Bad or Could be Better/Average/Good/Excellent
Soft Pull
You can get your rate without hurting your score.

Pros Pros

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

Cons Cons

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

Bottom line

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

Avant

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

APPLY NOW Secured

on Avant’s secure website

Avant

Loan Amount
up to $35,000
Term
up to 60 Months
APR Range
9.95%-35.99%
Origination Fee
0.95%-4.75%
Soft Pull
You can get your rate without hurting your score.

Pros Pros

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

Cons Cons

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

Bottom line

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

OneMain Financial

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

APPLY NOW Secured

on OneMain Financial’s secure website

OneMain Financial

Loan Amount
up to $25,000
APR Range
25.10%-36.00%
Origination Fee
No origination fee
Credit Required
Average/Good/Excellent

Pros Pros

  • Talk to a Loan Officer At OneMain you have the benefit of talking to a loan officer and explaining your personal situation. This is a positive experience that can help you explain anything that can’t be seen on an application.
  • Receive Money Same Day If you apply online before noon, you usually will receive the loan the same day. This is helpful if you need money quickly. After the loan is approved, you have 14 days to change your mind and return the loan proceeds. If you do that, you will not be responsible for any of the accrued interest.

Cons Cons

  • High Interest Rates Accrued Daily Even though the interest rates may be more reflective of your situation, they are still high. Interest accrues daily, which could add years to your loan if you don’t pay on time. Be sure to make your payments on time each month to avoid paying high interest rates.
  • Must Meet in Person You have to physically bring your paperwork into a OneMain branch after applying online. You will also have to complete an interview with a loan officer. This can be a tedious process if there is no OneMain branch located near you.
  • Must Borrow a Minimum of $1,500 Depending on how much cash you need, the $1,500 minimum may be too high if you only need a couple of hundred dollars. There is no maximum loan amount offered.
Bottom line

Bottom line

OneMain locations can be a good choice if you want to have your loan the day you apply. If you’re okay meeting someone in person and have the transportation to get to your closest branch, this may be an option worth exploring. Make sure you decide if this offer is right for you and if you need a loan over $1,500. Check to see if you’re pre-qualified for a better offer from other institutions.

Last Resort: Subprime Credit Cards

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

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

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

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

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

Bad Credit FAQs

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at brynne@magnifymoney.com

TAGS:

Advertiser Disclosure

Best of, College Students and Recent Grads, Credit Cards

Best Student Credit Cards August 2017

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.

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

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

Our Top Pick

Discover it® for Students

APPLY NOW Secured

on Discover’s secure website

Read Full Review

Discover it® for Students

Annual fee
$0 For First Year
$0 Ongoing
Cashback Rate
up to 5%
APR
13.99%-22.99%

Variable

Credit required
zero-credit
New to Credit

Best for Commuter Students

Discover it® chrome for Students

APPLY NOW Secured

on Discover’s secure website

Read Full Review

Discover it® chrome for Students

Annual fee
$0 For First Year
$0 Ongoing
Cashback Rate
up to 2%
APR
13.99%-22.99%

Variable

Credit required
fair-credit
Fair Credit, New to Credit

Best Flat-Rate Card

Journey Student Credit Card from Capital One

APPLY NOW Secured

on Capital One’s secure website

Read Full Review

Journey Student Credit Card from Capital One

Annual fee
$0 For First Year
$0 Ongoing
Cashback Rate
up to 1.25%
APR
24.99%

Variable

Credit required
fair-credit

Average Credit

Best Intro Bonus

Wells Fargo Cash Back College℠ Card

Annual fee
$0 For First Year
$0 Ongoing
Cashback Rate
up to 3%
APR
11.90%-21.90%

Variable

Credit required
fair-credit
Fair Credit

Best Credit Union Card

Altra Federal Credit Union Student Visa

APPLY NOW Secured

on Altra’s secure website

Read Full Review

Altra Federal Credit Union Student Visa

Annual fee
$0 For First Year
$0 Ongoing
APR
14.90%

Fixed

Credit required
zero-credit
New to Credit

Also Consider Also Consider

Golden 1 Credit Union Platinum Rewards for Students:

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

What should I look for in a student credit card?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How did the CARD Act change student credit cards?

