Difference Between Debit Cards and Credit Cards Explained

Businessman in suit and glasses giving credit card to woman

At first glance, it may seem like a silly question. Debit cards allow you to, you know… debit stuff. Credit cards, on the other hand, offer you, um… credit.

Yeah, it’s not such a silly question after all – especially if you’re trying to decide when to use which option. So we’re going to take a moment to consider the benefits and potential pitfalls of each, along with some specific “compare and contrast” along the way. Debit cards and credit cards both have their uses and advantages. But like any financial tool, it’s all about how they’re used.

Difference Between Debit Cards and Credit Cards

Debit cards and credit cards certainly LOOK the same. They’re the same size, have the same 16-digit numbers across the front, many of the same logos and designs. And they fit into the same little machines the same basic way. In the past year, it’s certainly felt like they both require swiping when you try to insert them chip-first. And either one requires inserting chip-first if you try to swipe!

And to be fair, debit cards were largely designed to look and in many ways operate like credit cards. Or at least to be usable anywhere you could use a credit card. That’s part of what makes them so convenient. Just to muddy the waters further, more debit cards are trying to incorporate some of the advantages of credit cards, and vice versa. No wonder it’s easy to get confused!

Still, it’s probably worth taking a step back and considering some of the important ways in which debit cards and credit cards are fundamentally different. Many may seem obvious to you, but others you may not have thought about recently. Let’s start with the biggie…

Debit vs. Credit: The “Debit” Part

The most important difference between debit cards and credit cards, not surprisingly, is where the money comes from. While we like to pretend that anything we pay for with plastic is somehow “free,” that is of course not the case.

Your debit card is tied to your checking account. It was originally designed to replace or supplement the fading practice of writing checks. It was a win-win for customers and businesses alike. It’s much easier to use the little card with your information already magically encoded in that funny strip on the back than to mess with writing out a paper check. With a debit card, you get a receipt; with a check, you’d get a carbon – or maybe not even that. For businesses, once the card is processed, if it’s approved, it’s approved. The money is instantly debited from your account – hence the name. The deal is done, with no danger the money will somehow go away after you leave. With a check, there’s always the possibility it will bounce and the merchant will be stuck trying to track you down to make good on it.

Because a debit card is essentially a “check” streamlined into credit card form, it’s pretty difficult to spend more than you have in the bank. How much you can spend is dictated by how much you have in the bank. Sure, you may have overdraft protection or some arrangement by which your savings account acts as a backup for your checking, but even in those cases, you’re paying immediate penalties in addition to funds being taken out of your account to pay the merchant or other service. There’s no telling yourself you’ll pay it back later, over time, etc. That’s simply not how they work.

Debit Card Limit

The flip side of this, of course, is that if you don’t have the money to pay for something, you don’t have the money. You can’t have it, whether it’s yet another pair of shoes or penicillin from grandma. You pay zero interest on purchases with your debit card because interest is the cost of borrowing money, and you’re not borrowing – you’re spending.

Debit vs. Credit: The “Credit” Part

Credit cards, on the other hand, offer exactly what the name implies – credit. How much you can spend is dictated by your credit score and credit history, particularly your credit history with that specific card. The longer you have a card without defaulting completely on your payments, the higher they’ll nudge up your spending limit, even if your balance has never ever actually gotten lower no matter how long you’ve been paying.

Every time you use your credit card, you’re taking out a loan. It’s a revolving loan, meaning that as you pay it back, the money becomes available to you again to borrow on the same terms. This is an amazingly flexible source of financing. But you pay for that convenience with relatively high-interest rates compared to other types of loans. The exception, of course, is if you pay your balance in full each month. You pay no interest that way because your payment is so timely, it’s like you’re not actually borrowing.

Credit Card Balance

In other words, people like my wife who pay their credit card balance in full every month are essentially using it like a debit card – one with a 30-day delay between using the money and the funds coming out of their account. Why would they bother if there’s little difference between debit cards and credit cards when used this way? Because going cashless is an easy way to keep track of your spending and take advantage of the protections and rewards of a credit card without paying credit card interest rates.

You don’t normally hear about people working themselves into despair trying to conquer debit card debt. I’m pretty sure that would be impossible. On the other hand, debit cards are limited to what you actually have available right this moment. They’re far less dangerous because they’re far less flexible. You may recall Uncle Ben’s warning to Spiderman – the one about “with great power comes great responsibility”? He could easily have been talking about the difference between debit cards and credit cards.

I mean, probably not – but he has shot right afterward, so you can’t exactly prove me wrong. Plus, he was fictional, so I have that in my favor as well.

Other Benefits to Debit Cards (There Are A Few!)

Debit cards are by design fairly “no frills,” which is in fact their primary benefit. There are a few other advantages worth considering, however.

The biggest is probably the ease of withdrawing cash from your checking account or any connected accounts and pretty much any ATM in the universe. Those outside your bank’s network may charge you a few dollars to do so, but it’s pretty hard to find a town so small that there’s not at least one automated teller tucked away somewhere. In any city large enough to have a few chain stores, it seems like they’re on every corner and in every convenience store.

Sure, easy access to cash can be a temptation, but it’s not so different than using your debit card directly. And you can’t out more than you have in your account, minus whatever overdraft arrangements you pay a hefty fee for with your bank or credit union.

Taking Cash From Credit Cards is a Bad Idea

Most credit cards allow you to take out cash as well, but it’s almost universally a horrible idea. That’s not what they were created to do, and they’re not very good at it. The fees tend to be high, and the interest rates on cash withdrawals are usually brutal – almost like they’re punishing you for not coming up with a better plan. You should be well informed about credit cards before you take one of them.

You’re better off taking out a personal loan of some sort if you really need the cash. Or sell plasma or your old comic book collection. Better yet, suggest your significant other sells THEIR plasma and collectibles. If they really love you, they’ll do it. But there are few if any situations in which taking out a cash advance on a traditional credit card is a good plan.

The only other advantage sometimes cited is that you’re rarely asked to sign a screen these days when using your debit card. More typically, all you have to do is enter your 4-digit PIN and you’re good to go.

Other Benefits to Credit Cards (There are Several!)

There are so many types of credit cards these days. It’s difficult to discuss them collectively without acknowledging that everything I’m about to say as several exceptions out there. In general, however, there are some important distinctions between debit cards and credit cards when it comes to the frills and features.

I mentioned a moment ago that withdrawing cash on your credit card is a horrible idea, and it is. So is spending beyond your actual limit compared to your allowed-by-the-issuing-card-company limit. Just because they’ll let you use up to $12,000 or whatever doesn’t mean you should ignore your perfectly clear budget and start spending with plastic because the card company says so. They’re not necessarily evil or anything, but they probably have different priorities than you do. Let’s just leave it at that for now, shall we?

Planes, Trains, and Amazon

Long-distance transactions, on the other hand, or charges in which the final total can’t be determined upfront, are great times to use a credit card. When you’re booking a flight, reserving a hotel, or renting a vehicle, you’ll definitely want to use a good old-fashioned credit card. Part of this is convenience. You may have noticed when you check in to a hotel, you asked to provide a credit card for “incidentals.” This is the hotel’s way of covering any pay-per-view movies your kids watch after you go to sleep, any stuff you “accidentally” take with you from the room, or potential damages if you go all “rock star” and start breaking things.

Even if you don’t end up incurring extra charges, a “hold” goes on your card for some predetermined amount – $50 or $100 is typical. On a credit card, this is no big deal. You’ll probably never notice it happened. With a debit card, however, that preset amount is “claimed” until they’re sure they don’t need to charge you. At that point, those funds go back into your available balance. But it’s not always immediate and it can be quite inconvenient if you need access to those dollars.

The PIN-less and the Fraud

Credit card fraud is becoming common and you must be very careful. Most credit cards come with pretty decent “fraud protection” as well. Doing business online or over the phone is inherently risky. Although, it’s a minimal risk, it’s still higher than walking into your local merchant and paying cash. And we’ve all heard the horror stories about stolen identities and credit card numbers on the “dark web” and all that. And of course, there are always the classic “lost or stolen” scenarios as well.

As long as you act in good faith and report any problems as quickly as possible to the issuing company, most cards offer you pretty thorough coverage. Your local bank or credit union will no doubt try to do right by you as well if something happens with your debit card or checking account. But it’s a very different problem when the actual cash has already been removed from your account in some form or another than when those same numbers show up on a credit card statement you haven’t paid yet.

Credit Card fraud protection tips

Cash Back, Miles, Points, and Other “Rewards”

There’s no end to the varieties of “rewards” programs out there on various credit cards. Which ones appeal to you, or whether any of them do, depends on your spending habits and personal preferences. They are, so far, specific to credit cards, however.

While nothing’s impossible, it would be difficult for debit cards to offer anything comparable because debit cards make very little money from your using them. They’re convenience so you’ll do business with your chosen bank or credit union. Credit cards, on the other hand, make a fortune off of your spending, meaning (a) intense competition between card companies and endless efforts to make THEIR card stand out from all the others.

Before taking out a new credit card, you should avail yourself of one of our online tools to compare various card features. And gather the relevant credit card information for yourself. I could tell you what I like, but in this case, that’s not all that helpful. As with so many things, we’re here to provide information and connections. The actual decisions are entirely up to you. I WOULD suggest you actively seek out the information you’re interested in and proactively make your decision. If you find yourself tempted by some random offer you’ve received online or in the mail, at least make sure you ask the right questions before choosing convenience over careful consideration.

Giving Yourself Some Credit

There’s one last benefit to using a credit card, at least periodically. Because credit cards are a type of loan, making regular payments on your balance(s) helps build or rebuild your credit. You probably don’t want to buy stuff just to build a credit history. But if you’re making a medium-sized purchase anyway and know you can handle the payments, you might consider charging it.

The stronger your credit score, the better the terms available to you down the road. The more positive credit history you build, the easier it is for you to borrow for the important stuff – homes, automobiles, vacations, weddings, etc. – at much better rates in the future. Debit cards are wonderful because they don’t let you go in debt by using them. But because they’re not a form of debt, they don’t impact your credit score one way or the other.

Conclusion

You may choose to have only one credit card and use it sparingly. You might opt to have several and use different cards for different purposes. Also, you don’t necessarily have to choose. Although, very few people have good reason to need more than a couple of credit cards at any one time. In the end, though, it’s your call what combination of debit cards and credit cards you wish to carry.

The most common way to get a debit card is through your local bank or credit union, or wherever you have a checking account. That same local bank or credit union no doubt offers several credit card options as well. Unlike debit cards, however, you can apply for credit cards from dozens of different places. And yes, we’re one of those places.

Don’t worry – I’m not pushing a credit card offer on you. We don’t even issue them. What we do have, however, is a carefully curated database of reputable online institutions which do, and with whom we’ve arranged to connect some of our favorite customers if they so choose. Because of the low overhead and nationwide reach possible with the internet, the rates and terms are surprisingly competitive.

You know we’re here if you need us. Now, go make great financial choices!

How to Find Credit Cards With No Annual Fee?

Credit cards can be a tricky subject. They can be a great financial tool to help you on your way to financial freedom. They can also be the fastest way to send yourself in a debt spiral and you may not be able to get out. It is really easy to use your credit card without any real knowledge about how it is impacting you. The best thing you can do is truly understand how credit cards work for you and against you. When you have a better understanding of how credit cards work, you can use them to your benefit. Armed with knowledge, you can look for the right credit card for you, including credit cards with no annual fee. Continue reading to find out more credit card information.

The Basics Of A Credit Card

I always like to start at the beginning with the most basic elements. After all, how can you find a credit card with no annual fee that is right for you if you do not understand the basics of a credit card. If you begin using a credit card without really understanding how it works, you are setting yourself up for financial disaster. How about you make a promise to yourself right now not to set yourself on a path for disaster?

The basic premise behind credit cards is the same. Some credit cards offer different promotions and the fees may vary. There are also credit cards with no annual fee. A credit card is literally a plastic card that is backed by a bank or something other financial institution. When you are given a credit card, it has a credit limit. This is called revolving credit. For purposes of this article, I will say you are given a credit card with a limit of $2,000. That means that you have $2,000 at your disposal to use how you want.

The catch is you have to pay back whatever you use in about 30 days. If you do not pay the full amount back, you are charged interest. The bank gives you a minimum amount that you have to pay each month. It is a percentage of how much you have used. The more credit you use that means the higher your minimum payment is. Whatever money you pay back, you have available for your use. That is why it is called revolving credit.

The Basics In Numbers

To illustrate, I will show you this example with numbers:

$2,000 available credit

You spend $500.

You now have $1,500 available credit

In 30 days, you have a minimum payment of $75. That means you have to pay at least $75. You pay $500.

Your available credit is now $2,000.

Same example, except you only pay $300. Your available credit is up to $1,800 and you have to pay interest on what you did not pay. If your credit card has an interest rate of 15 percent, that is $45, so your new balance is $345. And if you do not use your credit card for the entire month, you will owe $345 on your next bill. If you do not pay that entire amount, you will have interest charges again.

What Is An Annual Fee?

Credit cards with no annual fee are just that, a fee that the credit card charges you every year simply to use their credit card. The annual fee can start around $39 and easily go up to $550. That jaw-dropping amount is for the Platinum American Express card. There are many perks to pay for this card, including free Global Entry. These perks are geared to someone who travels often and in first class. This group of people is not your average run of the mill credit card holders and can afford to spend $550 for the benefit, which there are many, of carrying a platinum Amex card. For some, this card is worth the price. I am going to go out on a limb and guess that you are not one of those people.

The bottom line is you want to look for credit cards with no annual fee. There are plenty of them so there really is no reason to pay a fee. Now, that being said, some credit cards offer an amazing deal on say, airline miles. If you use your credit card properly, you can get many free airline tickets per year. That could save you thousands of dollars. So, it may be worth it to you to pay $100 a year to save thousands. However, you have to travel often anyway and make good use of those points for it to be worth it. You have to determine for yourself if this is the right credit card for you.

The Best Credit Cards With No Annual Fee

There are many credit cards with no annual fee that you can select. While doing the research is fairly simple, I have also done some research for you and found the top credit cards with no annual fee. I am listing them here so you can review them to get an idea of the type of credit card that is right for you.

CapitalOne QuickSilver Cash Rewards Credit Card

CapitalOne QuickSilver Cash Rewards Credit CardThe CapitalOne QuickSilver is a great credit card with no annual fee option. This card offers a promotion of 0 percent interest for 15 months. Keep in mind, the rate will go up to between 15.74 percent to 25.74 percent after the 15 month period ends. This credit card also offers 1.5 percent cash back on all purchases. That is unlimited cash back and you do not have to activate any offers to get the cash back.

The cash back does not expire and there is no limit to how much you can earn or cash in. Capital One also offers a one time cash bonus of $150 once you spend $500 in the first 3 months of opening the account. If you do not spend $500 within the first 3 months, you will not receive the $150. They do not have any foreign transaction fees.

Chase Freedom Unlimited Credit Card

Chase Freedom Unlimited Credit CardThe Chase Freedom Unlimited Card also no annual fee and also has a promotional offer of 15 months with 0 percent interest. After that 15 month period, the interest rate may go up to between 16.74 and 25.49 percent. This card offers an unlimited 1.5 percent back on all purchases. There is no minimum for redeeming the cash back. Even better, the cash back does not expire. If you spend more than $500 in your first 3 months after opening the account, you get a $150 bonus.

DiscoverIt Chrome

DiscoverIt ChromeDiscover offers on of the best credit cards with no annual fee. In addition to not having an annual fee, they give you cash back and then they match the cash back. You do not have to sign up for any of the cash back options, but the percentage changes based on the items you purchase. So you can earn 2 percent cash back at restaurants and gas stations on up to $1,000 of purchases at those types of retailers per quarter.

You then earn 1 percent cash back on every other purchases. And yes, Discover matches it all. There is no limit. These rewards never expire and you can redeem them at any time. Discover’s customer service department is 100 percent located in the US. They offer you a FICO score card to help you keep an eye on your credit score. You can also sign up for credit alerts for free.

Wells Fargo Propel American Express Card

Wells Fargo Propel American Express CardThe Wells Fargo Propel American Express card is a credit card with no annual fee. This card gives you bonus points when you make purchases. You receive 3x the points on restaurants, travel such as airline tickets, hotels, and car rentals, gas purchases. And you earn 1x the points for all other purchases. You get bonus points so that when you spend $3,000 in purchases in the first 3 months, you get 30,000 bonus points. 30,000 bonus points equals $300 in cash. This card does not have a foreign currency fee.

Bank of America Cash Rewards Credit Card

Bank of America Cash Rewards Credit CardThe Bank of America Cash Rewards Credit Card does not have an annual fee. If you make $1,000 in purchases within the first 90 days of opening the credit card, you receive $200 cash bonus rewards. This card offers an introductory interest rate of 0 percent. This rate is good for 15 months. After that, you can expect the interest rate to go up to anywhere between 15.49 to 25.49 percent. The cash back is tiered and may seem a little complicated.

You get 3 percent back on a category of your choosing, so ideally you would pick the category in which you spend the most money. You get 2 percent back at grocery stores and wholesale clubs, but there is a limit of $2,500 in combined purchases per quarter. All other purchases have a 1 percent unlimited cash back. You also have the opportunity to become a preferred rewards member, which gets you 25 to 75 percent more back per purchase.

How Do I Pick Credit Cards With No Annual Fee?

I am sure you know by now that there are a ton of credit cards available to you. So how do you pick the right credit cards with no annual fee?

When you are looking for the right credit card for you, there are some points to which you should pay attention. Always make sure you know the lender who is offering the credit card. If you have not heard of this lender, it could be a scam. You want to make sure you protect yourself. Make sure this credit card gives you what you want and need.

For example, if you are looking for a credit card to which you want to transfer a balance, you want one with a 0 percent balance transfer. If a credit card is not going to meet your needs, look for another one. There are too many available for you to settle on the wrong one. Always, always, always be sure to read the fine print. Hidden in the details is the information you really need to know. This is where you will find fees, end dates for promotions, and the dreaded interest.

The best way to do some credit card research is to use a website to compare credit cards. This is a credit card shopping trick that many people may not want to share. These types of websites compare major credit cards and outline the positives and negatives of all of them. It tells you what promotions they are offering to help you select the right credit card for you. It even highlights credit cards with no annual fee.

There are many sites available with information about the best credit cards with no annual fee. They compile the best of the best for you, so you do not have to do a lot of digging to find one. These sites list all the pros and cons of all credit cards with no annual fee and even gives you the ability to see a side by side comparison. Once you select the card you want, you are able to click the apply button directly from these sites. Usually, that redirects to the website of the credit card. You can fill out the application and provide any required documents directly from the website. Usually, you have a response in minutes letting you know if you are approved.

Key Reminders About Credit Card Use

While credit cards with no annual fee are a great tool for you, I also want to take a moment to remind you to use your credit card responsibly. It can be very easy to fall into the dangerous zone of not being able to afford your credit card bill. A credit card company is in the business of making money. They make money when you accrue interest on your balance. The more interest you accrue, that means the more money they make. They do prefer that you pay your bills, but like it when you get interest on your bill.

Another pitfall of credit cards is that it becomes really easy to purchase items that you just cannot afford. Since you are not paying for it right away, there is a tendency to forget that you still have to pay the bill at some point. It is also easy to be unaware of how much you are spending and not realize it until you get your bill with the minimum payment. It is at that point that you realize you can only afford the minimum payment and this begins the dangerous slide. Let me show you with numbers what happens when you can only afford the minimum payment.

You have a credit limit of $2,000. You spend $1,800 of it. Your minimum payment is $200. You can only afford a $200 payment. Now you owe $1,600. You are hit with a 20 percent interest of $320, so know you owe $1,820. Your minimum payment is $210 and that is all you can afford. Now, you owe $1610, but you get hit with another $320 in interest and it goes back up to $1830. Do you see the nasty cycle you can get yourself caught in? The best thing you can do for yourself is not get caught in that cycle. Do not spend more money than you can afford to pay.

Conclusion

I have talked quite a bit about credit cards with no annual fee and how they can benefit you. It is important that you have a complete understanding of credit cards before you begin using them. If you do not understand how they work, you are surely setting yourself up for financial disaster. Make sure that credit cards are right for you before you begin to use them.

While there are many credit cards with no annual fee available to you, it can become overwhelming trying to determine which one to select. The best way to do this is to use a website that compares the credit cards for you and gives you all the benefits they have to offer. This makes your selection process much easier.

The 11 Top Business Credit Cards: CEO Approved

It’s no secret that running a business- whether a large or small one- takes money. Sometimes, when expenses pop up, resources may not be fluid, so you need an alternative option. Business credit cards can be a great way to take care of these expenses. If you have the right one and handle it well. That’s what we are going to talk about today. The ups and downs and ins and outs of business credit cards.

Basics of Business Credit Cards

Before applying for a credit card, it is important to educate yourself. The first things you need to understand are the similarities difference between personal credit cards and business credit cards. On a very basic level, business credit cards and personal cards work the same. You use the money to pay for things, and then you repay the money. In this sense, a credit card is just a credit card. When you dig past the surface, though, there are some important differences.

Rewards and Bonuses

As business credit cards are intended for businesses, the rewards and bonuses offered appeal more to businesses than to individuals. For instance, business cards usually have better options on categories such as:

  • Travel- hotel stays, rental cars, airfare
  • Office supplies
  • Technology
  • Even advertising

Some personal cards use these categories, too, but you will likely see bonuses and rewards for personal cards such as:

  • Groceries
  • Home improvement purchases
  • Entertainment

Sometimes these categories will be found on both personal and business credit cards, but not always.

Reported Differently

Even if a business card is under your personal identification, the credit does not show up under your personal credit utilization. This is a very good thing as you want to keep your business and personal finances separate.

Higher Interest and Fees

You will often find that business credit cards charge much higher interest rates and tack on much higher fees than personal cards. And, worse, they can increase those interest rates, fees, and any potential fees without giving you a bit of warning. You can imagine that such a scenario would be no fun for anyone trying to run a business.


Anyone Can Apply for Either

Just because they are called business cards does not mean you need to have a physical location and employees to apply. If you are a freelancer or simply have a side hustle and want to keep your business expenses separate, you can apply for business credit cards with your personal information as a sole proprietor. In the same vein, a business owner might consider a personal credit card instead of a lower interest.