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

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

How can I protect myself from racking up debt?

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

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

How can I automate my credit card usage?

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

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

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

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

What happens to my student credit card when I graduate?

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

First, you can simply keep it. You will want to keep the credit card open, because it helps you build a long credit history. However, you might want to call your credit card company and ask if you can migrate to a standard (non-student) credit card.

But if you have been using your credit card properly, you will have an excellent credit score when you graduate – and you will be able to get any credit card that you want.

Here is a summary of our favorite cards:

Credit cards
Best for
Lindsay VanSomeren
Lindsay VanSomeren |

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

TAGS:

Advertiser Disclosure

Building Credit, Credit Cards, Earning Cashback

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

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.

Discover it Secured Credit Card Review

Updated August 1, 2017

Discover offers the Discover it® Secured Card – No Annual Fee for people who are looking to build credit and establish good credit history. Secured credit cards are an excellent way to build your credit with responsible use. With this product, Discover has created one of the best secured cards on the market. You do need to make a security deposit of $200 or more to establish your credit line (up to the amount that Discover can approve). 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 card is clearly one of the best no fee secured credit cards available.

Learn More

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 security deposit of at least $200. If you want a bigger limit, you will have to make a bigger deposit.

Automatic monthly reviews starting at 8 months: After just eight months, Discover will start monthly automatic reviews of your account to see if you can be transitioned to an account with no security deposit. With an 8-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 combined purchases each quarter). Plus, get 1% cash back on all your other purchases. 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.

Monitor Your Social Security Number: Discover will monitor your Social Security Number and alert you if they find your Social Security Number on any of thousands of risky websites. Activate for FREE. This is a great feature that will help alert you of possible fraud.

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

LearnMore

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 card is best for those with no credit, or scores of 670 or less.

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.

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

Go to site

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, 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.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

TAGS: , ,

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score

Advertiser Disclosure

Credit Cards, Featured, News

Average Household Credit Card Debt in America: 2017 Statistics

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.

Even as household income and employment rates are ticking up in the U.S., credit card balances are approaching all-time highs. What’s behind the growth of credit card spending among consumers? In a new report on credit card debt in America, MagnifyMoney analyzed credit debt trends in the U.S. to find out exactly how much credit debt consumers are really taking on and, crucially, how they are managing their growing reliance on plastic.

Key Findings:

  • While credit balances are increasing, the amount of debt that households are carrying from month to month is actually much lower than it was leading up to the 2008 financial crisis. As of December 2016, households with credit card debt owed an average of $7,703, down 27.2% compared to October 2008, when household credit card debt peaked at $10,588.
  • Credit card balances and credit card debt are not the same thing. The 73 million Americans who pay their bill in full each month have credit card balances reported to the major credit reporting bureaus.
  • Assessing financial health means focusing on credit card debt trends rather than credit card use trends.

Credit Card Debt in the U.S. by the Numbers

Credit Card Use

Number of Americans who use credit cards: 203 million1

Average number of credit cards per consumer: 2.22

Number of Americans who carry credit card debt: 127 million3

Credit Card Debt

The following figures only include the credit card balances of those who carry credit card debt from month to month.

Total credit card debt in the U.S.: $504 billion4

Average credit card debt per person: $3,9715

Average credit card debt per household: $7,7036

Credit Card Balances

The following figures include the credit card statement balances of all credit card users, including those who pay their bill in full each month.

Total credit card balances: $764 billion as of January 2017, an increase of 7.3% from the previous year.7

Average balance per person: $5,5518

Who Pays Off Their Credit Card Bills?

42% of households pay off their credit card bills in full each month

31% of households carry a balance all year

27% of households sometimes carry a balance10

Understanding Household Credit Card Balances vs. Household Debt

At first glance, it may seem that Americans are taking on near record levels of credit debt. Forty-two percent of American households11 carry credit card debt from month to month, and, if you look at the total credit card balances among U.S. households, the figure appears astronomical — $764 billion. But that figure includes households that are paying their credit debt in full each month as well as those that are carrying a balance from month to month.

While credit balances are increasing, the amount of debt that households are carrying from month to month is actually much lower than it was leading up to the 2008 financial crisis. The total of credit card balances for households that actually carry debt from month to month is $504 billion.

As of the first quarter of 2017, households with credit card debt owed an average of $7,703.3 That is a decrease of 27.2% compared to October 2008, when household credit card debt peaked at $10,588.12b

And as household incomes have risen in recent years, this has helped to lower the ratio of credit card debt to income. Today, indebted households with average debt and median household incomes have a credit card debt to income ratio of 14.9%.13 Back in 2008, the ratio was 19.1%.

Credit Card Debt per Person

Once we adjust for these effects, we see that an estimated 127 million Americans carry $503 billion of credit card debt from month to month. Back in 2008, 7 million fewer Americans carried debt, but total credit card debt in late 2008 hovered around $631 billion.16 That means people with credit card debt in 2008 had more debt than people with credit card debt today.

Average credit card debt among those who carry a balance today is $3,970 per person2 or $7,703 per household.3 Back in 2008, credit card debtors owed an average of 28.6% more than they do today. In late 2008, the 115 million17 Americans with credit card debt owed an average of $5,567 per person12a or $10,689 per household.12b

Delinquency Rates

Credit card debt becomes delinquent when a bank reports a missed payment to the major credit reporting bureaus. Banks typically don’t report a missed payment until a person is at least 30 days late in paying.

In the second quarter of 2009, delinquency rates were 6.77%, nearly three times higher than they are today. Today, credit card delinquency rates among U.S. households are down to 2.34%.14

Credit card debt is well below recession levels, but balances continue inching upward. In the last year, overall credit card balances rose 7.3% to $764 billion.

Our Method of Calculating Household Credit Card Debt

Credit card debt doesn’t appear on the precipice of disaster, but the recent growth in balances is cause for some concern. Still, our estimates for household credit card debt remain modest.

In fact, MagnifyMoney’s estimates of household credit card debt is two-thirds that of other leading financial journals. Why are our estimates comparatively low?

A common estimate of household credit card debt is:

This method overstates credit card debt. The Federal Reserve Bank of New York/Equifax Consumer Credit Panel (CCP) does not release a figure called credit card indebtedness. Instead, they release a figure on national credit card balances. Representatives of the Federal Reserve Bank of New York and the Philadelphia Federal Reserve Bank both confirmed that the CCP includes the statement balances of people who go on to pay their bill in full each month.

To find a better estimate of credit card debt, we found methods to exclude the statement balances of full paying households from our credit card debt estimates. Statement balances are the balances owed to a credit card company at the end of a billing cycle. Even though full payers pay off their statement balance each month, their balances are included in the CCP’s figures on credit card balances.

To exclude full payer balances, we turned to academic research outside of the Federal Reserve Banks. The paper, Minimum Payments and Debt Paydown in Consumer Credit Cards, by Benjamin J. Keys and Jialan Wang, found full payers had mean statement balances of $3,412. We used this figure, multiplied by the estimated number of full payers to find the statement balances of full payers.

Our credit card debt estimate is:3

Credit Card Debt: Do We Know What We Owe?

Academic papers, consumer finance surveys, and the CCP each use different methods to measure average credit card debt among credit card revolvers. Since methodologies vary, credit card debt statistics vary based on the source consulted.

MagnifyMoney surveyed these sources to present a range of credit card debt statistics.

Are We Paying Down Credit Card Debt?

A Pew Research Center study25 showed that Americans have an uneasy relationship with credit card debt. More than two-thirds (68%) of Americans believe that loans and credit card debt expanded their opportunities. And 85% believe that Americans use debt to live beyond their means.