11 Great Business Credit Cards

1. Capital One Spark Cash for Business Card

Capital One Spark Cash for Business Card

This is a great card for the everyday expenses you face. You can earn 2% cash back on all purchases, so whether you are purchasing a pack of pens from Office Depot or gassing up the jet to fly off to your meeting across the country, you earn. Best of all, there are no caps on that earning.

There is an annual $95 fee, which is waived the first year, and you may also earn $2,000 or more for signing up and completing the spending requirements. This particular sign on bonus may not last forever, but there are usually some good incentives. It comes with free employee cards and even some protections, such as purchase protection, extended warranty, and price protection.

2. Capital One Spark Miles for Business

Capital One Spark Miles for BusinessIf your business pays for a lot of travel, you may consider the Capital One Spark Miles for Business card, as there are some pretty sweet perks. First, you get 5 miles for every dollar you spend on hotel and rental cars through Capital One Travel, and 2 miles for every dollar you spend on all of your other purchases. There are no foreign transaction fees, and the annual $95 fee is waived for the first year.

This card also gets you up to a $100 credit if you enroll in Global Entry and TSA PreCheck, and employee cards are free. Additionally, you get the same purchase protection, extended warranty and price protection of the Spark Cash card, but also travel protections that include:

  • Travel accident insurance
  • Lost luggage reimbursement
  • Auto rental collision damage waiver

3. The Business Platinum Card from American Express

The Business Platinum Card from American ExpressAnother great credit card for business travel is from American Express. This card comes with an automatic Gold status for the Hilton and Marriott. If you book your travel through AMEX Travel, you get a 35% points rebate for flights in first or business class as well as a $200 annual airline fee credit and 5 membership points for every dollar spent.

The Business Platinum Card from AMEX also gives you 1.5 points on your purchases of $5,000 and up, and then 1 point for every dollar you spend on anything else. Often, they run a sign up special that gets you free airline points. There is an annual fee of $595, but there are no foreign transaction fees. Do some math: if you or your employees travel enough that you will save more than the $595 annual fee, this might be the credit card for you.

4. Brex Corporate Card for Startups

Brex Corporate Card for StartupsBrex offers an excellent option for some businesses. Let’s start by pointing out that this card is given depending on the information gathered from your EIN, so the self-employed, sole proprietorships, and so on will not get approved- move to the next card. If you are incorporated though, continue reading.

The Brex Corporate Card credit limit depends on the amount your business has raised, but generally, the limits are 10% to 20% higher than small business cards. The first five cards are included in sign up. Any additional cards cost $5 per user per month. There are no annual fees at all, no interest, and no foreign transaction fees. At the end of 30 days, the payment is automatically debited from your account, meaning you do not even have to think about it.

If all of that does not sound good enough, there is more. You earn 7 points on rideshares, 4 points on Brex travel, 3 points on restaurants, 2 points on recurring software, and 1 point on everything else. They even have partnerships with Quickbooks, Xero, Google Ads, and more. Check them out to see what they can do for your business. As it does not revolve around your personal credit, it will not hurt your credit to apply.

5. U.S. Bank Business Cash Rewards World Elite Mastercard

U.S. Bank Business Cash Rewards World Elite MastercardThe U.S. Bank Business Cash Rewards World Elite Mastercard lets you earn an unlimited 3% cash back on cell phone services as well as gas station and office supply store purchases. The rewards never expire and there is no limit to how much you can earn. You also earn a 25% Annual Cash Rewards bonus of up to $250.

You can transfer balances to this card for 0% interest for the first 15 billing cycles, but there is a 5% or $10 cash advance fee. There is a 2% to 3% foreign transaction fee, depending on the purchase. However, there is no annual fee and an introductory 0% interest rate, which lasts for 15 billing cycles.

6. Ink Business Preferred Credit Card from Chase

Ink Business Preferred Credit Card from ChaseInk is a great card to consider for any business, but especially digital ones. This is because you can get 3 Ultimate Rewards points for every dollar you spend on advertising on search engines and social media sites. Those same rewards points go for travel, Internet, cable, and phone services, and shipping purchases. On everything else, you earn 1 point per dollar spent.

With this card also comes primary rental car insurance, free employee cards, and cell phone insurance. There are no foreign transaction fees, but there is a $95 annual fee. Currently, there is a sign-up bonus of 80,000 points when you meet the spending requirements and extra points for booking travel through Chase Ultimate Rewards.

7. CitiBusiness AAdvantage Platinum Select World Mastercard

CitiBusiness AAdvantage Platinum Select World MastercardThis is another good card to consider for travel. You receive 2 AAdvantage miles for every dollar you spend on American Airlines, and 2 miles for every dollar you spend on telecommunications, cable and satellite, car rentals and gas. For all other purchasing categories, you get 1 mile per dollar spent.

Additionally, you get baggage checked for free and even four companions. It comes with free employee cards, too. There are no foreign transaction fees. There is a $99 annual fee but it is waived for the first year. They also run sign up deals that give you bonus miles when you meet spending requirements.

8. The Hilton Honors American Express Business Card

The Hilton Honors American Express Business CardThis card starts off with Hilton Gold elite status, which gives you a 25% point bonus on certain spending, free nights, and more. You then earn 12 Hilton Honors points for every dollar spent at Hilton properties, 6 points per dollar for gas, at restaurants, and with flights and car rentals from certain companies, and 3 points per dollar on everything else.

Employee cards are free and you even get access to expenses tracking tools. This card also gives you travel protections like baggage insurance, travel insurance, roadside assistance, and more. There are no foreign transaction fees, though there is a $95 annual fee.

9. U.S. Bank FlexPerks Business Travel Rewards Card

U.S. Bank FlexPerks Business Travel Rewards CardThe U.S. Bank FlexPerks Business Travel Rewards Card does not earn as many points as some others, but it comes with its own perks. You earn 2 points per dollar on purchases of office supplies, gas, airline tickets, or whatever you spend the most on every month, as well as 2 points for purchases through cell phone providers. An exciting thing, though, is that you can also earn 2 points per dollar on eligible charitable donations. You then earn 1 point per dollar spent on other purchases.

You can receive a $25 Airline Allowance per round trip for things such as baggage fees, seat upgrades, or food and drinks on the plane. Your points can be redeemed for different items, such as gift cards, airline tickets, cash back, hotel stays, and more. There are no foreign transaction fees. You get travel insurance, auto rental collision damage waiver, emergency assistance, and more. There is a $55 annual fee, but it is waived for the first year.

10. American Express Blue Business Cash Card

American Express Blue Business Cash CardThis card is good for businesses looking to grow. First, you earn 2% cash back on all eligible purchases that amount to $50,000 per calendar year. After that $50,000, it drops to 1%. For those that need to spend more than their credit limit, the Blue business card has an Expanded Buying Power option where you can go over your limit. How much over depends on your payment history and more, but it is an option.

There is a balance transfer option, which costs either $5 or 3% of the amount of the transfer- whichever is greater, though there is no fee on transfers in the first year. You get charged 2.7% on all foreign transactions. In the first year, purchases have 0% interest. Extras include purchase protection, extended warranty coverage, car rental loss and damage insurance, and more.

11. Marriott Bonvoy Business American Express Card

Marriott Bonvoy Business American Express CardFor those businesses whose travels land them at the Marriott pretty often, why not have a Marriott Bonvoy Business American Express Card? You get six Marriott Rewards points for every dollar you spend at Marriott properties. And you also get complimentary Marriott Bonvoy Silver Elite Status. You even receive a free night every year you keep the account active. If you spend $60,000 on the card in a calendar year, you get another free night.

That isn’t all, though. You earn 4 points per dollar spent at restaurants, gas stations, and cell phone services, and 2 points per dollar on other purchases. The card comes with baggage insurance, travel accident insurance, roadside assistance, and car rental damage and loss. There are no foreign transaction fees, but there is an annual fee of $125. If you have or have had a Marriott business card recently, you may not qualify for the application bonus, so check the fine print before you sign.

Pros of Business Credit Cards

There are plenty of good reasons to apply for business credit cards.

  • You can usually get approved for a business credit card much quicker than you can get approved for a personal one. As odd as it may sound, even if the lender is looking at your personal credit score, they tend to be more lenient with the credit cards. This is not always the case, but it typically is.
  • The rewards, bonuses, promos, and other incentives can be incredibly helpful. For instance, getting a 0% interest introductory rate for a year can give you that full year to work on increasing your income. This is great for startups and small businesses as it gives them a chance to get money coming in. Also, as mentioned above, earning points towards things you use can help you save. If you are going to have a credit card anyway, you might as well have one that will help you where you need to save.
  • Like a personal credit card, they can help build your business credit- something businesses desperately need to have.
  • When you run into problems, like equipment malfunctions, credit cards can help you take care of the problem quickly.

Cons of Business Credit Cards

Of course, there are downsides to business credit cards, as well. Two big ones are:

  • Interest rates are often high for business credit cards.
  • Fraudulent charges may slip through the crack. Because there are usually so many charges put on a business credit card, it is easy to overlook something that you did not put there. Often, it is easier for an identity thief to get his hands on a business’s credit card information than it is an individual’s. Also, as much as I wish it weren’t so, employees may use a business card for things other than business expenses, especially if they feel they are not being monitored. The best solution is to be sure that someone is going through every charge on your credit card bill. If something looks like it should not be there, investigate. This will ensure that you catch fraudulent charges more quickly. Also, if you are making your employees explain the charges they make, they will be much less likely to charge things that they should not.

Promotions and Bonuses

Credit card companies are similar to every other industry- they have to be competitive to win your business. This competition often results in promotions when customers sign up. These promotions can be a great benefit to businesses, but if you are not careful, they may also cost you. You have to weigh the promotions out.

Some credit cards come with a 0% interest promo for the first year, which is a great deal. If the interest shoots up to 29% after that first year, though, you need to have it paid off before the end of that 12 months and have a lower interest card at your disposal.

Another of the many types of credit card promotions they run you see will be something along the lines of “Get 80,000 airline miles if you spend $50,000 in the first 6 months”. This is not necessarily a bad thing. If you travel for your business and you already spend $50,000 on business purchases in six months, this promo might be worth it for you. Just do not let something like this push you to spend more than you normally would. Also, if you don’t fly, those airline miles are useless. You are better off finding a card with something you will use.

Here is a credit card shopping trick that many people try: Sign up for a card with 0% interest for the first year and perks you can use. At the end of that year, find another card that has 0% interest for a year, and close the first one so you are not charged any annual fees. Sometimes, though, rather than lose your business, your first credit card company will give you another good deal- it’s always worth trying to ask them.

If that does not work, you can sign up for a new card at the end of each promotion, unless of course your contract says otherwise. For this to work well, though, you will need to do one of two things: either make sure your balance is paid in full before the end of the promotional period, or make sure your new card allows for balance transfers and transfer that balance at least a month in advance. That way, by the time your promotional period is over, you have nothing on that card.

Business Loans vs Business Credit Cards

At times, you may find it more beneficial to get a business loan than to use a business credit card. When you need to make a large purchase, an installment loan might be a better idea. This is because the interest is usually lower than credit card interest, and you can make payments over time.

The repayment term usually depends on the amount of money you borrow. Probably the only time a credit card would be better is if you are at the beginning of your 0% interest period. And you know for a fact that you can repay the amount prior to the end of the period.