Academic research shows the conflicting attitude is justified. Some credit card users aggressively pay off debt. Others pay off their bill in full each month.

However, a substantial minority (44%)26 of revolvers pay within $50 of their minimum payment. Minimum payers are at a high risk of carrying unsustainable credit card balances with high interest.

In fact, 14% of consumers have credit card balances above $10,000.27 At current rates, consumers with balances of $10,000 will spend more than $1,386 per year on interest charges alone.28

Minimum Payments and Debt Paydown in Consumer Credit Cards29

Even an average revolver will spend between $54530 and $55631 on credit card interest each year.

Credit Debt Burden by Income

Those with the highest credit card debts aren’t necessarily the most financially insecure. According to the Survey of Consumer Finances, the top 10% of income earners who carried credit card debt had nearly twice as much debt as average.

However, people with lower incomes have more burdensome credit card debt loads. Consumers in the lowest earning quintile had an average credit card debt of $3,000. However, their debt-to-income ratio was 21.7%. On the high end, earners in the top decile had an average of $11,200 in credit card debt. But debt-to-income ratio was just 4.9%.

Although high-income earners have more manageable credit card debt loads on average, they aren’t taking steps to pay off the debt faster than lower income debt carriers. In fact, high-income earners are as likely to pay the minimum as those with below average incomes.32 If an economic recession leads to job losses at all wage levels, we could see high levels of credit card debt in default.

Generational Differences in Credit Card Use

  • Boomer consumers carry an average credit card balance of $6,889.
  • That is 24.1% higher than the national average consumer credit card balance.34
  • Millennial consumers carry an average credit card balance of $3,542.
  • That is 36.1% lower than the median consumer credit card balance.35

With average credit card balances of $6,889, baby boomers have the highest average credit card balance of any generation. Generation X follows close behind with average balances of $6,866.

At the other end of the spectrum, millennials, who are often characterized as frivolous spenders who are too quick to take on debt, have the lowest credit card balances. Their median balance clocks in at $3,542, 36.1% less than the national median.

Better Consumer Behavior Driving Bank Profitability

You may think that lower balances spell bad news for banks, but that isn’t the case. Credit card lending is more profitable than ever thanks to steadily declining credit card delinquency. Credit card delinquency is near an all-time low 2.34%.14

Despite better borrowing behavior, banks have held interest on credit cards steady between 13% and 14%37 since 2010. Today, interest rates on credit accounts (assessed interest) is 13.86%. This means bank profits on credit cards are at all-time highs. In 2015, banks earned over $102 billion dollars from credit card interest and fees.38 This is 15% more than banks earned in 2010.

How Does Your State Compare?

Using data from the Federal Reserve Bank of New York Consumer Credit Panel and Equifax, you can compare median credit card balances and credit card delinquency. You can even see how each generation in your state compares to the national median.

Footnotes:

  1. Source: Survey of Consumer Expectations, © 2013-2015 Federal Reserve Bank of New York (FRBNY). “The SCE data are available without charge at www.newyorkfed.org and may be used subject to license terms posted there. FRBNY disclaims any responsibility or legal liability for this analysis and interpretation of Survey of Consumer Expectations data.”The June 2016 Survey of Consumer Expectations shows 76.1% of people with credit reports had balances on credit cards. The May 2017 Report on Household Debt and Credit showed 267 million adults with credit reports. For a total of 203 million credit card users.
  2. May 2017 Report on Household Debt and Credit, Page 4, Q1 2017, 453 million credit card accounts. 453 million credit card accounts / 203 million credit card users1 = 2.2 credit cards per person.
  3. The 2015 Report on the Economic Well-Being of U.S. Households reports 58% of credit card users carried a balance in 2015. 203 million1 * 58% = 118 million people with credit card debt.Minimum Payments and Debt Paydown in Consumer Credit Cards by Benjamin J. Keys and Jialan Wang shows that 67% of credit card users were not “full payers.” This results in a high estimate of 136 million people with credit card debt.Average estimate is 127 million with credit card debt.
  4. Using data from the 2015 Report on the Economic Well-Being of U.S. Households, 203 million credit card users * (58% not full payers) * $4,011 per individual5 = $472 billion in credit card debt.Using data from Minimum Payments and Debt Paydown in Consumer Credit Cards by Benjamin J. Keys and Jialan Wang, we calculate 203 million credit card users * (67% not full payers) * $3,930 per individual5 = $535 billion in credit card debt.Average estimated total credit card debt is $504 billion.
  5. The May 2017 Report on Household Debt and Credit shows $764 billion in outstanding credit card debt. Table A-1 in Minimum Payments and Debt Paydown in Consumer Credit Cards by Benjamin J. Keys and Jialan Wang shows an average balance of $3,412 for “full payers.” Using their estimate of 33% full payers, we calculate:[$764 billion – ($3,412 (full payer balance) * 33% full payer * 203 million credit card users1)] / (203 million credit card users * (100% – 33% not full payers)) = $3,930Using their estimate of 42% full payers, from the 2015 Report on the Economic Well-Being of U.S. Households and the $3,412 full payer balance from Table A-1 in Minimum Payments and Debt Paydown in Consumer Credit Cards by Benjamin J. Keys and Jialan Wang, we calculate:[$764 billion – ($3,412 (full payer balance) * 42% full payer * 203 million credit card users1)] / (203 million credit card users * (100% – 42% not full payers)) = $4,011Average estimated credit card debt per person is $3,971.
  6. Average per person credit card is $3,9715 and the average household contains 1.94 adults over the age of 18. $3,971 * 1.94 = $7,703.
  7. May 2017 Report on Household Debt and Credit, Compare Q1 2016 to Q1 2017, outstanding credit card debt (Page 10).
  8. May 2017 Report on Household Debt and Credit, Page 3, Q1 2017, credit card debt $764 billion / 203 million1 = $3,759.
  9. 2016 State of Credit Report” National 2016 Average Balances on Credit Cards, Experian,Accessed May 24, 2017. National Balance on Bankcards- average of $5,551.
  10. Page 30, 2015 Report on the Economic Well-Being of U.S. Households.
  11. 2013 Survey of Consumer Finances reports 37.1% of U.S. households carry credit card debt. There are 125.82 million U.S. households.Meta Brown, Andrew Haughwout, Donghoon Lee, and Wilbert van der Klaauw reported that 46.1% of U.S. households carried a balance the month prior to the Survey of Consumer Finances.Between 48 million14 and 58 million15 households carry credit card debt. Using the average of the two estimates, we believe 53 million households out of 125.82 million households carry credit card debt.