A business line of credit is another option here. These are similar to credit cards as they are a revolving line of credit. You take what you need, you pay it back, and you can take it back out if you need it. It actually is not a bad idea to have both a business credit card and a business line of credit. When you need to borrow money, compare the current interest rates for each and determine which will charge you less. Having both available to you opens up your options, which is very helpful when you need to make a large purchase.

Handling Business Credit Cards Responsibly

You need to be as careful with your business credit cards as you are with your personal credit cards. Well, unless you are not responsible with your personal cards. If that is the case, it is time to be responsible with all of them. Here are a few tips to do so:

  • Only give cards to employees who you feel will be responsible with them, and then check to make sure that they are doing that.
  • Set limits on the cards so that neither you nor your employees can do any large spending without you authorizing it first.
  • Only spend money that you have either planned to spend or need to spend.
  • Set a budget for your spending and stick with it.
  • Try to have savings set aside for unexpected expenses instead of having to use your credit card all of the time.
  • Pay your bill on time every month.
  • Pay more than the minimum balance required. As stated above, if it is at all possible, try to pay your balance off every single month.
  • Remember that 0% interest is not a green light to spend like crazy. The amount you charge during that period needs to be paid off before the end of the promotion. Otherwise, interest will be added.

Conclusion

Running a business requires time, commitment, and money. Though credit cards can only take care of the money side of things, having the funds already available can save you time and make it easier to keep your head in the game. I said above that having a business line of credit and a business credit card available to you opens up your options. So does having more than one business credit card.

It might be beneficial for you to have two or three business cards open. First, when done well, they will help your business credit. Second, if you have three that offer different perks and cash back for different purchases, you can choose the best card for each move you need to make. Look into a few that you feel will benefit your business the most and apply.

Additionally, if you are currently in credit card debt that you cannot seem to dig your way out of, there is hope. Getting an installment loan can give you the funds you need to pay off your credit cards. Then, instead of making multiple payments and gaining insane amounts of interest every month, you have one simple payment to make.

How to Evaluate a Credit Card Offer: Credit 411


You probably get a ton of credit card offers in the mail and via email. Every week another credit card company seems to want you to apply. You are pre-approved, they claim.

Ah, but what does this really mean? Pre-approved?

It does not necessarily mean they will send you the credit card they advertise. In fact, those advertisements get away with sounding so good by hiding tiny caveats in the small print at the bottom of the page or on the back of the offer letter. You need to become an expert at spotting a scam, so you can report it and save yourself and others money. Here is the best way to determine which offers really live up to the hype and which to skip, so you can build your creditworthiness.

How to Evaluate Credit Card Offers

How do you know which card advertisement is honest? And how can you tell a trap from a treat?

Read on and I’ll explain, in detail. As you will learn, the details really matter. You can evaluate any card offer in ten steps. There is no such thing as a simple credit card offer, so you have to know your stuff.

10 Steps to Evaluate a Credit Card Offer

  1. Evaluate the bank or financial institution offer the credit card. Avoid applying for a credit card from a lender with whom you are unfamiliar. It could be a scam. Unsolicited credit card offers typically do not offer the best interest rates or other terms.
  2. Determine if it meets the criteria of the credit card you desire. If you need a balance transfer card, but the offer extends a potential rewards card, it does not meet the card requirements of what you need. Taking out a credit card you do not need just mess up your credit more.
  3. Study the fee schedule. How easily avoidable are they? I once had a card with a bank that got into huge trouble with pretty much every financial oversight agency because they left off the caveats of their fee schedule. One of their no-nos was claiming a person had paid late if they paid at 5:01 pm on the due date – in their time zone. That is illegal. The credit company has to fully explain all fees and card terms in the documentation they give you. That bank got sued and had to pay back numerous “late fees” to people who had paid their payments on the day they were due. I learned the hard way not to do business with new organizations or “re-structured” banks.
  4. Do the math to determine the value of the annual fee. You may have the option to take out the card with an annual fee or the one without. Calculate which provides a better deal. Grab a calculator and pen and paper. Make notes so you can keep the various credit cards straight.
  5. Calculate the cost of financing purchases on each credit card offer. Be honest with yourself. Lying to yourself about how you handle money only hurts you. It is one of the biggest credit card mistakes. If you typically make only the minimum payment, then you won’t want a card with a mid- to high-interest rate. If you never carry a balance month to month, this has little bearing, so long as you have enough savings to keep paying the card in full if you lost your job.
  6. Closely examine any rewards program offered. The reward rates vary on these cards and everyone is different. Typically, different types of purchases earn different payouts. You need to reference your budget to determine where you spend money. That will tell you whether the rewards card will benefit you. If it pays you back on airline flights, but you only fly somewhere once every five years, that will not benefit you. Also, consider for what items you can redeem credit card rewards. Common items include cash, travel, gift cards, charitable contributions, and merchandise.
  7. Study the credit card offer for other card benefits, such as shopping and travel protections. The credit card information also covers other provisions the bank may extend include price and purchase protection. The card might include trip cancellation and interruption protection, car rental insurance and lost baggage protection. Cards with EMV chips have become more popular and this factor keeps your finances safer since credit cards with this feature are much tougher to hack.
  8. Consider the bank issuing the card and which retailers accept it. While four ..major payment networks exist — Visa, MasterCard, American Express and Discover, only the former two are widely accepted.
  9. Check if the card issuer extends credit to those with your credit score. Also, check for other application qualifiers. You can enhance your approval rating by only applying for what you genuinely qualify. If you have a low-income, do not apply for a platinum card. If you have bad credit, do not apply for cards offering prime rates. Make sure you already meet income threshold requirements or membership requirements.
  10. Read the fine print carefully. Read it a few times. You need to fully understand everything in the fine print. Some credit cards will actually repossess the items you purchased with them rather as a bank takes back your car if you miss the payments.

Let’s go into some of those topics in greater detail. First, let’s talk about the main types of credit cards available to you.

Credit Card Types

You typically come across four types of credit cards, balance transfer, rewards, temporary zero interest and secured. Each offers vastly different benefits.

Balance Transfer Credit Cards

These cards let you pay off existing credit card debt by transferring the balances to a card with a low-interest rate or no interest rate. You should use these to pay off high-interest rate cards. You may pay a fee to transfer but will probably make it back through the interest saved.

Rewards Credit Cards

You can earn cashback or other rewards by using these cards. If you pay off your balance in full each month you can use these cards to make money. Some provide a signup bonus that pays you when you hit the required spending minimum within a specific time period.

Introductory Zero Percent APR

Often, this gets offered in conjunction with balance transfer cards. Typically, these offer zero percent interest on purchases and balance transfers for six to 18 months.

Secured Credit Card

Secured cards let an individual re-establish their credit by matching the credit limit with a deposit of the same amount. They can help a person with poor or limited credit obtain a card to prove their creditworthiness. These differ from prepaid cards because you still must make timely payments and your payment activity gets reported to the credit bureaus.

If the card offer you receive does not meet your needs, ignore it. Do not apply for every card offer you get since this will ruin your credit score. Every time you apply for credit of any type, the creditor requests your credit report from a credit bureau. This activity results in what those in the financial sector call a hard hit to your credit score. Every application drops your score by two to five points. You can quickly tank a decent score by applying for only a few cards. The 10 to 25 points a score drops from five applications can take a 700 to 675. That means going from a “very good” to a “good” score. Only apply when you feel certain you will get accepted for the card. That means you ensure you meet all of the criteria before you try.

The Fees, The Fees!

Every credit card has fees. There is no way around it. The bank wants to make money, and they charge you at every possible juncture to do so. These fees are a method of risk reduction.

Financial lending institutions are typically quite risk-averse. They like very low-risk situations only. Like an insurance agent not wanting to extend a wind policy on the east coast of Texas because they would have to pay a claim so often, a bank or credit union does not want to extend a credit card to those with low credit scores because they are doubtful they will get paid on time or at all.

Individuals with high credit scores obtain credit cards with much lower fees. Those cards also charge far fewer fees. Check the credit card offer for the full fee schedule. Look for the following.

Annual Fee

Every year you will get charged for the privilege using the card provides. This could amount to $25 a year or $200. Annual fees are all over the place. The range is huge. Higher fees typically provide higher rewards.

Late Payment Fee

Nearly every credit card charges late fees. They might vary, but you should expect an average cost of about $35 if you pay late. The bonus is you can avoid this by paying on time. Set up automatic payments so you do not need to worry.

Cash Advance Fee

Another fee you cannot avoid the credit card having is your cash advance fee. If you use the card to get money back from the ATM or bank branch, you get charged a cash back fee. You will never need to pay this if you do not use the card for advances. If you use it for an advance though, you do pay the cash advance fee as well as a higher APR. Also, advances do not provide a grace period, so you will get charged interest from the first day you take out the advance.

You also need to watch for situational fees. The most common of these is the foreign transaction fee.

Foreign Transaction Fee

You only incur this foreign transaction fee when you use your credit card in another country. This percentage-based fee, typically three to four percent, gets charged every time you make any purchase in another country. To avoid it, just do not make a charge using that card when you travel to another country.

Calculate the Annual Fees

Up there in step two, you read about comparing types of cards and now we covered many potential fees, too. The annual fee requires your closest attention.

As mentioned in step four, credit cards can have two annual fee options, one with and one without. You need to compare the costs with the credit card’s benefits. Some are more straightforward than others. Here’s the math.

Let’s say you have two versions of the same card, one with a fee, one without. Both feature a sign up bonus, but in different amounts. You need to find the y, in this case, how long it takes for the cards to exhibit equal benefit. Since you only get charged $89 in years two and thereafter, you need to figure out how many years the bonus pays for as compared to the bonus you get with the no annual fee card.

Card A: $400 signup bonus, $89 annual fee waived the first year

Card B: $200 signup bonus, no annual fee

The Math for Card A
$400
$400/$89 = 4.49 (round to 4.5)
4.5 + 1 = 5.5 years of annual fees paid

The Math for Card B = 200
Provides you with a flat rate.
You do not pay any annual fee, so the $200 is yours to spend as you like. You could pay it to the card once you have purchases to avoid paying interest.

If the card with higher bonus has better rewards, use the $400 and the fee waived year to earn rewards, then just before year five’s annual fee occurs, transfer any remaining balance to a balance transfer card after cashing out your rewards. You made money on the deal.

Compare rewards rates, too. Some cards with an annual fee provide more points per dollar spent. The only time you benefit from this though is if you spend money on what the card rewards are.

Fees Credit Card Companies Don’t Want You to Know

Bait and Switch: It Is Illegal

So, remember way up there where I mentioned that the card offer you get in the mail is not necessarily the card you get? Yeah. That happens all the time, but it is not supposed to happen.

Advertising one product, but switching in another after the contract gets signed or the product gets purchased is against the law.

Credit card companies try it all the time though. That keeps the lawyers busy.

So, you sifted through the whole pile. You worked your way through all the math on multiple orders. And you chose the card. You applied to the pre-approved offer. Then you got a letter that says you are approved but wait. You got approved for a different card than you applied for from the pre-approved offer. Somewhere in this letter, perhaps in very teeny, tiny print, it says something to the effect of, “Well, dude, you did not quite qualify for that one credit card, but we have this nearly, equally fabulous card for which you do qualify. Here it is, all wrapped up with a bow on the front card face and an [insert way obscene credit limit for your actual credit situation].”