  12. a. CCP data shows 76.6% of people with credit reports had balances on credit cards in September 2008. The May 2017 Report on Household Debt and Credit showed 240 million adults with credit reports in Q3 2008. For a total of 183 million credit card users.The May 2017 Report on Household Debt and Credit shows $866 billion in outstanding credit card debt in Q3 2008. Table A-1 in Minimum Payments and Debt Paydown in Consumer Credit Cards by Benjamin J. Keys and Jialan Wang shows an average balance of $3,412 for “full payers.” Using their estimate of 33% full payers, we calculate:[$866 billion – ($3,412 (full payer balance) * 33% full payer * 183 million credit card users)] / (183 million credit card users * (100% – 33% not full payers)) = $5,365U.S. Census Bureau, Survey of Income and Program Participation, 2008 Panel, Wave 4shows 44.5% of all households with a credit report have credit card debt. Using this along with the $3,412 full payer balance from Table A-1 in Minimum Payments and Debt Paydown in Consumer Credit Cards by Benjamin J. Keys and Jialan Wang, we calculate:[$866 billion – ($3,412 (full payer balance) * (100% – 44.5%) full payer * 240 million people with credit reports)] / (240 million people with credit reports * (44.5% not full payers)) = $5,769Average estimated credit card debt per person is $5,567.b. Average per person credit card is $5,56712 and in 2008, the average household contained 1.92 adults over the age of 18. $5,567 * 1.92 = $10,689.
  13. U.S. Bureau of the Census, Real Median Household Income in the United States [MEHOINUSA672N], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MEHOINUSA672N, March 17, 2017.
  14. Board of Governors of the Federal Reserve System (US), Delinquency Rate on Credit Card Loans, All Commercial Banks [DRCCLACBS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/DRCCLACBS, March 16, 2017.
  15. Statement balances are the balances owed to a credit card company at the end of a billing cycle. Full payers will pay off the entirety of their statement balance each month. Finding an estimate of full payers’ statement balances was not an easy task. The Federal Reserve Bank of New York does not provide estimates of full payers compared to people who carry a balance.In order to get our estimates, we turned to academic research outside of the Federal Reserve Banks. In the paper, Minimum Payments and Debt Paydown in Consumer Credit Cards by Benjamin J. Keys and Jialan Wang, we found robust estimates of the statement balances of “full payers.” According to their analysis (see Table 1-A), full payers had mean statement balances of $3,412 (when summarized across all credit cards) before they went on to pay off the debt.We multiplied $3,412 by the estimated number of full payers to get the estimated balances of full payers.
  16. CCP data shows 76.6% of people with credit reports had balances on credit cards in September 2008. The May 2017 Report on Household Debt and Credit shows 240 million adults with credit reports in Q3 2008. For a total of 183 million credit card users.The May 2017 Report on Household Debt and Credit shows $866 billion in outstanding credit card debt in Q3 2008. Table A-1 in Minimum Payments and Debt Paydown in Consumer Credit Cards by Benjamin J. Keys and Jialan Wang shows an average balance of $3,412 for “full payers.” Using their estimate of 33% full payers, we calculate:$866 billion – ($3,412 (full payer balance) * 33% full payer * 183 million credit card users) =$659 billionU.S. Census Bureau, Survey of Income and Program Participation, 2008 Panel, Wave 4shows 44.5% of all households with a credit report have credit card debt. Using this along with the $3,412 full payer balance from Table A-1 in Minimum Payments and Debt Paydown in Consumer Credit Cards by Benjamin J. Keys and Jialan Wang, we calculate:$866 billion – ($3,412 (full payer balance) * (100% – 44.5%) full payer * 240 million people with credit reports) = $587 billionEstimated credit card debt is $623 billion.
  17. Source: Survey of Consumer Expectations, © 2013-2015 Federal Reserve Bank of New York (FRBNY). “The SCE data are available without charge at www.newyorkfed.org and may be used subject to license terms posted there. FRBNY disclaims any responsibility or legal liability for this analysis and interpretation of Survey of Consumer Expectations data.”The June 2016 Survey of Consumer Expectations Shows 76.1% of the adult population uses credit cards. The May 2017 Report on Household Debt and Credit shows 267 million adults with credit reports. For a total of 203 million credit card users. Page 30, 2015 Report on the Economic Well-Being of U.S. Households shows that 58% of households with credit cards sometimes or always carry a balance.203 million * 58% = 118 million people with credit card debt