Guess what? It is not equal to the other card. But, you will not know that unless you remain super calm and read every, single, solitary word in front of you just as you did the prior pre-approved credit card. What you probably got sent has higher interest rates or higher fees or some awful surprise.

Resist the urge to go buy a new TV and computer. Instead, do the reading and the math. For one thing, you were pre-approved. That means that they already knew your credit score. They should not have sent the letter with pre-approval if you did not actually qualify. When you find the hidden fee or the catch, you will know whether or not you should reject the card. You probably should because it typically will be a huge diference.

That’s how they get you. You excitedly tear open the envelope, recognizing the address and company on the outside. And you remember applying. But you do not read the letter. You just rip the card of the front, sign the back and go shopping! So, protect yourself. Read the letter anally. Double check everything against your pre-approval letter. (Yes, you should have kept it.)

If the card is not up to par, as my CPA pal would say, reject it. Phone the company and let them know you will not accept the new card terms. Close the account without charging to it. Doing this can save you from massive fees you did not expect. The great news is that you will only be out the two or five credit score points from the hard hit to your credit report for the check. That is much better than a surprise $200 setup fee or $100 annual fee or interest rate 10 points higher than the original.

A Credit Card Shopping Trick

If you’re looking for a magic credit card shopping trick, here’s something that may interest you. Conduct wise shopping for a credit card. You need to use combination of Creditry and Loanry to best protect your credit and to find really high quality credit cards.

Wait. Why would I say you would need Loanry when you keep getting offers in the mail for credit cards?

Simple. Those offers may not be good credit cards for you. You may actually need a credit card because you need to shop online at certain retailers that do not let you use pre-paid cards. You might need to rent a car and the rental companies typically do not rent to people without a credit card. They want to be able to tack on fees, charges and extra rental days, just in case you keep the car extra time.

So, eventually you will need a credit card. When you do, you need to be choosy about to which you apply.

The ones they mail to you in the offers may not be appropriate, but somewhere, there is a credit card perfect for you.

Loanry works like a mall. You know how you go shopping for jeans or a sweater? Loanry lets you apply the same concept to loans.

The brief form you complete on it front page may only contain basic info like your name, address and the last four digits of your Social Security Number, but it acts like a personal shopper gathering potential blue jeans for you to try on in the fitting room. Loanry makes a soft hit to your credit report that does not ding your credit score for any points. It then may find a good fit and you may get the name, URL and essential details of the credit product to you.

The site handles the research of for which credit cards you may qualify for you. You then simply read through the information and pick the offer for which you want to apply. You apply knowing that you already meet the minimum qualifications for the card.

Managing Your Credit

You need to be a smart cookie about your credit. You can use a simple website like Creditry.com to help you manage your debt and develop your credit score. If you already have credit, be sure to use a debt tracker to monitor all of the credit lines you have open.

The advantage to using a service like Creditry is that it helps you track everything that has to do with your credit. You can quickly find mistakes on your credit report and improve your credit score.

Creditry can help you watch for things that lead to credit damage and zombie debt like:

  • identity theft,
  • computer error,
  • fraud.

Those things can happen more easily than you think. Take identity mix ups, for example. Right after graduating from graduate school, I landed a job at a major university. The school benefits office unintentionally mis-entered my information and that of another woman who worked on a different campus. They had confused us since one has the middle initial “R” and the other has the middle initial “L.” Paperwork gets confusing when you see hundreds of the same form everyday and they were short-staffed on data entry clerks.

They fixed it, but it took time. For months, we similarly named women traded benefits paperwork through campus mail between the main campus and health sciences campus. We laughed about it and struck up a telephone friendship. We chuckled when I got notices about her then teen’s braces (and I have never had kids) and she got the ones of my physical therapy for a mountain biking knee injury (and she had never mountain biked).

Creditry can help you watch your credit report for the craziness like that. We just lucked out that we were both anal about paying our bills and sending paperwork back and forth. The benefits office eventually got it straightened out. It takes time and commitment to solve such problems. It took us months and we had a friendly benefits clerk, plus it was our employer.

Vigilance about keeping watch over your credit score can help protect your credit score and/or help you rebuild it. Use services like Creditry to monitor your credit report. Quickly respond to the credit bureau to question any unusual data.

Final Thoughts

Credit card companies will try to draw you into their lair. Tame their attempts by fully examining and analyzing each offer. If you only receive offers that do not meet your credit needs, turn to Loanry or Cashry to find the right option. The best plan is to have few credit cards with large credit lines that you do not max out. Manage your money and your credit wisely.

The brands within Goalry can help with that. We unified finance to help make shopping for loans, credit, money and real estate more efficient. These sites work together to help you achieve the goal of financial independence. To begin building wealth, you first must get out of debt. Your next step is saving with a third step of establishing and building great credit. Start now and get a handle on the credit card offers in your mailbox.

You have to be careful with your credit. Your credit cards should serve you. You should be their master. MasterCard should not be yours.

 

Credit Cards for Fair Credit: Swipe Here

Credit cards can be excellent tools when handled responsibly. If you have been thinking about obtaining a credit card but are afraid you will be turned down due to your fair credit score, we have good news: there is a card out there for pretty much anyone. Fair credit may not be the best, but you can still find a credit card to help you meet your goals. This information should help you with your search.

What is Fair Credit?

If you are looking into credit, there is a chance that you have heard of more than one type of credit score: a FICO score and a Vantage score. While lenders vary, the most commonly used and well-known credit scores are FICO scores. These usually range from 300 to 850. The following is how these scores are viewed:

  • 300- 579- Very Poor
  • 580- 669- Fair
  • 670- 739- Good
  • 740- 799- Very Good
  • 800- 850- Exceptional

Approximately 17% of Americans fit in the Fair category. A full 33% of Americans fall into either the Very Poor or Fair credit. If you have fair credit, you are most definitely not alone. The good news is that fair credit still gets some opportunities; so if you are looking for credit cards for fair credit, do not despair. There is hope.

Breakdown of a Credit Score

It is important to know exactly what goes into your credit score, so let’s break it down:


-35% of your FICO score is your payment history.

-30% of it is how much you owe.

-15% of your score depends on the length of credit history.

-10% involves any new credit you have opened.

-10% is about your credit mix- or the different types of credit you have used.


Note that the two biggest factors include your payment history and the total you owe. Though you should work on your credit as a whole, these two sections are a great place to start. As we will go over in this article, you should always try to keep your payment history looking as good as possible. Pay what you owe on time as much as you can. Try not to be a bit late.

Then, pay off as much as you can. The less you owe, the better your credit score will be. Make a repayment plan, even if you can only pay $5 on a debt each month. Try picking up extra shifts or a side hustle to pay it off quicker.

Opening new credit cards can help, too. First, by lowering your credit utilization, then by adding more to your credit mix and putting a little more activity on your credit. Even if your credit is less than desirable at the moment, by following the tips listed here, you can increase your score for the future.

What is the Difference in Credit Cards for Fair Credit vs. Other Credit?

Credit cards are basically the same. They are simply avenues of borrowing money. The difference comes in the terms that come with each credit card. Credit cards for good credit will have much more favorable terms than credit cards for fair credit, though credit cards for fair credit will have more favorable terms than those for poor credit. These terms will include things such as your interest rate and available credit limit.

Things to Know When Shopping for Credit Cards for Fair Credit

Anytime you are getting ready to make a move, especially in your finances, you need to be educated about what you will face. When you are shopping for credit cards for fair credit, there are quite a few facts you should be aware of.

Different Types of Credit Cards for Fair Credit

Some credit cards for fair credit will require that you put up collateral, typically in the form of a deposit. These are called secured cards, and they may require deposits as low as $39, or they may require a deposit in the full amount of your credit limit. As long as you make your payments on time, most companies refund this deposit after a certain amount of payments.

Interest Rates

Most credit cards for fair credit will come with pretty high-interest rates. You cannot really control these rates. They are, unfortunately, one of the major downsides to having lower credit scores. Over time, if you handle your credit card responsibly, you should find opportunities for cards with lower credit card interest rates. Sadly, when your credit is less than stellar, you will have to start out closer to the bottom and work your way up.

Credit card interest rate statistics

Credit Limit

Credit cards for fair credit will likely not have very high credit limits. While it will really depend on the credit card company, it is usually best not to expect more than a couple or a few hundred. Most companies will increase your limit over time if you make timely payments, but the lower your credit score, the lower your initial credit limit.

Fees

Some credit card companies will charge annual fees. These fees can range in price, and sometimes make the card not worth it. As you compare credit cards, make sure you know what- if any- annual fees you will be paying and if there are any benefits to paying those fees. There are usually other fees, too. These can include anything from a paper statement fee to a late fee.

Fees Credit Card Companies Don’t Want You to Know

Credit Card Perks

When you are credit card shopping, you have to watch out for the advertised perks. It is very common for people to fall for credit cards with high fees or high-interest rates due to the perks that come with them. The perks themselves are not necessarily bad things, though. The problems come due to the following people sign up for the perks that they never use.

I have actually known people to sign up for credit cards for airline miles. This would not be a bad thing except that these particular people never- and I do mean never- fly. When I asked one of them why they signed up, she said, “Well, so they’ll be there if I ever decide to use them.”

Basically, she paid a crazy annual fee for something she knew she would probably never use. She would have been better off putting that annual fee in a savings account or investment account every year. If she ever did decide to go somewhere, she could easily pay for her plane ticket with that money, or she would have it for something she actually would use. Do not fall for credit cards just for the perks unless the perks are something you already use. Earning cash back on groceries or gas, for instance, would be worth it for many people- unless, of course, you never drive and always eat out.

Where to Find Credit Cards for Fair Credit

Credit cards seem to be available everywhere now, but finding the one that is right for your credit and your life is not always a walk in the park. It is very important to compare multiple credit cards to get the best terms and interest rates. Especially when you have fair credit. Without shopping are for credit card interest rates and terms, you could end up with a card that does you a lot more harm than good.

The best way thing to do is to buy credit card online. Through the Internet, you can compare multiple cards at once. In fact, you can even start your search with your personal criteria, such as your credit score. Shopping credit cards for fair credit online will save you a ton of time. And most likely show you some options you would not find out about otherwise. You just might be surprised by what you find.

How Can I Improve My Credit to Get a Better Credit Card?

One of the great things about credit is that it can always be improved. One of the great things about credit cards is that they can be used to fix credit. If this is what you are aiming for so that you can get better credit cards or a home, or even if you want to just keep your good credit, here are some steps to take:

Be Responsible

The biggest thing to remember is to be responsible with the credit card. Do not overspend. Spending more than you can repay is the exact step you should take if you want to be in debt and destroy your credit. Otherwise, be sure you only charge what you can repay.

The first step to following through on this is determining how much you can afford to repay. A good rule of thumb is to not charge anything that was not already coming out of your check. If you were not planning to buy an $800 smartphone this weekend out of your weekly paycheck, do not purchase it with your credit card. In other words, do not just go crazy and spend it because it is available.

Large Purchases

At the same time, credit cards can be useful for larger purchases- if you plan and prepare correctly. Here is the thing about credit cards: they are similar to mortgages and auto loans in that they can help you get things you cannot normally afford all at once. You have to remember, though, that they are also like mortgages and auto loans in the fact that you will be paying back more than you borrow. Interest is going to be added, so you have to really think it through.

When it comes to a mortgage, most people are more than willing to pay interest because they are getting to purchase a home- something that most people cannot do without a loan. I want to purchase a home for my family, something that we can all enjoy, and that my kids and grandkids (when I have some) can come to visit. A home is part of my dream, so paying interest to purchase a home is worth it to me.

The same thing can be said for cars. For those who really need or want a new car, paying interest on an auto loan is worth it completely. These people will happily work harder to pay the interest because what they get in return is worth the cost they pay.

When it comes to your credit card, you have to look at it the same way. Is the item you want to charge worth paying interest on until you pay it off? For instance, if you were considering purchasing that $800 cell phone I mentioned a moment ago, will you be willing to pay out extra each month to have it? Or would it be better to pick up a few extra shifts at work to pay for it outright?

This decision really comes down to you. You will be the one paying the bill, so only you can decide what is worth the money. Your priorities can help you make these decisions. I, personally, would not put a TV on my credit card, but if one of my kids asked for a really special gift on their birthday, I might consider it- if I have not saved enough for the gift.

Other people might value a TV because that is what their family sits around on Saturdays to watch movies for family night. As I said, the choice of what to charge is completely up to the cardholder. You just have to decide what you are willing to pay extra for.

Emergencies

Credit cards can be great tools during emergencies if you have any room left on your card. If you have a card that is specifically for emergencies, normally, you should leave it alone. However, if you were only able to get credit cards for fair credit, you may currently be stuck with a $200 or $300 credit limit. What happens if you have a $700 emergency?

While you do want to be very careful with your emergency credit card so it is available when you need it, you also need to put some activity on it so that you can increase your credit limit. Try just using it for $20 worth of gas once or twice a month and pay it off quickly. Definitely do not use your emergency card for shopping, just for some small charges and repayments that make you look like a responsible cardholder.

Pay Your Bill On Time or Early

Do not be late. I repeat, do not be late with your payment. Late payments can affect your credit more than you will ever know. Be on time with your payment, or early if you can. It can be hard sometimes when you are broke or struggling, but it is possible. Let me tell you my “secret” of paying early.

A couple of years, I was offered a credit card from my bank. It was nothing overwhelming- just a $200 card. After some thought, I went for it. We were also broke at the time, so interest rates were not something I could afford, but I wanted to build up my credit a bit. So, I sat down and formulated a plan to keep away from interest and still be able to utilize the card while making early payments.

I knew that the $200 limit would cover a particular bill every month. And I knew that my utility bill was due four days after the close of my card billing cycle and that the credit card bill was due right in between the two. So I would use my check that came directly before my credit card bill was due, which was the same check I would normally pay my utility bill with.

I would pay the entire $200 on my credit card bill, at minimum, two days before the billing cycle closed. If the funds were in my bank, I would pay it a few days earlier. Since interest was charged at the end of the billing cycle, I avoided having to pay any since my balance was zero. As soon as the billing cycle closed, I would use my card to pay my utility bill.

With this system, my bill got paid every month either on time or early and I avoided interest. Sometimes, I would do it twice a month to increase my credit card activity. All of this drove my credit up and a few months later, I got a credit increase to $500. I did not go crazy and blow it though. Instead, I continued the same system but added a bill to the mix. I also left at least $100 completely alone just in case of an emergency.

I hope you can see that it can be pretty easy to take care of your bill with a little planning and some type of income. If you want to follow my system, it is important to do a few things. First, make sure your credit card does not charge interest until the end of the billing cycle. And you should definitely know when the end of the billing cycle is. Second, figure out which of your checks will come every month prior to the end of the cycle, and be sure you budget your credit card bill into that check.

Pay More Than What is Due

When you receive your credit card bill, it will tell you a minimum amount to pay. It can be very tempting to only pay that amount when you are broke. The problem is that paying that amount is only going to help you for that moment. Typically, that minimum amount is not even enough to cover the interest you owe.

That means that the next month, you will get charged interest on your purchases and the remainder of your prior month’s interest. Every month, you will get charged interest on your interest. What was once a $200 credit card can quickly increase to thousands of dollars. As long as you are making those minimum payments, the credit card company will continue to let your balance grow.

And that, my friends, is how so many people end up in crazy amounts of credit card debt. I promise, it is not what you want to go through, so pay more than is due every month. If you can follow the system I mentioned above, this will not be an issue for you.

Pick a Good Due Date

Many credit card companies will now let you choose your due date. Try to find a company that gives you this option. Then, before you choose a date, consider which check of the month will be the easiest to make your payment from.

Protect Your Credit Card

While there are many ways to mess up your credit, the easiest way seems to be when someone else gets access to it. It does not require an experienced hacker to steal your identity. It only takes them seeing your card, or picking it up off of the ground. A person can make all kinds of purchases online with nothing but your credit card information. Keep it safe at all times. If you notice that it is missing, you can freeze it until you find it. It may just be in the wrong pocket of your wallet, but it might also be in the hands of a dishonest person.

Protect your credit card

Conclusion

While fair credit may sound unappealing, it does not have to be. It also does not have to keep you from building a better financial life for yourself. There are lenders and credit card companies all over the place now. Some of them work specifically with lower credit scores to help those people build their credit.

If you have fair credit, do not just sit around and wait for your score to go up on its own. There is a credit card out there that can help you increase your score and build up your credit. With some patience, determination, and some work, you can find a great credit card for your current financial situation that can help you build a better one.

Credit Cards for Good Credit: Insert Chip Here

I have noticed that the better your credit is, the more credit card offers seem to head your way. Also, I can always tell my credit score has risen when I get a mailbox full of “pre-approved” credit card offers. I do monitor my credit, but I do not watch it 24/7. Credit card companies must though because these companies always seem to know my credit score long before I do. Those offers are always tempting, too. They really are. It is so easy to fool yourself into thinking, “Oh, this could take care of these bills and I could breathe”, especially when it seems like you work more than you sleep or see your family.

While it is true that those credit cards can offer some relief, it is only temporary relief and it comes at a price. Like most things in life, there will be a trade-off. However, credit cards can be utilized to make your situation better than ever if you use them wisely. To do so, it is important that you know what to do, what to expect, and how to choose the best credit cards for good credit. We have you covered with the 411 on credit cards for good credit.

Should I Apply for Credit Cards with Good Credit?

The first question to ask yourself to figure this out is what exactly are you getting the card for? Do you want it to build your credit? Help out with gas in between paychecks? Have it available for emergencies? Or do you simply want to spend money you do not yet have? If the last scenario is the case, back away now. Do not add that temptation to your life. There is enough trouble already- do not add more willingly.

On the other hand, if your intentions are honorable, such as the first three scenarios, credit cards for good credit just might be a good thing for you. Do not just start applying, though. Learn what you can about them first, look for the best one, then remember and live by the reason you want the card.

Types of Credit Cards for Good Credit

You typically find two types of credit cards: secured cards and unsecured cards. Each has different requirements and different benefits.

Secured Credit Cards

Secured credit cards require that you put some type of deposit down. This might be as low as $39. Some, though, require that you put deposit your entire credit limit. Over time as you make timely payments, your deposit will usually be refunded to you.

People with good credit usually do not have to put down a deposit. In some cases, like perhaps if you do not have much credit history, you might still be required to get a secured card.  You might also be required to pay a deposit if you want a higher credit limit than they approve you for.

Unsecured Credit Cards

An unsecured card is the most likely option of credit cards for good credit. This is one area that all of your hard work to build your credit comes in handy. Many cards will still start you out on a smaller limit and increase that as you show your creditworthiness.

Remember, compare credit cards for good credit in order to find the best one for you. Everyone is different, so do not go with the first option. Shop around, see what is out there and then decide.

Understanding Credit Scores

You may be wondering what exactly your credit score means and how it is determined. There are five parts to it:

1. Payment History- 35%- This depends on how well you have paid your debts in the past and if you made the payments on time. As you can see, this accounts for a great deal of your credit.

2. Amounts Owed- 30%- How much of your available credit are you using?

3. New Credit- 10%- Opening new accounts affects your score, but not as much as other things listed here.

4. Length of Credit History- 15%- How long have you had credit?

5. Credit Mix- 10%- You should have more than one type of debt. Mix up installment loans and revolving credit, but try to have more installment loans as they have a more positive effect.

These five factors tell the lender whether it is safe to lend money to you or too risky, though they also consider other factors, such as income. The higher your credit score and better your income, the better chance you have to get credit cards for good credit. Typically, good credit is considered to be a score that ranges between 680 and 720.

Benefits of Good Credit

There is one major benefit to having good credit that all other benefits fit into. And that benefit can be summed up in one word: freedom. While you might not be able to buy anything and everything you want, good credit affords you many opportunities.

You can much more easily get a loan than those with fair or poor credit, so buying a house, car, or other desires is going to be very attainable for you. You also have a better chance of being approved for good credit cards, take better vacations, and so on. Good credit may also help your children during college years if they ever need to take out private loans. This is because good credit can get you much better interest rates than those without it.

Obviously, perfect credit- if it actually exists- is what we should strive for. However, good credit can provide you a lot more financial freedom than fair or poor credit.

But….

Though good credit opens up a lot of doors, there is a caveat. Maybe two. First, it does not matter if you have perfect credit- if you do not have an income or you have a low income, you will still face restrictions. Having a great credit score is just part of it. Lenders and credit card companies are not going to want to lend you anything if you do not have the means to repay them. Additionally, some creditors care a lot more about what is on your credit report than your score. Keep these factors in mind as you apply for credit cards.

Compare Credit Cards for Good Credit

Even if a card seems like a great one, you should never simply go with the first one you find or are offered. You should compare credit cards online to ensure that you are getting the best credit cards for good credit. Interest rates and how they are calculated are the biggest factors to consider. As you search for credit cards for good credit, you should find that you get pretty good interest rates- at least better interest rates than those with lower credit.

Still, you want to be sure you are getting the lowest interest rate possible, so compare multiple cards. You should also look for credit cards for good credit that do not charge interest until the end of the month. This gives you the chance to pay off your balance or pay it down before interest hits. Compare options here on Loanry:


What to Do If You Have Good Credit But Get Turned Down

I mentioned above that lenders want you to have more than a good credit score, so it is still possible to get turned down for credit cards and loans. It is likely that you have worked hard to achieve that credit score, so a rejection is a stab in the chest. With it comes the confusion of what you could have possibly done “wrong”. Fret not as it is actually pretty easy to figure out.

First off, you will likely receive a letter from the lender. It is an “official” rejection that will often list two or three (or more) things that likely affected the decision. You might see things such as not enough credit history, too many open accounts, and so on. With this letter comes the opportunity to request a free copy of your credit report. It is important to know that you can get a free credit report from all three major credit bureaus once a year, and every time you get rejected for credit. You do, however, have to request that copy within the specified time period. Having your credit report in hand can help you figure out what exactly is going on if you have any delinquent accounts.

Or…

As this is the digital age, though, there is a much easier and more helpful way to do this. Sign up for a free Credit Karma account or Credit Sesame account. I am most familiar with Credit Karma and love it, so I personally recommend it, though you can decide for yourself. Through Credit Karma, you can monitor your credit. It alerts you if there are any changes, giving you the opportunity to watch out for any fraudulent activity. While I love this fact, there is an aspect I love more. It is the fact that it tells you what, if any, changes you should make.

For instance, if you do not have a good credit mix, it lets you know that and tells you how to fix it. If you are using too much credit, it lets you know. This can be used as an excellent tool to build and monitor your credit. So, if you get turned down for a credit card, Credit Karma can help you figure out why.

How to Keep Good Credit

You should work as hard to keep good credit as you did to attain good credit- maybe even harder. I can say with absolute certainty that it is easier to keep good credit than to get it in the first place. Once that score goes down, it takes a lot of work to get it back up. Since you are applying for credit cards for good credit, here are some ways to make sure you keep that good credit:

Pay Your Bill Early or on Time

The early you can make a payment, the better off you are. If you charge something Tuesday on your card and get paid Friday, it is in your best interest to pay off what you charged with your Friday check. This is true for three reasons. The first is that if your credit card does not charge interest until the end of the billing cycle, you avoid that interest. Yay! The second is that doing say prevents you from being late with a payment (Score 1 for preemptive action). And the third reason is that the less you owe on your card at any given time, the lower your credit utilization (which you always want to keep under 30%).

If you cannot pay your bill early, at least pay it on time. Late payments will hurt your credit score in a heartbeat. Also, try to pay more than the minimum payment. Make every effort to pay your balance down every month so that you can keep your credit utilization where it needs to be. Again, that is less than 30%. For example, if your credit limit is $500, you should keep your balance at or below $150.

Tips for Paying Your Credit Card Bill on Time Every Month

Do Not Charge More Than You Can Afford

One of the biggest mistakes made with credit card use is charging more than you can afford to repay. This tends to be because people view credit cards as a way to buy all of that expensive stuff they want. They forget, though, that the money has to be repaid, and the balance can get out of hand very quickly.

Let’s say you purchase a $300 TV on your credit card that charges 20% interest. That would make this purchase cost you $360 to repay it, but only if you repay the full amount that month. If you do not, you will get charged an additional 20% interest on your full balance the next month, and the next, until you pay it off. If you let it continue, you could end up paying $3,000 for that $300. You probably wish you would have saved your cash for that purchase at this point, but it is too late.

A rule of thumb, I suggest- and attempt to follow- is to only charge each month what you can pay back in a month. I say attempt because there are times that it simply cannot be helped. Sometimes an illness keeps you out of work and you need to pay a bill, or there is some type of emergency.

Sometimes you have to do whatever it takes, including getting into more debt than you can afford at that moment. To be clear, though, keeping your power on is one thing. Go into ridiculous amounts of debt over a TV is a whole other ball game, and I cannot think of one reason that would justify such debt.

The only exception to this rule, in my opinion, is if you are in a 0% introductory interest rate period. Some companies offer these periods for six or twelve months as an incentive to sign up for their card. During this time, you could purchase that $300 TV without worry. As long as you paid a minimum of $50 per month on your credit card, you would have the TV paid off prior to interest being charged.

The rule still applies though: do not purchase anything with a credit card that you cannot afford to repay. In other words, a 0% interest rate period is not an excuse to go out and spend $5,000 unless you know you can pay off that $5,000 during that period.

Use Only When Necessary

In truth, it is best to only use your credit card when you actually need to. If you can only swipe it when there is no other choice, you will save yourself a ton of interest. Again, shopping sprees are not  necessary. Necessary means that you will somehow suffer in an intolerable way if it does not happen, like going hungry or not having running water. Even when it does not seem like it, I promise that you can tolerate going without impulse purchases or splurges.

Protect Your Credit Card Information

A very important way to protect your credit score is to protect your credit card information. Nothing can destroy your credit as quickly as an identity thief can. How, though, can we do this? I will be honest and tell you that your information is never 100% safe online. There are some very talented hackers out there that put their skills to bad use and can find whatever they want. While this is true, there is something else to consider.  If you were hungry and standing in front of two refrigerators, one locked down like Fort Knox and the other standing wide open, which would you choose to find some food?

Unless you are a renegade, Robert Frost facing the road less traveled, or Pocahontas wondering what’s around the river bend, you will probably take the path of least resistance and choose the unlocked fridge. That’s kind of how identity thieves roll. Yes, they could put the effort into breaking into locked down accounts, but why would they want to? There are so many accounts wide open for the taking. Obviously, nothing is a guarantee. But I have found that the more protection you put into place, the less likely the chance of theft. Here are a few very simple ways to add tons of protection:

1. Watch the Websites You Purchase From

First and foremost, be careful with which sites you make purchases on. Here is a scary fact: hackers can actually mirror other websites and set up fraudulent ones. This means that when you put your card information into those sites, you have literally just given them free access. So how do you know if a site is safe? Take a look at the web address bar. If you see a little lock there, you are good to go. Also, do not purchase from websites that you are not familiar with or that you cannot check out for customer reviews and such.

2. Use Prepaid Cards

Another very safe way to make online purchases is to use a prepaid card to do so, and by this I mean one of those that does not require you to load it from your bank account. If you wish to make a purchase or pay a bill, load the cash onto the card. This one does require a little more work, but if you do not do much business online, you should be okay.

3. Use a VPN

If you have never heard of a VPN, or virtual private network, you are about to get some incredibly valuable information. Have you seen the movie Black Panther? If not, what are you waiting for? Marvel movies are awesome (yes, I am a big fan).

Anyway, in the very exciting Black Panther movie, Wakanda has a shield. And it is covered to the extent that if you do not know it is there, you are not going to find it. Between the reflective dome and the dense foliage, I am not sure that even if I lived there I could find it. It is that well hidden.

This is kind of what a VPN does for your online presence. It shields you, your activity, your information, and more from everyone- even your cable provider. Can a hacker bypass it? Sure, but, like Wakanda visitors, hackers would have to know that the information is there to hack it.

There are a lot of VPN options, but my favorite is SurfShark. I am not going to go into a sales pitch- you can check out their website to compare it to others. But I will say though that the benefit of the SurfShark VPN is that for about $2 per month, you can download it to an unlimited number of devices, so you can cover your entire family. I have yet to find another that covers that much for such a low price.

4. Monitor Your Credit

Monitoring your credit usually means seeing a charge after it is made, so you are not really preventing the fraud. However, the quicker you spot issues, the quicker you can get the ball rolling and fix it.

5. Freeze Your Credit and Your Card

Again, there are no guarantees, but freezing your stuff is as close to perfect identity protection as you can get. For a few years now, many banks and credit card companies have allowed their users to freeze their cards through their apps and websites if the card is lost. This is great because you do not have to immediately cancel the card. (A major frustration when you find the card at the bottom of your purse or in the wrong pocket of your wallet the next day.) You can just as easily unlock the card if you find it.

Lately, though, thanks to all of the website hacks and data breaches that have been going on, you can actually freeze your entire credit. This means that no one, including you, can apply for credit or run a hard check on it. You have to go back in with your password to unfreeze it first.

I decided to do this recently because I did not want anything unauthorized to show up on my account. Not only have I not had any alerts of suspicious activities, but it has actually helped my credit score. When I consider applying for something, I know that I have to go through a process to unfreeze my credit. It gives me time to think through what I am doing. For about three months now, I have not found a thing worth that effort. Since no one has been running hard checks on my credit, my credit score has improved.

Check For Free Identity Theft Protection

Some banks and credit card companies actually provide free identity theft protection. If you are looking for credit cards for good credit, or if you have one already, check with your company to see if you have this.

Conclusion

If you are ready to take the plunge and shop for credit cards for good credit, be sure you are ready to commit some time to compare a few. For those considering a credit card simply to pay off other credit cards, consider a personal installment loan instead as they typically have lower interest and better repayment terms. Regardless of the direction you choose to take, be sure to understand the terms and conditions you are signing up for and make a plan to keep yourself from racking up too much credit card.

Fees Credit Card Companies Don’t Want You to Know

Credit cards can be one of the most helpful and convenient things. They can handle emergencies and other unexpected expenses, gas and necessities in between checks, and more. The question is whether or not those nifty little pieces of plastic are worth the cost. Even more important: do you actually know what your credit card costs you? Let’s take a look.

The Price of Credit Cards

There would be a lot of financial stress off of people if the $20 they charge for pizza would only cost that same $20 to pay off. Unfortunately, that is so not the case. At the same time, though, if that were the case, credit cards probably would not exist. Why not? Because there would be no incentive to loan the money to us.

At their most basic, credit cards are simply loans. Credit card companies loan you money and you repay them- with some extra, of course, as a sort of fee to let you borrow that money. So paying a little extra to borrow that money is not so bad. If we pay the fees, we keep getting to borrow the money.

Here’s the thing, though: you do not have to pay as much as some credit card companies want you to. To pay as little as possible, there are some things you need to know and pay attention to- things that credit card companies would rather you did not know. (Hey, pssst, we are going to tell you anyway.) There are two big things to look out for: interest rates and fees. Let’s break them down.

Interest Rates

The most commonly known extra added onto a credit card bill is the interest rate. This is the very basic, “I loan you this money, this is how much you owe me back since I let you borrow it.” It is just like a loan in that sense.

There are a couple of good things about credit card interest rates. First, you know how much that interest rate is prior to taking out the card. When you apply for a card, they will inform you about the interest rate. Cards with a fixed interest rate will continue to charge that same rate. Some, though, may have adjustable rates. This means you can expect a fluctuating interest rate. Again, though, they will inform you of the type of interest rate you are looking at up front.

Another awesome thing is that if you repay what you borrow before the close of the billing cycle, some companies will not charge interest. This gives borrowers a chance to get out of debt before it grows. If at all possible, pay your entire bill every month before the interest is tacked on. If you cannot, pay as much as you can so you will at least be knocking your debt down.

Beware Intro Interest Rates

Introductory interest rates can be awesome- especially if you get one with a very low or 0% interest rate. The problem? That introductory period comes to an end at some point. It is imperative that you know when that point is. Put it on your wall calendar, in your Google calendar, write it on your forehead if you must- just do not overlook it.

Otherwise, you might go out and put $1,000 on your card right after your intro period ends and you suddenly get a bill for $1,360. You might stare at the bill in silence, scream, freak out, or pass out, but nothing changes the fact that your interest rate suddenly jumped from 0% to 36%. Do not let the date sneak up on you.

When you notice the date is approaching, you have a few options. First, consider giving your credit card company a call to renegotiate your interest rate. There is no guarantee that it will work, but if they fear they might lose you as a customer, it is possible. It really never hurts to check.
Another option is to look for another card with a good introductory rate. You should not have a problem locating another one at all. This is because credit card companies all over will do what they can to attract more customers.

You might also keep your current card put away for extreme- like really, really extreme dire straits. However, if you are sure that you will no longer use it at all, close the account. If you do not and that credit card company charges any fees, you may still get a bill.

Credit Card Fees

Now, let’s get into the less well known credit card fees. Not every card will charge all of these fees, but you need to know what to look out for. Here are some of the common credit card fees.

Late Fees

Just as every other bill has a habit of adding on pesky late fees, so do credit card companies. While these late fees may vary slightly, the most common late fee that I have seen is around $39. It is entirely possible that you simply forgot to pay your bill. It does actually happen.

However, there are many people- me being one of them- who have not paid a bill on time due to the lack of money to pay it. For those of us who are lacking the money to pay the bill, it is not going to be any easier to pay a late fee. And, worse, once that late fee is added to your balance, it is fair game. It will accumulate interest.

So, imagine this: you swipe your card at Domino’s for a $20 total and you are late paying the bill. Now, $39 is added on to that $20, meaning you now owe $59. Ah, but wait- there’s more. Your card charges 15% or 17% interest, so that adds on another $10 or so. You went from a $20 charge to a $69 bill. That’s an extra $50- that’s more than you paid for the pizza! And that is if you even get it paid off this month. If not, there will be more interest added to the next bill.

Sometimes late fees cannot be avoided. Life can get in the way and throw us off track. It happens to everybody. You might not be able to avoid the late fee, but try to find the one with the lowest late fee (and lowest interest rate). That way, even if you are late, it will not add on too much.

Balance Transfer Fees

Oh, some companies have no shame in playing on our weaknesses- one of which being debt. If you owe hundreds- or even thousands- to credit card companies and you are suddenly offered a balance transfer card with 0% interest for the first six months or year, it can be so tempting to jump on it.

However, these cards tend to charge a balance transfer fee. Granted, they may boast a 3% fee, which sounds like a cake walk, but 3% of a large balance is still a large amount. If you really want to transfer your balance, you will need to do some math. Figure out how much it will cost you to transfer the balance. Then, think about what you currently pay in interest on these other cards. Which is lowest and has the best terms? That is the one to go with.

Annual Fees

Annual fees, or membership fees, are pretty common with credit cards, though not all cards charge them. Those that do often offer the best perks, such as cash back on gas and groceries, airline miles, and so on. I have seen annual fees as low as around $25, but more often they are closer to $100. Before jumping on a card with an annual fee, it is important to understand the ins and outs of the cards.

Really read the fine print- maybe have a friend read it, too- to make sure you know what you are getting into. Even getting 50% cash back on gas does not help if you only take the bus. You need to know all the details and determine if those perks will benefit you (more on this below).

Foreign Transaction Fees

If you never, ever purchase anything at all that involves a foreign entity or bank, you can probably ignore this fee. You may think, as many do, that a foreign transaction fee is added when you physically go out of the country and purchase something. This is not the case. You can be sitting on your couch in your pajamas in Anytown, U.S.A., but if you purchase something that involves a foreign bank at all, you just might see this charge. It will likely be anywhere from 1% to 3% of the charge. The only ways to avoid it is to avoid international business or make sure that your card does not charge you for this type of fee.

Cash Advance Fees

Not all cards let you withdraw cash, but those that do charge a fee with interest starting the day it is charged. You not only pay that interest, but you also pay a fee of about 5% of the withdrawal amount. There are also limits involved. If you find yourself needing cash too often, you may need to consider a new income stream because withdrawals fees will eat through your wallet in no time.

Returned Payments

If you try to make a payment on your credit card bill that does not clear for some reason, there is a chance you will incur a returned payment fee. It is basically like a “bounced check fee”. There is a chance that you can avoid the fee if you are able to take care of it before the actual due date.

However, if you cannot or if your credit card company does not give you the opportunity to fix it, you just might be paying of a fee. Fortunately, there are laws governing credit card fees that prevent the credit card companies from getting too crazy.

Like the late fees, returned payment fees will most likely be $28 or $39. If you have had no returned payments in the last six months, you cannot be charged more than $28. If there have been any other returned payments in the last six months, they can legally charge you up to $39 but no more.

Over the Limit Fees

Depending on your credit history, you may not get the chance to go over your limit. However, many companies allow some- or all- of their cardholders to go over their limit. For those that do go over their limit, you may or may not find yourself paying an over the limit fee.

According to legislation, this fee cannot top $28 if you have not gone over your limit in the last six months and no more than $39 if you have. The good news, though, is that you can completely refuse the ability to go over your limit by opting out of it. If you do this, any charge over your limit will be declined. Also, you can only get charged over the limit fees if you opted in to it in the first place, so your credit card company cannot just charge you without you knowing that it could happen.

Paper Statement Fees

This fee probably gets on my nerves more than the rest. Why do I have to pay for you to send me a bill? That is insane. Many companies I know will reward you for signing up for paperless billing- that is awesome. But, I am still trying my best to figure out exactly why it is okay for a company to charge a customer for sending out a bill. I understand that it *may* encourage customers to sign up for paperless billing, though I am quite unsure if that is the real reason.

As crazy as it may be, some companies are charging as much as $10 per month for a paper statement- way more than it costs to send it. If you have access to the internet and a printer, you are much better off printing the thing out yourself, if you need a paper copy. You could even print it out at your local library for way less than $1.

Reward Redemption Fees

Another irritating fee is this one- “Let’s charge you for using the rewards that you are already paying for through your annual fee.” These fees may be as low as $20 and can go up as high as you will agree to.  Not every company charges a reward redemption fee. Others may charge them if you redeem a certain way- like it is free to do online yourself but if you call and have someone else do it they charge.

Other companies charge you for redeeming them regardless of how you redeem them. This is definitely a fee you should find out about and add in to your calculations when deciding if the perks are worth it.

Activity Fees

Credit card companies do not want your credit cards to sit in your wallet unused- they do not make any money that way. These fees were once called inactivity fees and you would be charged for not using your card. Financial laws now make it to where this can only happen if you do not use your card for more than a year.

Now, they charge what they call activity fees. This means that if you do not spend the amount of money that they set- which may be over $2,000- you owe a fee. Some companies charge this fee up front, then refund it to your card after you spend the specified amount. These fees are pretty common, but you can find cards that do not charge them.

Payment Protection Fees

These fees are intended to cover the charges you make in case of job loss or some other issue covered by the program. These can get expensive as they may charge as much as $1 per $100 on your bill. That can add up big time. It would be so much better to just put some money up yourself to cover hard times.

Please do be aware that although these are the common fees, financial laws change quite often. When they do, some credit card companies get creative and come up with ways to present new fees. So if you notice something that we did not mention here, it is not surprising.

Are Any of the Fees Worth It?

Like many other financial topics, there is no one-size approach to answering this question. It really, REALLY depends on your finances, your lifestyle, and, well, you. Let me try to break this down. Let’s say that I find a credit card that charges a $99 annual fee with one of the perks being that I can earn 1% back on groceries. 1% may not sound like a lot to some, but we are a family of six- three of which are tweens and teens. We spend a lot on groceries, so that 1% cash back would more than pay for the annual fee- it would leave a nice little bit in my pocket, too.

On the other hand, we never travel by plane. Even if we did, it would take entirely too long to earn enough airline miles to justify any type of annual fee. For someone who travels enough, it might be worth paying for the airline miles perk. A single person who always eats out, though, may not earn enough back on groceries to justify that card.

In my personal opinion, annual fees for perks you can actually benefit from might be worth it. Others, though, not so much. I mean, no, paying to get a paper statement or having to pay late fees are never worth it. If you just absolutely have to pay something with cash, a cash withdrawal fee might be worth it. Also, if you desperately need to go over your limit for some reason and the over the limit fee is cheaper than loan interest rates, you might find yourself willing to pay for it.

Again, though, this all comes down to you. Before signing up for a card, look at all of the perks and fees attached to it. Really do some calculations and ask yourself if those fees are worth it. Will you actually use the perks? When I ask this, I do not mean that you suddenly think, “Oh, yeah! I am going to start collecting airline miles so when I want to go on a trip, I can.” More often than not, you will either never take that trip or not take it before your rewards expire. If you already travel every month or two, though, the fees might be well worth it.

Avoid These 7 Common Credit Card Mistakes to Save Money

Avoiding Credit Card Fees

With some of these fees, they can only be avoided by not getting a card that charges those fees. Others just require a watchful eye and some discipline. Here are some tips to avoid fees:

Compare Credit Cards

The biggest way to avoid fees is to really compare the credit cards you are looking into. It is not likely that they will charge all of the same fees and offer the same perks. You have to pay a good deal of attention to these so that you have no surprises and so you can make the best decision.

Know the Fees

Going along with the previous tip, you have to know the fees your card charges if you expect to avoid them. If you are unaware that your card charges a paper statement fee, you will not be so quick to sign up for paperless billing. Know your fees well and the terms that go with them.

Keep an Eye on Your Bill

Always, always pay attention to your credit card bill- for more than one reason. First, you want to be sure that you are not being charged for something you did not purchase. This can help detect identity theft early. If you notice it, shut the card down immediately and call your credit card company.

The other reason is that you want to be sure you know what you are being charged for. Do not let yourself be surprised by fees you did not even know existed, or increases that you were not expecting. Keep a close eye on your bill and if you notice anything wrong or different, contact your credit card company immediately.

Shop Credit Cards Consistently

The best credit card shopping trick of all time is to actually shop credit cards. I mentioned comparing credit cards a moment ago. This should not stop after you choose your credit card the first time. On a pretty regular basis, shop around for credit cards. You can often find better interest rates and perks if you look around enough. At the very least, you need to do this prior to any special interest rate periods ending. Also, if you use your cards wisely, you will find yourself eligible for better things as your credit improves.

If you’re interested in getting a new credit card, you can shop them right now, here on Loanry. Consider companies selected by our partner Fiona. See below:


Use a Credit Card to Build Credit

If you are looking for a way to build your credit, credit cards are definitely a way to do it. You do, however, have to be incredibly responsible with it. Here are some tips to use your cards to build credit which can lead to better credit cards and help you achieve other financial goals:

Watch Your Charges

Do not charge items that you are not certain you can pay for. While you may have to break this rule in case of emergency, do not break it simply to splurge. Going out to buy a $1,000 smart TV that you do not see yourself having the money for any time soon is just not a good idea. Credit should not be used as a crutch to splurge.

Pay Your Charges Immediately

You do not have to wait until your bill is due to pay it. Some very smart people I know will go to the grocery store on their designated day. They have been budgeting for groceries, so they have money put away for it. They use their credit card at the store, but immediately pay it off when they get home.

For example, let’s say my friend Sally has budgeted and put away $100 for groceries. She waits to go to the grocery store until that $100 is in her bank account. At the grocery store, she pays $100 with her credit card. As soon as she gets home, she pays that charge off with the $100 she has put away.

How does this help? First, it shows her actually using her credit. Creditors want to see this, so Sally is showing good things on her credit but she is paying off the charge before interest is accrued. This, of course, saves her some money.

Pay Your Credit Card Bill on Time

If you cannot pay your bill early, at least pay it on time. Find a card that sends out the bill at a time you can actually pay it. The good thing with many credit card companies now is that they will let you choose your bill date. This means that if you get paid on the 17th, you can have your bill due on the 20th. Then, pay the bill on the 17th- you might be able to save some of that interest. Look for a credit card that gives you control over your bill date.

Protect Your Card

Identity theft is a big problem. Guard your credit card information at all costs. If you shop online, only do so on sites that have protection. You can tell these sites because they have a little lock in the address bar. You do not want to find yourself owing money for things you do not even get to enjoy because someone else is.

Conclusion

Remember that while credit cards can be handy, they can also be hazardous to your credit, which can be hazardous to your future. Be diligent and watchful, and know exactly what you are paying for. If you are in credit card debt with high interest rates, you might consider consolidating that debt with a personal installment loan. Just be sure that whatever steps you choose to take are well thought out and helpful to your financial situation.