  18. Source: Survey of Consumer Expectations, © 2013-2015 Federal Reserve Bank of New York (FRBNY). “The SCE data are available without charge at www.newyorkfed.org and may be used subject to license terms posted there. FRBNY disclaims any responsibility or legal liability for this analysis and interpretation of Survey of Consumer Expectations data.”The June 2016 Survey of Consumer Expectations Shows 76.1% of the adult population uses credit cards. The May 2017 Report on Household Debt and Credit shows 267 million adults with credit reports. For a total of 203 million credit card users. Minimum Payments and Debt Paydown in Consumer Credit Cards by Benjamin J. Keys and Jialan Wang shows that 67% of credit card users were not “full payers.”203 million * 67% = 136 million people with credit card debt
  19. The 2013 Survey of Consumer Finances reports 37.1% of U.S. households carry credit card debt. There are 125.82 million U.S. households.
  20. Meta Brown, Andrew Haughwout, Donghoon Lee, and Wilbert van der Klaauw reported that 46.1% of U.S. households carried a balance the month prior to the Survey of Consumer Finances.
  21. The 2013 Survey of Consumer Finances reports a median credit card debt of $2,300 per household with credit card debt.
  22. Meta Brown, Andrew Haughwout, Donghoon Lee, and Wilbert van der Klaauw used CCP data and determined a more realistic median credit card debt of $3,500 per household. Two-person households systematically underreported their debt.
  23. The 2013 Survey of Consumer Finances reports a median credit card debt of $5,700 per household with credit card debt.
  24. Meta Brown, Andrew Haughwout, Donghoon Lee, and Wilbert van der Klaauw used CCP data and determined a more realistic average credit card debt of $9,600 per household.
  25. The Complex Story of American Debt, Page 9.
  26. Table 1 in Minimum Payments and Debt Paydown in Consumer Credit Cards.
  27. Recent Developments in Consumer Credit Card Borrowing.
  28. Board of Governors of the Federal Reserve System (US), Commercial Bank Interest Rate on Credit Card Plans, Accounts Assessed Interest [TERMCBCCINTNS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/TERMCBCCINTNS, June 6, 2017.February 2017 interest rate on accounts assessed interest 13.86%: $10,000 * 13.86% = $1,386.
  29. Table 1 in Minimum Payments and Debt Paydown in Consumer Credit Cards.
  30. $3,9312 * 13.86%28 = $545
  31. $4,0112 * 13.86%28 = $556
  32. Minimum Payments and Debt Paydown in Consumer Credit Cards.
  33. 2013 Survey of Consumer Finances.
  34. 2016 State of Credit Report” National 2016 Average Balances on Credit Cards, Experian,Accessed May 24, 2017. Average credit card balance for baby boomers is $6,889 compared to a national average of $5,551.
  35. 2016 State of Credit Report” National 2016 Average Balances on Credit Cards, Experian,Accessed May 24, 2017. Average credit card balance for millennials is $3,542 compared to a national average of $5,551.
  36. Board of Governors of the Federal Reserve System (US), Commercial Bank Interest Rate on Credit Card Plans, Accounts Assessed Interest [TERMCBCCINTNS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/TERMCBCCINTNS, June 6, 2017.
  37. U.S. Bureau of the Census, Sources of Revenue: Credit Card Income from Consumers for Credit Intermediation and Related Activities, All Establishments, Employer Firms [REVCICEF522ALLEST], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/REVCICEF522ALLEST, March 17, 2017.
  38. CCP data shows 76.6% of people with credit reports had balances on credit cards in September 2008. The May 2017 Report on Household Debt and Credit shows 240 million adults with credit reports in Q3 2008. For a total of 183 million credit card users.The May 2017 Report on Household Debt and Credit, Page 3, Q3 2008, credit card debt $886 billion / 183 million = $4,720
  39. State Level Household Debt Statistics 1999-2016, Federal Reserve Bank of New York, May, 2017. All average credit card debt balances are calculated using the following formula:(Total Credit Card Balancea – Balance of Population Not Carrying Debtb) / Population Carrying Credit Card Debtc
    1. Total Credit Card Balance = (Average Credit Card Debt Per Capita * Population)
    2. Balance of Population Not Carrying Debt = Average Credit Card Debt Per Capita * Population * % of Population Using a Credit Card
    3. Population * % of Population Using a Credit Card * (1 – .375)
  40. State Level Household Debt Statistics 1999-2016, Federal Reserve Bank of New York, May, 2017.
  41. Data from Consumer Credit Explorer.
Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah at hannah@magnifymoney.com

TAGS: