If you haven’t started your children or teens off with a kids checking account optimized for their needs, you’ll want to help your college student open a checking account before they begin school.
Opening a checking account for your child can teach them about money management and financial responsibility, along with providing them an easy way to make debit card purchases. It’s never too late to get started.
One advantage to helping your young adult open their first student checking account is they have more options than they might have when they were 16 or younger. Students over 18 can open a bank account with few restrictions.
But choosing a student checking account may give them access to higher interest rates and added features and benefits, along with fee-free checking, no monthly maintenance fees, and no minimum deposit to open an account.
12 Best Student Checking Accounts
Not surprisingly, many of the best student checking accounts come from banks that also offer some of the best checking accounts for any age. However, the products below – in most cases – are tailored for young adults from the ages of 18 to 24, with the features this age group desires most, including an intuitive mobile app and low or non-existent minimum deposit requirements.
1. Best for Students under 18: Capital One MONEY Teen
Most of the student bank accounts on our list exclude children under the age of 17 or 18. Capital One MONEY Teen checking is available to children ages 8 and up. It comes with all the benefits and security of a big bank, providing peace-of-mind. This includes access to Capital One branches and Capital One Cafes for in-person service. This account also serves as a great tool to teach your young adult the basics of banking.
Capital One MONEY Teen checking is a joint account with no monthly fee, no overdraft fees, and access to 70,000 ATMs with no fees. Plus, earn 0.10% on all balances, including those in checking.
You can link Capital One MONEY Teen checking to any other bank account through any bank or neobank, making it easy to transfer money to your teen while they are away at college. Plus, you can keep tabs on their spending with their linked account in the Capital One mobile app.
When they graduate, your teen can hold onto their MONEY account or transfer the funds into a top-rated Capital One 360 Checking account of their own.
2. Best for Working Students: Chime
Chime is not a bank. It’s a financial technology company and mobile app backed by Stride Bank, NA, and The Bancorp Bank. Many features make it perfect for working students. First, you can receive your paycheck up to two days earlier than you might at other banks with ACH deposit.
Plus, you can set up automatic transfers to your linked Chime Savings account, helping you to establish good financial habits early on. Simply set up Chime to transfer a percentage of your paycheck into your Savings Account every time you receive a direct deposit.
When you use your debit card for purchases, the “Save When You Spend” program rounds up your purchase and transfers the difference directly into savings. That small change can really add up, whether you’re saving for your first apartment after college, a new car, or your next tuition bill.
For working students looking to build their credit, Chime gives account holders access to a Credit Builder Secured Visa, with no annual fee, no credit check, and no security deposit required. Instead, the credit account is secured by your Chime checking account with monthly direct deposits.
Like many of the best student bank accounts on this list, Chime has no overdraft fee, no monthly service fee, no ATM fee for in-network ATMs, and no minimum balance requirements.
3. Best Account Opening Bonus: Chase College Checking
Chase Bank has been handing out student account opening bonuses like they hand out lollipops at their branches lately. College students ages 17 to 24 can snag a $100 bonus when they open an account online or at a local branch (students age 17 will need to visit a branch). You’ll just need to make 10 qualifying transactions within the first 60 days of opening the student bank account.
What’s a qualifying transaction? Virtually anything, according to the Chase website, including debit card purchases, online bill payments, Chase QuickDeposits, Zelle transfers, and ACH credits. Bank as you normally would, and you should easily earn that $100.
In addition to the generous sign-up bonus, Chase College Checking has no monthly fees for college students for up to five years, access to 16,000 ATMs and 4,700 branches across the U.S., and zero liability protection for unauthorized debit card purchases.
Chase Overdraft Assist covers purchases that exceed your account balance. You’ll pay no overdraft fee if you’re overdrawn by $50 or less at the end of the next business day.
4. Best for Yield: Ally Interest Checking
Ally Bank is the first bank on our list not designed specifically for students, but the vast array of features in this interest bearing checking account makes it ideal for young adults.
Ally Bank offers an APY of 0.25% on checking account balances and 4.00% APY on balances in a linked Ally Bank savings account. Neither account has any monthly fees.
Ally offers several features to help those on a tight budget manage their money. You can organize your money into spending and saving buckets, which can help you see exactly where your money goes each month. Ally will also review your bank accounts and help you find opportunities to save, and shuttle that extra money into your high yield Ally savings account.
Customers who have deposited $100 or more into their Ally checking account, or $250 via direct deposit, gain access to Ally’s CoverDraft service after 30 days. This protection covers up to $100 or $250 in charges that would overwise overdraft your account. Some purchases, including Zelle transfers, or ATM withdrawals, may be declined if they would put your account into overdraft.
Ally has no monthly maintenance fee, no overdraft fees, no ATM fee for in-network ATM transactions and no minimum balance requirement.
5. Best for Referrals to Earn Extra Cash: GO2bank
GO2bank, the digital bank associated with the top financial technology company Green Dot, offers an easy, straightforward money account with overdraft protection up to $200 with eligible direct deposits. The linked savings account pays a high 4.5% APY, with no fees for qualifying customers and no minimum balance requirement.
You can get regular ACH deposits from your job or side gigs up to two days earlier than most traditional banks. If you receive government benefits, such as Social Security, you can receive those deposits up to four days early.
Your GO2bank account will have a monthly service fee that costs $5 per month, unless you have a qualifying direct deposit that month. You will also pay fees for transfers from a linked debit card from another bank or fintech, mobile check deposits, and cash deposits.
If you are the type of person with friends who come to you for advice, you can earn $50 for each friend you refer to GO2bank who signs up with direct deposit. Your friend will also earn $50. You can use this offer for up to 30 friends, yielding $1,500 annually. This makes a GO2bank account great for social media influencers or college students with a large friend group.
6. Best for Full-Service Banking: Bank of America Advantage SafeBalance Banking
Bank of America Advantage checking accounts offer options for people in various stages of their financial life. College students might be best to start out with Bank of America Advantage SafeBalance banking, a straightforward money account with no overdraft fee and no checks.
The account has no monthly fee for students under the age of 25 or customers under the age of 18. Preferred Rewards customers also receive free checking. There is a $25 minimum deposit to open an account.
New Bank of America customers can earn a $100 account opening bonus when they open an account and set up direct deposits of $1,000 or more within 90 days.
7. Best for Comprehensive Money Management: PNC Virtual Wallet Student
Money Magazine named the PNC Virtual Wallet on its best banks for students list three years running. PNC Bank divides this mobile account into three separate accounts for everyday spending, “reserve,” or short-term savings, and “growth” for long-term savings.
The account has no monthly service fee for students for up to six years, along with all the benefits of a regular PNC Virtual Wallet. Additionally, students receive a courtesy refund of your first overdraft fee on your Spend account, one free incoming domestic or international wire transfer per statement period, and free paper statements if you opt in to receive them.
Once six years have passed or you are no longer a student, your account converts into a regular PNC Virtual Wallet, which may have associated monthly fees. Check the PNC website at that time to determine the fees and how you can waive them.
Your PNC Virtual Student Wallet pays a 0.01% APY on money in your Reserve account, and .02% on account balances up to $2,499 in your Growth account, with .03% APY on balances over $2,500. These may not be the best rates available, but the reputation of PNC Bank, along with the money management features in a Virtual Wallet Student account, make this an account worth considering for students just learning to budget.
8. Best for Establishing Savings Habits.: Wells Fargo Clear Access Banking
As one of the Big Four banks in the U.S., Wells Fargo offers a reliable and safe place to store your money, plus access to thousands of branches nationwide.
The Wells Fargo Clear Access banking account is great for teens and college students, since it’s available for account holders ages 13 to 24. Anyone under the age of 18 will need to open their account in a branch and anyone younger than 17 must have an adult aged 18+ as a joint account holder. The account has no monthly maintenance fee for anyone 24 or younger. A $25 minimum opening deposit is required.
Wells Fargo Clear Access banking is a simple, straightforward money account with no checks and personalized service at Wells Fargo branches. There are no overdraft fees with the account, but also no overdraft protection. Transactions that exceed the account or minimum balance amount will be declined, which helps put teens and young adults in charge of their money.
You can link your Clear Access bank account to a Way2Save Savings account and earn a 0.15% APY. You can establish good money habits by setting up automatic savings. Wells Fargo will transfer $1 from your Clear Access account into your checking account each time you use online bill pay or use your debit card for a one-time purchase. You can also transfer as little as $25 per month or $1 per day into your account to see your savings grow even faster.
9. Best for Cash Back: Discover Cashback Debit
The Discover Cashback Debit account may not be marketed to teens and students, by name. But, it’s enticing to anyone looking for a standard checking account with no monthly service fees and 1% cashback on debit card purchases, up to $3,000 per month. It’s highly unlikely for most college students to max out that free money (unless they are putting housing, tuition, and car expenses on their card).
Discover Cashback! debit card offers many of the benefits you’d expect from these top-rated money accounts, including early direct deposit, 60,000+ no-fee ATMs, and overdraft protection from your linked Discover Savings with no fees. Discover charges no fees for insufficient funds, bank checks, regular checks, or expedited delivery of a replacement debit card.
These features make it one of the most convenient accounts you can hold. Plus, you don’t have to worry about “aging out” of the account and facing fees for a non-student bank account. Your Discover Cashback Debit account will be free no matter your age. Link it to a Discover Savings Account to earn 4.0% APY with no minimum deposit required.
10. Best for Unlimited Out-of-Network ATM Fee Reimbursement – Axos Bank Rewards Checking
Another bank account not marketed to students but meeting all their needs is the Axos Bank Rewards Checking account. This account has no monthly fees. It also reimburses ATM fees for out-of-network ATMs nationwide, which is great for students who travel domestically or who don’t have ATMs in their network on campus.
Pay no overdraft fee or non-sufficient funds fees with this account. Best of all, earn an APY of 0.40% on your checking balance if you receive monthly direct deposits of $1,500-plus. Young investors can ramp up their interest rate by 1% with an average daily balance of $2,500 in an Axos Invest Managed Portfolio Account, plus another 1% by holding $2,500 in a self-directed trading account. If you take out a loan through Axos, you can add another 0.60% to your APY.
College students likely won’t regret opening an Axos Bank account to take them through adulthood, especially with options for investing, low mortgage rates, car loans, and more.
Plus, earn a welcome bonus when you open an account and have direct deposits of at least $1,500 within a single calendar month during the first three months of account opening.
11. Best Credit Union: Alliant Credit Union Teen Checking
Alliant Credit Union offers a teen checking account for minors ages 13 to 17. The account is insured up to $250,000 per account holder by the National Credit Union Administration (NCUA). The adult account holder must be an Alliant Credit Union member. But it’s easy to join by depositing $5 into an Alliant Credit Union saving account. Alliant Savings earns an APY of 0.25%.
The teen checking account has no overdraft fees or non-sufficient funds fee. It also has no monthly fees or minimum balance requirements. Account holders gain access to 80,000+ fee free ATMs nationwide plus $20 per month in ATM fee reimbursement for out-of-network ATM use. This is an interest earning checking account which also pays 0.25% APY on all balances as long as you have at least one deposit, via ACH direct deposit, mobile check deposit, or transfer from another bank or credit union, each month.
12. Best for Young Shoppers: Varo Bank
Varo Bank is another account not necessarily marketed to college students but definitely optimized for their needs. The Varo Bank debit card delivers up to 6% cash back, with money deposited into your Varo account as soon as you accrue $5 in rewards.
Like many of the best student accounts on this list, Varo has no monthly fee, no minimum balance requirements, and no overdraft fee. If you need money before payday, you can use Varo Advance, an interest-fee program that allows you to borrow up to $250 and pay it back within 30 days. You will not pay fees to borrow less than $20. Borrowing up to $250 comes with fees that can be as high as $15, depending on the amount of cash advance you need.
Varo Bank uses the Allpoint network of ATMs, with fee free access to 55,000+ ATMs nationwide. Using other bank ATMs could result in charges up to $3 from Varo and fees charged by the other banks, as well.
It pays to open a linked Varo Bank savings to take advantage of a high 3% APY. Account holders with direct deposits equal to $1,000 per month and a positive balance in their Varo checking and savings can earn up to 4% APY.
One of the best things about a Varo account is it can grow with you. You won’t pay additional fees as an adult out of college, so you can keep the same bank account you started with for your entire life if you want.
Methodology: How We Select the Best Student Checking Accounts
To find the best student checking accounts, we evaluated the monthly maintenance fees, ATM fees, minimum deposit requirements, features, benefits, banking services provided, along with customer service and mobile app access at several of the biggest and most well-known banks and credit unions.
ATM Network
Most banks have ATM networks or partner ATM networks of 20,000 or more ATMs nationwide where you can use your debit card with no ATM fees. You might be surprised to learn that even online banks and financial technology companies that are not a bank provide access to thousands of ATMs nationwide through partner programs.
Nationwide availability (physical locations or mobile access)
College students often split time between their college campus and the home where they grew up. Finding a bank with physical locations in the areas they live or an online bank that provides a mobile banking app with fee free mobile banking from anywhere is important.
Fees and minimum requirements
Bank fees no longer have to be a way of life for today’s young adults. We chose financial institutions with no monthly maintenance fees or easy ways to waive maintenance fees.
Benefits such as high APY, cash-back rewards, or other additional perks
Student checking accounts today are more than just “bare bones” places to store your cash. Many student bank accounts offer perks, benefits, and high-yield savings or an interest bearing checking account to provide added value.
Overdraft fees
Cash management mistakes happen, especially when young adults first start learning to budget and manage their finances. Many banks have no overdraft fees and some offer overdraft protection to help out in a pinch.
How to Choose the Best Bank for College Students
We’ve offered 12 solid options to help you choose the best student checking account. Before you open a student bank account, it’s a good idea to think about what you need in your primary checking account and a linked savings.
The list below makes it easy to review your must-haves and nice-to-haves when you choose your first bank account as a college student.
Best student checking account interest rates
If you’re looking to earn interest on your standard checking account, many banks offer this feature. Review annual percentage yield (APY) figures for your top choices.
Remember, a higher savings interest rate might benefit you more, since money in your checking account tends to fluctuate based on paychecks, bills, and expenses. The best checking account may not pay interest, but can save you money in other ways.
Annual Percentage Yield (APY)
Likewise, you can put money in your pocket with an account with linked savings offering a high annual percentage yield (APY).
Mobile Check Deposit
If you get paid via paper checks, you’ll want to find an account with a mobile app that offers mobile check deposit. Find out how fast deposits clear, and if mobile banking services are fee free.
No Monthly Maintenance Fees
Many banks today make it easy to find a free checking account with no maintenance fees. If you have to pay a monthly maintenance fee, find out exactly what you’re getting for your money. Find out if the perks and benefits, such as a cash back debit card or reimbursement of ATM fees make the maintenance fees worthwhile.
Minimum Deposit and Minimum Balance Requirements
When you’re just getting started, cash may be tight. It’s important to find an account with no minimum deposit to open.
Banking Services Provided
Accounts should have customer service online, by phone or in branches, plus an easy-to-use mobile app and a debit card with no ATM fees.
FAQs About Student Checking Accounts
Read what people are asking about the best student checking accounts, including minimum deposit requirements and benefits of a student checking account.
What are the benefits of a student bank account?
A bank account tailored for students gives young adults a head start on their financial future and learning how to manage money. For students who work, they can receive direct deposits in their student account, pay bills online, and send money to friends and family using Zelle.
How to get a student checking account bonus?
Several student checking accounts, including Chase, provide sign-up bonuses. Make sure to read the fine print and complete the requirements, which may include setting up direct deposit or making a minimum opening deposit, to collect the bonus.
Can I open a student checking account without a deposit?
To open a student checking account without a minimum deposit amount, simply look for a bank account, like Varo, that has no minimum opening deposit.
Are there any downsides to opening a student checking account?
When you open a student checking account, you’ll want to make sure you won’t pay monthly maintenance fees. Some student checking accounts convert to a regular account once the student graduates, and there may be fees associated with the regular account.
Is there an age limit on a student checking account?
Most student checking accounts are open to students from the age of 18 to 24 without a joint account holder. Customers under the age of 18 may be able to open an account with a joint owner.
Can minors open student checking accounts?
Accounts like Capital One Money Teen are available to children ages 8 and up with a joint account holder. Some other accounts require students to be 18 or older.
What happens to your student checking account when you graduate?
Many of the student bank accounts on this list won’t change when you graduate college. Others offer the option to convert your account to one of the bank’s regular checking products. A Chase College Checking Account has no monthly fees for your first five years in college, but if you graduate or exceed that time frame, you might pay a $6 monthly maintenance fee unless you meet other requirements.
Secured credit cards are good options for those with bad credit (FICO scores of 629 or lower). They’re easier to get approved for because they require you to put down a refundable security deposit, which becomes your credit line and eases the risk that the card issuer is taking by lending you money.
But coming up with that deposit, often around $200, can still pose a hurdle.
The Yendo Credit Card, issued by Cross River Bank, works a lot like a secured credit card, but instead of a cash deposit, it’s secured by an asset: your car.
For those who lack the liquidity for a cash deposit — and can’t afford to tie up that money for months on end — this might sound appealing. But using your car as collateral, even if it’s just for a few months, is a move that warrants careful consideration. After all, your automobile is among your most important assets, as it allows you to get to and from a job. And if you default on your payments with the Yendo card, it’s possible that your car could be repossessed. (More on that later.)
Here are five things to know about the Yendo Credit Card.
1. Your car is your collateral
The Yendo card isn’t the only asset-secured credit card on the market, but it may be one of the only ones specifically tailored for automobile owners. Eligible vehicles that can be used as collateral for the Yendo card include:
Light-duty trucks.
Sport utility vehicles.
Furthermore, the vehicles must meet these requirements:
Must be 1996 or newer.
Must be in working condition.
Must be owned by the card applicant. If you leased the car or took out a loan to purchase it, it can’t be submitted as collateral.
To be approved for the Yendo card, you’ll need to upload pictures of the car in the Yendo app, then drop the title off at one of Yendo’s partner locations or mail it to Yendo via FedEx. (Yendo covers the shipping costs.)
Your credit limit on a Yendo card will depend on the year, make, model and condition of your vehicle and will range from $450 to $10,000. If Yendo determines that the value of your car isn’t at least $450, you can’t get the credit card. Only one vehicle is allowed per credit line.
2. Owning a car isn’t the only requirement
Potential Yendo cardholders have to check a few more boxes to qualify. Applicants must live in the U.S., Washington, D.C., or a U.S. military location and have either a Social Security number or Individual Taxpayer Identification Number (ITIN); however, U.S. citizenship isn’t required.
You’ll also need to provide proof of income to demonstrate an ability to pay your credit card bill, but Yendo doesn’t disclose the minimum income required to get the Yendo Credit Card.
🤓Nerdy Tip
The Yendo card joins a list of credit cards that can be used almost immediately upon approval. Most Yendo applicants, within 30 minutes of being approved, will receive a virtual credit card that can be used to make online purchases or with Apple Pay, Google Pay or Samsung Pay.
3. You can get the title back …
Yendo will return the vehicle title to you as long as you’ve completely paid off the credit card balance and ask Yendo to close the account.
In this way, the Yendo Credit Card acts like a secured card that returns the security deposit to the cardholder if the account is closed in good standing.
4. … Or you could lose your car
Yendo founder and CEO Jordan Miller said in an email that repossession is a possible consequence of missed payments — but only after the issuer has exhausted all other options to recoup the outstanding balance. He also said that one missed payment will not trigger a repossession as long as the cardholder communicates to Yendo about their financial hardship.
Even if losing your car isn’t a likely outcome, some people may still be wary of putting up a vehicle as collateral. For those who don’t want to take that risk, other secured cards may be more appealing. The OpenSky® Plus Secured Visa® Credit Card requires a $300 security deposit, but you can pay that over 60 days. The Capital One Platinum Secured Credit Card also allows cardholders to pay the deposit in installments, and it’s possible to get a $200 credit limit with a $49 security deposit, depending on your creditworthiness.
The point is, you may not need $200 to get started with a secured credit card.
🤓Nerdy Tip
As of this writing, the Yendo Credit Card reports to two of the three major credit bureaus: Equifax and Experian, but not TransUnion.
5. There’s an annual fee
The Yendo Credit Card doesn’t require a cash security deposit, but it does charge a $40 annual fee that’s waived in the first year. And unlike the deposit for secured credit cards, annual fees aren’t refundable.
A solid $0-annual-fee alternative is the Capital One Quicksilver Secured Cash Rewards Credit Card. It earns an unlimited 1.5% cash back on all purchases, and eligible cardholders can eventually qualify to upgrade to a traditional, non-secured Capital One credit card (and get their deposit back).
Editor’s note: This is a recurring post, regularly updated with new information and offers.
Capital One VentureOne Rewards Credit Card overview
The no-annual-fee Capital One VentureOne Rewards Credit Card (see rates and fees) offers the same great redemption options as its sister cards, the Capital One Venture Rewards Credit Card (see rates and fees) and the Capital One Venture X Rewards Credit Card (see rates and fees) — but with a lower rewards rate and fewer perks. The miles earned on the card can be transferred to Capital One’s 15-plus airline and hotel partners or redeemed directly as a statement credit on eligible purchases. Card Rating*: ⭐⭐⭐
*Card Rating is based on the opinion of TPG’s editors and is not influenced by the card issuer.
No matter which card from the Capital One Venture family you choose, all three options offer simple earnings structures, 17 airline and hotel transfer partners and easy-to-use rewards.
For those who like a straightforward option for earning and redeeming rewards, you can also use your miles to “pay” back travel purchases charged to your card in the past 90 days.
If you’re on the fence about paying an annual fee, you’ll want to take a look at the Capital One VentureOne Rewards Credit Card.
Capital One VentureOne welcome offer
The Capital One VentureOne comes with a sign-up bonus of 20,000 bonus miles once you spend $500 within the first three months from account opening. Based on TPG valuations that peg Capital One Venture miles at 1.85 cents apiece, this sign-up bonus is worth $370.
That’s significantly less than the Venture card’s bonus, which is currently at up to 75,000 miles after you spend $4,000 on purchases within the first three months of account opening, and valued at $1,388 by TPG.
However, the 20,000-mile bonus is still higher than what many other no-annual-fee cards offer. Additionally, the spending requirement for the VentureOne card’s bonus is much easier to meet than the Venture card, with it requiring just $500 in spending.
Earning miles on the Capital One VentureOne
The VentureOne earning scheme is similar to the $95-a-year Venture card but with a slightly lower return on everyday spending.
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You’ll earn a flat 1.25 miles per dollar on everyday purchases, which equates to a solid 2.33% return using TPG valuations. While decent, it isn’t the best return for everyday spending. However, the benefit of an unlimited earning rate is that you don’t have to keep up with multiple bonus categories — exchanging simplicity for maximizing value.
Plus, if you are booking hotels and rental cars through the Capital One travel portal, you’ll earn 5 miles per dollar on those reservations — a solid 9.25% return.
Redeeming miles on the Capital One VentureOne
You have a few options when it comes to redeeming Venture miles.
The most straightforward way is to use them to pay for eligible purchases as a statement credit. This allows you to sign in to your Venture Rewards online account and redeem miles at a flat 1 cent apiece for a statement credit against eligible travel purchases you’ve made with the card in the last 90 days.
This includes many travel expenses that traditional miles won’t cover, from Uber rides to Airbnb stays. There are no award charts, blackout dates or minimum redemption amount.
Related: Use your Capital One Venture miles to stay at these 10 stunning Airbnb homes
However, to get more value from your sign-up bonus, you should try the more advanced redemption option — maximizing Capital One’s transfer partners. Capital One has 17 airline and hotel partners to which you can transfer your miles, including Avianca LifeMiles, British Airways Avios, Etihad Guest and Turkish Airlines Miles & Smiles.
This redemption option is slightly more advanced than just redeeming against charges at a fixed value, but it’s not as difficult as it sounds. We have plenty of guides that will teach you how to best redeem your miles using transfer partners:
Capital One VentureOne benefits
The VentureOne card comes with the standard suite of World Elite Mastercard travel and shopping benefits, including:
In addition to these World Elite Mastercard perks, the VentureOne is among the few no-annual-fee cards with no foreign transaction fees, making it a great option to use outside of the U.S. Benefits are only available to accounts approved for the World Elite Mastercard card, and terms apply.
Which cards compete with the Capital One VentureOne?
If this card sounds pretty appealing, know that there are actually several no-annual-fee cards that compete with the VentureOne, plus its older sibling:
For additional options, check out our full list of the best no-annual-fee cards.
Read more: The power of the Chase Trifecta: Sapphire Reserve, Ink Preferred and Freedom Unlimited
Is the Capital One VentureOne worth it?
The VentureOne is a solid no-annual-fee option for those who still want a healthy sign-up bonus, reasonable perks and the ability to transfer points and miles directly to travel partners. However, you can get a higher earn rate on everyday purchases by getting a Venture card with an annual fee.
Bottom line
In addition to its perks and sign-up bonus, the Capital One VentureOne Rewards Credit Card also beats other no-annual-fee cards for perks such as purchase protection and no foreign transaction fees. It’s a budget-friendly option for Capital One fans and frequent travelers alike.
Official application link: Capital One VentureOne
For Capital One products listed on this page, some of the above benefits are provided by Visa® or Mastercard® and may vary by product. See the respective Guide to Benefits for details, as terms and exclusions apply.
Additional reporting by Ryan Wilcox and Stella Shon.
Editor’s note: This is a recurring post, regularly updated with new information.
In the points and miles world, a mention of the infamous 5/24 rule is sure to follow whenever a Chase card comes up. In short, this refers to the unofficial rule that Chase won’t approve a credit card application for someone who has opened five or more new credit cards from any issuer in the past 24 months.
However, without any published policy from Chase, dissecting the 5/24 rule still relies heavily on crowdsourced data. There are outlier data points that can turn out to be false, as well as exceptions to what we generally believe to be true.
Here’s everything you need to know about Chase’s 5/24 restrictions.
What is the 5/24 rule?
In order to be approved for any Chase card subject to 5/24, you cannot have opened five or more personal credit cards across all banks in the last 24 months (more on business cards in a moment).
This means you actually need to be under 5/24 to be approved. The 5/24 rule only applies to getting approved for cards issued by Chase, but your 5/24 count includes credit cards from all banks.
Related: The best ways to use your 5/24 slots
Are all Chase cards subject to 5/24?
Most travel cards issued by Chase are subject to 5/24 for approval, including cobranded cards. The following are cards reported to be subject to the 5/24 rule:
*The information for these cards has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
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Reader reports also indicate that applying for too many Chase cards too quickly can lead to account scrutiny and shutdowns, regardless of your 5/24 status. Some online reports have noted that Chase will not accept you for more than two new accounts within 30 days.
Because of that, a general recommendation is to avoid applying for a new account more frequently than every three or four months.
Remember that 5/24 is not the only factor determining whether your Chase credit card application is approved — your credit score, income, debt levels and many other variables get considered. For business cards, Chase also sometimes requests documentation such as financial statements or articles of organization to show that you have a legitimate business or sole proprietorship.
Related: Clearing up the confusion: How to complete a Chase business credit card application
How do I check my 5/24 status?
We’ve found the easiest way to check your 5/24 status is to sign up for the free credit report service at Experian (make sure you don’t accidentally sign up for a paid service). Using the Experian app, you can view all of your accounts and sort them by the date they were opened. From here, count anything opened within the last 24 months. Chase only looks at whether an account was opened — it doesn’t matter if you’ve since closed it.
According to most recent data points, you will not technically be below 5/24 until the first day of the 25th month after your fifth account was opened. For example, if your fifth most recent account was opened on Oct. 17, 2021, do not apply for a new card until at least Nov. 1, 2023.
Related: How to calculate your 5/24 standing
What accounts add to your 5/24 status?
The following accounts count toward your 5/24 standing:
All personal credit cards opened with any bank in the immediate past 24 months (even if they’re now closed).
Business cards opened with Discover and TD Bank in the past 24 months, plus any Capital One small business card other than the Capital One Spark Travel Elite card and Capital One Spark Cash Plus accounts.
Authorized user cards from another person’s personal card opened in the past 24 months, as they’re reported on your credit report. However, you can call the Chase reconsideration line and ask for these accounts to not be considered.
Specific store cards opened in the last 24 months that are part of a national payment system and can be used elsewhere. Some data points suggest that even store cards that can only be used at a single establishment also now count. Assume that if it shows up on your credit report then Chase will count it.
The information for the Spark Travel Elite card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
The following accounts will not count toward your 5/24 standing:
Related: These business cards can help you stay under Chase’s 5/24 rule
What about card conversions and upgrades?
Depending on how a bank processes a card conversion or upgrade — also known as a product change — it might not be reported as a new account. Before completing an upgrade or product change, ask the bank if a hard credit pull will be completed. In addition, ask if you’ll receive a new account number after the switch.
If the answer to one (or both) if these questions is yes, that could be a sign the account will be considered new and add to your 5/24 standing.
Related: Do product changes and conversions count against Chase’s 5/24 rule?
Are the methods to bypass 5/24 all dead?
There used to be a handful of common ways to overcome 5/24 and get a card with the sign-up bonus you desire. But those avenues are no longer working.
However, there have been some instances recently where cardholders bypassed the 5/24 rule through targeted “Just for you” offers. To see if you’re targeted, navigate to “Just for you” under “Explore products” in the left-hand menu bar when you’re logged in to your Chase personal account.
If you desperately want a card now and are over 5/24, you can attempt a product change within the Chase Ultimate Rewards card family (assuming you’ve held the card you want to convert for at least a year). However, unless you’ve been specifically targeted for a bonus to upgrade a card, you will not receive a sign-up bonus for any product change.
Related: When should you ignore Chase’s 5/24 rule?
Chase 5/24 FAQ
Can I apply for two Chase cards on the same day when I’m 4/24 and get approved for both?
Historically, some data points suggested you can apply for two Chase cards on the same day when you’re at 4/24. However, one of the applications may be automatically declined in this case. If you then call the reconsideration line, the agent may see your new (approved) account, and this may make you ineligible for the second one (though you’d still have the second hard inquiry on your account).
In either case, remember that Chase may scrutinize customers applying for credit too quickly. Our recommendation is to only apply for one Chase card at a time.
I applied for a card on the exact day I went below 5/24 and was denied. What can I do?
Wait until the first day of the next month and call the Chase reconsideration line, or reapply after the first day of the next month.
I am at or over 5/24. Can I get a card from another bank?
Yes. Approvals for credit cards issued by banks other than Chase are not affected by your 5/24 score. Of course, each bank does have its own approval criteria.
Do Chase business cards count toward my 5/24 score?
No. If you are approved for a Chase business card, it shouldn’t add to your 5/24 standing. However, you must be below 5/24 to get approved for most Chase business cards.
What if I’m under 5/24 but have authorized user accounts on my credit report that make me appear at (or over) 5/24?
Your application may be outright denied or marked for further review. In either case, you’ll want to call the Chase reconsideration line and note which accounts are authorized user accounts. The agent will likely ask whether you are responsible for these accounts and may approve you if someone else is the primary cardholder. However, this is a manual process, and it may not work.
Instead, consider planning ahead and removing yourself as an authorized user at least a month before submitting your application.
Related: How TPG staffers with the most credit cards handle Chase’s 5/24 rule
Bottom line
Chase’s 5/24 is a firmly entrenched rule with no signs of disappearing any time soon. This means you need to be extremely strategic about your application and rewards strategy so you can maximize your five allowed Chase slots.
If you’re starting in the realm of credit card rewards and aren’t close to 5/24, you’ll want to prioritize getting Chase cards first. But remember not to try to fill your five slots with Chase cards quickly. Applying for that much credit so fast is a surefire way to invite unwanted attention from Chase and risk your long-term relationship with the bank. Take it nice and slow and be smart about which cards you apply for and when you do it.
For additional reading, check out our picks for the best credit cards.
Application link: Chase Sapphire Preferred, earning 60,000 bonus points after you spend $4,000 on purchases in the first three months from account opening.
Application link: Chase Sapphire Reserve, earning 60,000 bonus points after you spend $4,000 on purchases in the first three months from account opening.
Additional reporting by Emily Thompson, Stella Shon, Katie Genter and Madison Blancaflor.
It’s feeling a little like 2007 today. Back then, I was writing posts like this on a daily basis.
Capital One has announced that it is exiting the mortgage business, seemingly surprising given the current real estate climate that is red hot.
If you attempt to visit the Capital One Home Loans website, you’ll be greeted by a “Down For Maintenance” message.
It also says they’ll “be back online shortly,” for whatever that’s worth.
Mortgage Competition Too Fierce
In what was seen as a surprising move
Capital One exited the mortgage business entirely
Thanks to increased competition that dented profitability
1,000+ jobs will be lost as a result
Per Bloomberg, Capital One chose to exit the mortgage origination business entirely because increased competition meant it wasn’t a profitable venture.
They will also cease making home equity loans, and more importantly, 1,100 employees will lose their jobs.
Some 905 positions will be cut in Plano, Texas, St. Cloud, Minnesota, and Melville, New York. An additional 200 jobs are being eliminated at an undisclosed call center in what is apparently an unrelated move.
Capital One president of financial services Sanjiv Yajnik told employees in an internal memo that the affected business lines “are in a structurally disadvantaged position, given the challenging rate environment and marketplace.”
And added that those “factors do not allow us to be both competitive and profitable for the foreseeable future.”
I’ll take that to mean that mortgage rates are now about three-quarters of a percentage point above their all-time lows, which is clearly hurting refinance numbers.
At the same time, new purchase originations are constrained due to limited available housing inventory and less home building.
While home equity lending is expected to experience a boom in coming years, it might not be enough to keep the business afloat.
So Many New Players in the Mortgage Space
Speaking of competition
There are tons of new non-bank mortgage lenders
Including a slew of fintech companies attempting to shake things up
It seems Capital One felt the mortgage business just wasn’t worth pursuing and it could be smart to get out early this time around…
There’s also the fact so many debutants have entered the mortgage space of late. We’ve got all the new fintech players including SoFi, Lenda, Clara, LendingHome, and Sindeo.
Then all the synergies between real estate agencies and mortgage lenders, like Motto Mortgage, Redfin Mortgage, Opendoor Mortgage, and most recently OfferPad Home Loans.
That’s making it increasingly difficult for banks to get a piece of the purchase market, even if that market segment is expected to strengthen.
It’s also not enough these days to merely offer mortgages alongside other financial products. Very few people are going to the bank and being cross-sold things like mortgages.
You’ve got to offer new and better ways to get a mortgage, like Quicken’s Rocket Mortgage. Or the push toward single source validation to speed up the loan process.
Implementing those new technologies and processes probably isn’t cheap, or easy, especially when you have other lines of business to worry about like credit cards and bank accounts.
The alternative is to beat everyone else on price, something large banks typically aren’t well positioned to do given their massive overhead.
If you can’t do either one, you may as well not bother. Even that million-mile promo didn’t seem to get the job done.
Capital One apparently still managed to become the 12th largest mortgage lender among other banks (not non-banks) with an estimated $20.6 billion in home loans as of June 30th. It sounds like a lot but really isn’t for a major financial institution.
Apparently it wasn’t enough to keep going in the mortgage space. The company did say it would continue to offer affordable housing loans and multifamily financing.
It may be nicknamed “the garden state,” but New Jersey isn’t just known for its agriculture. Multiple industries thrive in the state, drawing people looking for career opportunities. The best banks in New Jersey offer plenty of checking and savings account options to help you find the right fit.
9 Best Banks in New Jersey
If you’re in the market for a bank account, the options can feel overwhelming. But whether you’re looking for a local bank, a regional or national bank, or a credit union, there’s a financial institution to fit. Here are the nine best banks in New Jersey to help kick off your search.
1. Valley National Bank
Regional banks like Valley National Bank bring the benefits of a local bank while still offering expanded ATM and branch reach. Valley National Bank has locations throughout New Jersey, as well as in Alabama, Florida, and New York. If you travel outside those areas, though, you’ll pay a $2 fee for using an ATM outside the Valley National Bank network, and that’s in addition to fees charged by the ATM owner.
Currently, Valley National Bank is offering a $250 reward to new checking customers with its My Loyalty Checking. You’ll just need to set up bill pay or have at least one qualifying direct deposit. With My Loyalty Checking, you’ll also have up to $10 in out-of-network ATM fees refunded each month.
Fees:
No monthly maintenance fees
$36 overdraft fee
Balance requirements:
$100 minimum deposit to open
No minimum balance requirements
ATMs:
Fee-free at Valley National Bank ATMs
$2 for each non-Valley National Bank ATM transaction
Interest on balance:
0.85% APY on savings accounts
Up to 5.35% APY on CDs
Up to 1.75% APY on money market savings accounts
Additional perks:
Valley National Bank My Loyalty Checking account offers $250 reward
Teen, college, and business checking accounts
2. Chime
Online banking lets you manage your money from wherever you are. Chime is an online bank that offers banking solutions like mobile check deposit, bill pay, and easy transfers from checking to savings. Chime does work best if you have direct deposit activity each month, though, since its biggest perks require it.
If you’re working to build your credit, one of Chime’s best features is its secured credit card. No credit check is required to set up the card, and you may be able to increase your FICO score by 30 points, on average.
Fees:
No monthly maintenance fees
No overdraft fees
Balance requirements:
No minimum deposit required to open
No minimum balance required
ATMs:
Fee-free at 60,000+ ATMs nationwide
$2.50 out-of-network ATM fee
Interest on balance:
2.00% APY on savings account
Additional perks:
Access to paycheck up to two days early
SpotMe covers up to $200 in overdrafts
3. Capital One
If you’re looking for banking services that follow you wherever you go, national banks can be a great option. Capital One is one of the biggest banks in New Jersey, with 19 branches throughout the state. You’ll get fee-free access to cash at more than 70,000 locations, including MoneyPass and Allpoint ATMs.
One of the biggest benefits of banking with Capital One is that all overdraft fees are waived. You can set up your overdraft protection preferences to either automatically decline transactions or transfer funds from your savings or money market account.
Fees:
No monthly maintenance fees
No overdraft fees
Balance requirements:
No minimum opening deposit
No minimum balance required
ATMs:
Fee-free at Capital One ATMs
Fee-free at any Allpoint or MoneyPass ATM
$2 out-of-network ATM fee
Interest on balance:
Up to 4.10% APY on savings accounts
Up to 4.75% APY on CDs
Additional perks:
Cash deposit access at any CVS location
Some branches include cafés with Wi-Fi
4. Chase Bank
Small business owners in New Jersey should take a look at Chase, a national bank with 190 branches throughout the state. Business checking accounts can earn up to $500 in bonuses, and business credit cards currently get a $750 bonus cash back with qualifying activities. Chase also offers a variety of business loans, including lines of credit and commercial financing.
But bonuses aren’t limited to large and small business owners. Currently, new Chase Total Checking account customers can earn a $200 bonus with direct deposit. You’ll get access to personal service at branches across the country, including cafés, which offer free Wi-Fi and gourmet coffee.
Fees:
$12 monthly fee (waived with requirements)
$34 overdraft fee
Balance requirements:
No minimum opening deposit
No minimum balance
ATMs:
Fee-free at 15,000+ Chase ATMs
$3-$5 out-of-network ATM fee
Interest on balance:
0.01% APY on savings accounts
Up to 3.75% APY on CDs
Additional perks:
$200 cash bonus for new checking account customers
Autosave feature helps you set money aside
5. PNC Bank
Another option if you prefer national banks is PNC Bank, which has 193 branches in New Jersey. You’ll have fee-free access not only to PNC ATMs, but you can also withdraw cash at more than 60,000 partner ATMs nationwide.
PNC’s basic checking account is Virtual Wallet, which comes with no monthly fees as long as you receive at least $500 in direct deposits or keep a balance of at least $500 across all your PNC checking or savings accounts. Currently, PNC is paying a $50 bonus for its lower-tier account, but if you go with Virtual Wallet with Performance Spend or Performance Select, your bonus increases to $200 or $400, respectively.
Fees:
$7 monthly fee (waived with requirements)
$36 overdraft fee
Balance requirements:
$25 minimum opening deposit
No minimum balance
ATMs:
Fee-free at PNC ATMs
Fee-free at 60,000 partner ATMs nationwide
$3 out-of-network ATM fee
Interest on balance:
Up to 0.03% APY on savings accounts
Up to 4.00% APY on CDs
Additional perks:
Up to $400 bonus for new Virtual Wallet checking accounts
Wealth management services built into app
6. Wells Fargo
Wells Fargo is another of many national banks in New Jersey. You’ll get fee-free cash access at more than 12,000 Wells Fargo ATMs nationwide. Currently, Wells Fargo is offering a $300 bonus for opening a new checking account and receiving $1,000 or more in qualifying direct deposits.
If you’re in the market for a new savings account, Wells Fargo has a deal there, too. You can earn a $525 bonus on a new savings account as long as you add $25,000 to the account in the first 30 days. You’ll need to maintain that minimum balance for at least 90 days to receive the bonus.
Fees:
$10 monthly fee (waived with requirements)
$35 overdraft fee
Balance requirements:
No minimum opening deposit
No minimum balance
ATMs:
Fee-free at Wells Fargo ATMs nationwide
$2.50 out-of-network ATM fee
Interest on balance:
Up to 2.51% APY on savings accounts
Up to 4.75% APY on CDs
Additional perks:
$300 bonus on new checking accounts
Robust mobile banking features
7. TD Bank
With nearly 200 locations in New Jersey, plus branches and ATMs nationwide, TD Bank is one of the best banks in New Jersey for its mobile and online banking experience. TD offers a variety of deposit accounts, as well as personal loans and credit cards.
TD has multiple checking account options, including the Essential Bank Account, which comes with a $4.95 service fee and no minimum requirements. The fee is waived for those between the ages of 13 and 17, so this could be a great starter account for your high schooler. TD offers higher-than-average interest rates on savings accounts and CDs, so it’s worth checking out for that reason alone.
Fees:
$4.95 monthly service fee
No overdraft fees
Balance requirements:
No minimum deposit to open
No minimum balance
ATMs:
Fee-free at 2,600 TD Bank ATMs nationwide
$3 out-of-network ATM fee
Interest on balance:
Up to 3.51% APY on savings accounts
Up to 5.00% APY on CDs
Additional perks:
Live online customer service available 24 hours a day
$200 bonus for new checking accounts
8. GO2bank
Another online banking option is GO2bank, which offers all the features you need to manage your account online. The checking account is fee-free as long as you have an electronic deposit coming in each statement period. This qualifying deposit also gives you access to your paycheck a couple of days early.
GO2bank is one of many online bank accounts, but one differentiating feature is its high-yield savings account. You’ll earn 4.50% APY on your savings account balance, but that interest is limited to the first $5,000 in combined balances. Any funds above that amount won’t earn interest at all.
Fees:
$5 monthly service fee (waived with requirements)
$15 overdraft fee
Balance requirements:
No minimum deposit to open
No minimum balance
ATMs:
No ATM fees at Allpoint ATMs nationwide
$3 out-of-network ATM fee
Interest on balance:
4.50% APY on savings accounts
Additional perks:
Cash deposit access at 90,000+ retailers nationwide
Secured credit card helps you build credit with no credit check required
9. American Heritage Credit Union
American Heritage Credit Union is a Pennsylvania credit union with a branch in Cherry Hill, New Jersey. Like many credit unions, American Heritage has membership requirements. In this case, you’ll need to live, work, worship, or go to school in one of the approved Philadelphia-area communities, work for one of the workplace partners, or be related to a qualifying member. However, anyone can join by simply becoming a member of the Kids-N-Hope Foundation.
There are some reasons to sign up for American Heritage even if you don’t have a branch nearby. American Heritage offers great deals on accounts for consumers and small business owners, and you’ll also get ATM access at more than 30,000 locations nationwide.
Fees:
No monthly fees
$10-$15 overdraft fee
Balance requirements:
No minimum deposit to open
No minimum balance
ATMs:
Fee-free access at American Heritage ATMs
Fee-free access to 30,000+ ATMs nationwide
Up to 10 out-of-network ATM fees reimbursed monthly
Interest on balance:
Up to 3.55% APY on savings accounts
Up to 5.00% APY on CDs
Additional perks:
Competitive interest rates on auto and home loans
Wide range of business banking services
Frequently Asked Questions
Banking solutions come in a variety of formats, so it’s only natural you’ll have some questions. Here are some frequently asked questions about the best banks in New Jersey.
What should I expect from a bank in New Jersey?
From local New Jersey banks to national banks with branches in the state, there’s no shortage of options. But all these choices mean you can easily sort through the best banks to find the right one for you.
Customer service is an important feature of any New Jersey bank. Whether this means the in-person experience you get with local banks or around-the-clock service via online chat, it’s important that a bank offer a method to suit your preferences. If you’re comparing the same account terms across multiple banks and credit unions, this is one factor that can become a final decider.
What do you need to open a bank account with banks in NJ?
If you’re opening a new checking or savings account in New Jersey, there are a few things you’ll need. You’ll save time and trouble by gathering all your documentation before applying.
For online and mobile banking options, you may need to either scan and upload, snap a photo, or mail a photo ID. Some of the best checking accounts will also require you to deposit money to open them. This can be anywhere from $10 to $100. Make sure you have the funds to make this deposit at account opening.
Do banks in New Jersey have online accounts?
Some of the best financial institutions in New Jersey aren’t located in the state at all. You can find online checking accounts that pay more interest and require fewer fees than the same accounts from a national, regional, or local bank.
If saving money is your priority, don’t rule out online banking for those, either. Savings accounts, CDs, and money market accounts will often accrue interest at an interest rate that’s higher than what you’d earn with accounts at local Jersey banks or banks with branches in the state.
Where can you open a savings account in New Jersey?
Although you can find a high-yield checking account that pays interest on your balance, you’ll usually get a better deal on savings. There are plenty of local, national, and regional banks that pay a competitive interest rate, but some of the best deals come from mobile banking apps that have no local presence.
If you’d prefer a brick-and-mortar option, though, pay attention to interest rates. You can find savings rates in the 4% to 5% range online, so when you’re looking at a particular account, keep that in mind. It’s not unusual for consumers to have checking accounts locally but move their savings to an online-only bank for a better deal.
How much tax do you pay in New Jersey for interest you earned?
When you earn interest on your bank account balances, you’ll have to pay taxes. All your banking interest earned has to be reported on your federal taxes each year. This will be summarized on Form 1099-INT, which your bank will send at tax time.
New Jersey residents also pay state income tax. Your income interest is lumped in with your other income and taxed at the current rates. New Jersey uses a graduated tax rate. The higher your income, the more you’ll pay, with a maximum of 10.75%.
Whether you go with mobile banking or a bank with local branches, it’s important to find the bank that best fits your needs. Some banks make cash deposits easy while others give you everything you need to manage your money. Interest rates and fees can be the final decider when you’re choosing a partner for your New Jersey banking needs.
Even if you’ve never written a check, yes, you still need a checking account.
That’s because checking accounts give you the most flexibility in your banking. They’re generally easier and better for bill paying, ATM withdrawals, debit purchases, and, yes, writing and cashing checks. Unlike a savings account, which is meant for stashing your money and earning interest, checking accounts are for your day-to-day finances.
However, many banks require a substantial minimum deposit to open a checking account. Which means if you’re tight on funds, you’re out of luck.
That said, there are plenty of checking accounts out there that have no minimum deposit requirements (or, at the very least, low minimum requirements). To help you narrow down your search, we’ve rounded up the best checking accounts based on the following criteria:
No or low minimum deposit requirements
No or low fees
Rewards like cash back or the chance to earn bonus interest
What’s Ahead:
Best Checking Accounts with No Minimum Deposits
Chime® Checking Account: Best for Building Savings
APY: None
Minimum deposit requirement: None
Minimum balance requirement: None
Monthly fee: None2
There’s no minimum deposit required to sign up for the Chime Checking Account, and once you’ve opened your account, you won’t run into any monthly fees or future minimum balance requirements either.
Chime provides an impressive and comprehensive online banking experience.* With their highly rated mobile app, customers can securely transfer funds and set up early direct deposit to receive their paychecks up to two days early.3 Chime also offers fee-free overdraft coverage up to $200 (conditions apply)5, and customers can withdraw cash from Chime’s network of more than 60,000+ ATMs for free as well.6
However, perhaps the greatest features of this account are the automatic savings options. Whenever you use your Chime Visa® Debit Card, Chime will round up your transaction to the nearest dollar amount and transfer the difference into your Chime Savings Account.^ You can also set up an automatic transfer that moves as much as 10% of your paycheck into your savings with every direct deposit of $500 or more.1
Learn more about Chime or read our full review.
* Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank, N.A. or Stride Bank, N.A.; Members FDIC. ^ Round Ups automatically round up debit card purchases to the nearest dollar and transfer the round up from your Chime Checking Account to your savings account. 1 Save When I Get Paid automatically transfers 10% of your direct deposits of $500 or more from your Checking Account into your savings account. 2 There’s no fee for the Chime Savings Account. Cash withdrawal and Third-party fees may apply to Chime Checking Accounts. You must have a Chime Checking Account to open a Chime Savings Account. 3 Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date. 5 Chime SpotMe is an optional, no fee service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each month. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member’s Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime’s discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won’t cover non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. See Terms and Conditions. 6 Out-of-network ATM withdrawal fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.
Juno: Best for Those Interested in Cryptocurrency
APY: 1.20% bonus rate with Juno Basic; 2.15% bonus rate with Juno Metal
Minimum deposit requirement: None
Minimum balance requirement: None
Monthly fee: None
Juno is an online checking account that lets you get started with no opening deposit or minimum balance requirements.
Your checking is fee-free, which means no monthly maintenance fees, no overdraft fees, and free ATM access at 80,000+ locations (including Walgreens, CVS, and more).
Juno is also an excellent option for individuals interested in cryptocurrency. With Juno, users can earn, invest, and spend both cash and crypto. Start with a Juno Basic account, and you’ll receive a 1.20% bonus rate on checking account balances up to $5,000, after which it switches to 0.25%. If you ever want to upgrade to Juno Metal, all you need to do is set up a direct deposit of $250 or more. With Juno Metal, your bonus rate will be bumped up to 2.15% on balances up to $100,000. You’ll earn 5% cash back on popular brands like Amazon and Walmart (on up to $500 in purchases each year for Basic, and up to $6,000 in purchases for Metal).
As an added perk, right now Juno is offering a stellar sign-up bonus for their account holders: get $100 following your first direct deposit of $250 or more (conditions apply).
Learn more about Juno or read our full review.
FNBO Direct Checking Account: Best for Online Convenience
APY: None with the free FNBO Direct Checking Account; potential to earn interest with FNBO Premier Checking Account (varies and not available in some locations)
Minimum deposit requirement: None
Minimum balance requirement: None
Monthly fee: None
FNBO Direct, the online extension of the First National Bank of Omaha, offers a free checking account with no opening deposit required and no minimum balance.
FNBO is one of the more established banks mentioned in this list, with more than 160 years under its belt. This financial institution has worked hard to build a seamless online platform, and it shows. The mobile app and website are easy to navigate, offering a variety of personal, business, commercial, and wealth products.
When it comes to fees, FNBO continues to shine. FNBO waives many of the fees associated with a standard checking account, such as incoming wire transfer fees and monthly maintenance fees. Some FNBO customers can even earn interest through the bank’s Premier Checking Account option (varies and not available in some locations).
Learn more about FNBO or read our full review.
Capital One 360 Checking Account: Best for In-Person Banking
APY: 0.10%
Minimum deposit requirement: None
Minimum balance requirement: None
Monthly fee: None
The Capital One 360 Checking Account is another free checking account with no opening deposit required. However, you will need to make a deposit within 60 days of opening your account to keep it open.
Capital One differs from some competitors in this list for a couple of reasons. For one, it’s one of the few options that provides physical branches for those customers who want to work with a real person. That said, Capital One has also created a seamless digital experience for its customers. As a checking account holder, you can deposit checks, lock/unlock your debit card, and get real-time alerts about your account activity all on your phone. Additionally, the Capital One 360 Checking Account rewards its customers with a 0.10% APY interest rate, which is not offered by many checking accounts.
As extra icing on the cake, Capital One’s no minimum deposit checking account has surprisingly low fees for a traditional bank, including no monthly fees, no foreign transaction fees, no incoming wire transfer fees, and more. Not to mention, if you overdraw your account, Capital One provides three fee-free overdraft options to help you out.
Learn more about the Capital One 360 Checking Account.
Axos Essential Checking Account: Best for Multiple Accounts
APY: None (although you can earn interest with an alternative Axos checking account)
Minimum deposit requirement: None
Minimum balance requirement: None
Monthly fee: None
Axos is an online-only bank with multiple financial products available, including CDs, loans, and investment accounts. Among these options is the free Axos Essential Checking Account, which has no monthly service fee and no minimum deposit requirement. And, after you’ve opened the account, you won’t need to maintain any minimum balance either.
Since Axos operates entirely online, they offer a number of convenient features for their customers, such as automatic bill pay, early direct deposit, and even the ability to pay friends and family directly from your account. You won’t find any overdraft or non-sufficient funds (NSF) fees with this account, and you’ll also receive unlimited reimbursements on domestic ATM fees.
While you can’t earn interest or rewards with the Axos Essential Checking Account, the opportunity is available with some alternative Axos checking accounts, such as the Rewards Checking Account or their CashBack Checking Account.
Learn more about the Axos Essential Checking Account or read our full review.
Ally Interest Checking Account: Best for Earning Interest
APY: Up to 0.25%
Minimum deposit requirement: None
Minimum balance requirement: None
Monthly fee: None
With the Ally Interest Checking Account, you won’t pay a monthly service fee or deal with pesky minimum deposit and minimum balance requirements.
One of the many benefits of Ally’s free checking account is that this option makes it easy to save money. Thanks to convenient offerings like overdraft coverage and reimbursements for out-of network ATMs up to $10 per statement cycle, you won’t lose money through excessive fees. Not to mention, Ally — like Chime — has a round-up feature to help you save money without lifting a finger.
As another online-only banking solution, Ally excels in the web and mobile world, making it easy to complete a number of tasks, such as transferring funds, paying bills, and depositing checks. Unfortunately, this also means they can’t help if you want to deposit cash or visit a physical branch.
With all this said, the Ally Interest Checking Account option stands out among competitors for one reason in particular. Hint: it’s in the name. Ally offers a rare opportunity for checking account holders to earn an impressive rate of 0.25% APR. That means you’ll not only save money with no fees and automatic savings, you’ll also earn money along the way!
Learn more about the Ally Interest Checking Account or read our full review.
What Is a Checking Account with “No Opening Deposit”?
Accounts with “no opening deposit” mean exactly what they sound like: you don’t have to put down a single dollar to open the account.
Unfortunately, sometimes such accounts also come with hefty monthly fees, to make up for the $0 minimum deposit. That’s why we’ve picked the ones above — they’re all fee-free or have very low and reasonable fees.
Before you open any checking account, make sure to read the terms, so you know what fees you’ll be responsible for.
Pros & Cons of Checking Accounts with No Opening Deposit
Pros:
Low start-up costs — You won’t need to have too much cash on hand to get started.
Often low fees — Most accounts with minimal opening deposit requirements have low fees.
A safe place to store accessible cash — A checking account can help to keep your finances organized.
Cons:
Missing out on higher APYs — There are checking accounts with higher APYs available with higher minimum deposit requirements.
May not be able to work with brick-and-mortar banks — Many of these checking accounts are offered by online banks.
Missing out on potential rewards — Other checking accounts with higher balance requirements might have better rewards.
Is a Checking Account with No Opening Deposit Right for Me?
A checking account with no opening deposit might be right for you if you are just starting out. You might not have the extra funds on-hand to set up an account with a high opening deposit requirement. Plus, many of these accounts offer useful features for anyone who needs a checking account.
You might want to look at other options if you have ample funds to open a checking account elsewhere. With more funding available, you might be able to qualify for a high-yield checking account that will provide more long-term rewards.
Read more: Best High-Yield Checking Accounts
How to Choose a Checking Account with No Minimum Deposit
Here are some tips to consider when shopping around for a checking account with no minimum deposit.
Keep an Eye on Fees
Checking accounts may often try to bury their hidden fees deep into the terms. Before you move forward with an account, make sure you aren’t taking on any fees that don’t work for you.
Look past the monthly fee and consider other fees such as ATM fees or wire fees that could cut into your bottom line.
Beware of Transaction Limits
Transaction limits on a checking account can cramp your spending style throughout the month. Don’t open an account that restricts your transactions too much.
Read more: Does Your Debit Card Have a Daily Spending Limit?
Ensure the Checking Account Suits Your Lifestyle
There are checking accounts available at a variety of financial institutions. Consider whether you want an online experience or an in-person service. As you make your selection, find the account that suits your preferences.
Make Sure the Bank Is FDIC-Insured
You don’t want to work with a financial institution that is not insured by the FDIC. Otherwise, you could lose your savings if something went horribly wrong for the bank.
Research the Security Features Available
If you are working with an online checking account, it is important to make sure that the security features are top-notch. Without great security, the bank could be leaving your funds at risk.
Read more: How to Choose an Online Bank: 7 Features to Look For
How to Open a Checking Account with No Minimum Deposit
Opening a checking account with no minimum deposit required is easy. Depending on your bank or credit union, you can do it online, over the phone, or in person. The process is similar to opening a regular checking account, but you may need to provide additional information to open an account with no minimum deposit.
You’ll likely need to provide the bank with the following information:
Current address (and possibly your previous address(es) if you’ve moved recently)
Date of birth
Social Security number
A piece of government-issued ID, like a driver’s license, passport, or military ID
Contact information, including phone number and/or email address
You may also need to provide information about your employment, income, and assets. The bank will use this information to determine if you’re eligible for an account with no minimum deposit. Be sure to check if there are any fees associated with the account, such as monthly service charges, annual fees, or minimum balance requirements.
Even though no minimum deposit is required, you will need to deposit money into the account at some point. (After all, that’s the whole point of having a bank account!) The timing and amount varies with each bank, but within 30 days is a good rule of thumb.
You can do this a few different ways:
Deposit a check or cash. You can do this in-person at the bank, or at an ATM.
Set up direct deposit with your employer. Fill out your company’s paperwork to get the money moving.
Transfer money from another account. This could be your own account (if you have another one) or from a family member’s or friend’s account.
Once you’ve deposited money into your account, you can start using it just like any other checking account. This includes writing checks, using a debit card, and making online and mobile payments. Be sure to keep track of your account balance so you don’t overdraw and incur any penalties!
Summary
A checking account with no minimum deposit is a great option if you’re short on funds right now, but want to set up an account for your day-to-day spending.
Before you commit to one, do your research and compare your options. Check for hidden fees or limits, and don’t forget to add money into it as soon as you can!
Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
The sudden collapse of Silicon Valley Bank in March 2023 was a sobering reminder that even the biggest banks can fail — and potentially take their customers’ deposits with them.
The federal government stepped in to cover Silicon Valley Bank’s customers’ deposits, preventing large-scale deposit losses. But because SVB’s failure occurred in part because it mismanaged its customers’ deposits, the ordeal got regular people asking: What do banks and credit unions actually do with our money?
The short answer is pretty simple and probably not too surprising: Banks mostly use your money to make more money for themselves. There’s more to the story, though. And exactly how banks use deposits to make more money is an important consideration when choosing a bank and assessing how safe your deposits really are.
What Do Banks Do With Your Money?
Banks keep a relatively small amount of deposits accessible. This portion is known as a cash or capital reserve or sometimes fractional reserve.
Until March 2020, federal regulators required banks to maintain specific minimum reserves to cover withdrawal requests and offset possible losses on loans and other investments. The Federal Reserve managed a three-tiered system that set reserve requirements as a percentage of net transaction value. The Fed still updates the tiers because the laws requires it to do so, but it no longer enforces compliance.
Banks still keep some cash in reserve to cover withdrawal requests, but the government no longer requires them to maintain a specific minimum.
Banks use most of their deposits to fund loans and investments they hope will turn a profit. They aim to earn more on these loans and investments than they pay out in interest on deposits.
While they maintain detailed accounts of their customers’ funds, banks treat cash held in most common account types more or less the same. Whether you have a checking account, savings account, money market account, or CD — or all four — your bank keeps some of the cash in reserve and uses the rest to make money.
How Bank Reserves Work
In the old days, reserves would be literal cash in bank vaults.
Banks still keep some physical cash on hand, but a lot of their spare money sits in special accounts with the U.S. Federal Reserve Bank. That’s safer and more secure, anyway, and in an increasingly cashless world, it’s more practical too.
How Lending & Investing Work
The exact proportion of total deposits a given bank lends depends on factors like its lending strategy, financial health, economic conditions, and operating expenses.
However, under normal circumstances, banks try to lend as much of their cash as possible while still fulfilling their reserve requirements, which for practical reasons they likely still have internally whether the government enforces it or not. That’s how most banks make their money.
“Lend” can mean many different things, including some less obvious to nonexperts. In fact, it’s more accurate to think of a bank’s lending activities as part of its broader investment strategy. That’s how the bank sees it.
And while many banks stick to investing in various types of consumer and business loans, some also invest in more exotic (and risky) assets like public and private company stock, venture capital funds, and commercial real estate.
These common bank lending activities rely on customer deposits:
Issuing credit cards: Credit cards are super-profitable for many banks, from big names like Capital One to small players you’ve probably never heard of. That’s because credit card interest rates are much higher than the rates banks pay on even the highest-yielding savings accounts and CDs.
Making unsecured installment loans and lines of credit: Many banks make good money on unsecured personal loans and lines of credit. Because the bank can’t seize an asset to cover losses on these loans, they’re relatively risky and carry higher interest rates than mortgages or auto loans.
Making secured installment loans and lines of credit: These include mortgages, vehicle loans, and home equity loans and lines of credit. They generally have lower interest rates than unsecured loans and lines because they’re less risky for banks, but they still can be very profitable.
Providing financing to businesses: Many banks and credit unions offer financing to businesses and nonprofits. Community banks are particularly active in this space and tend to serve businesses in their own communities — an important consideration for bank customers who want to help local entrepreneurs indirectly.
Buying bonds: You can expect predictable interest payments and eventually the return of your initial investment in bonds. Banks appreciate bonds’ relative safety and predictability, though they’re not risk-free — Silicon Valley Bank failed in part because it made bad bond bets.
How Do Banks Protect Your Money?
When you open and fund a deposit account, you give your bank or credit union the right to use your deposits as it sees fit. But you’re still the rightful owner of that money and can withdraw it pretty much on demand, allowing for reasonable restrictions and penalties that depend on the account type and are spelled out in the deposit agreement.
So your bank or credit union is obligated to protect your money and ensure it’s available for withdrawal when you need it. It does this in several ways, some voluntary and others required by law or regulation.
Capital Reserves
Although the Federal Reserve eliminated specific capital reserve requirements in March 2020, every bank keeps a significant amount of its customers’ money in cash and cash equivalent, like short-term Treasury notes.
Capital reserves don’t directly protect your money. Your bank doesn’t maintain separate reserve accounts for each customer account. But it does know about how much customers withdraw in a typical day and ensures it has more than enough on hand to cover those requests.
In an even less direct sense, your bank’s reserves protect your money by ensuring the bank can pay its bills and keep operating normally.
Daily Withdrawal Limits
Banks can’t keep all their customers’ money in reserve. With no spare cash to make loans, they’d go out of business in short order. In fact, banks want to keep as little cash in reserve as possible while still covering operating expenses and expected withdrawals.
To manage the tension between their obligation to fulfill withdrawal requests and their prerogative to make money, banks often set daily withdrawal limits on all or certain accounts.
These limits tend to be lowest for cash transactions. For example, you might be limited to just a few hundred dollars per day in ATM withdrawals. They’re usually higher for electronic and wire transfers — typically $50,000 or more.
Deposit Insurance Coverage
State and federal banking regulations require banks and credit unions to carry deposit insurance.
The Federal Deposit Insurance Corporation provides federal deposit insurance to banks, while the National Credit Union Administration provides federal deposit insurance to credit unions.
For both, the maximum deposit insurance limit is $250,000 per account ownership type, which means you have full insurance on up to $250,000 across all individual accounts with the same bank and full insurance on another $250,000 across all joint accounts in that bank. (There are other account ownership types, but individual and joint are the most common.)
In addition to directly protecting customer deposits, deposit insurance helps prevent bank runs by providing assurances that customers won’t lose insured funds if the bank fails.
When that happens, the FDIC steps in and temporarily takes control of the bank, with the short-term goal of either finding another bank to assume its deposits or to sell off its assets piecemeal. In either case, deposit insurance kicks in and protects customer deposits.
This process has proven extremely reliable over the years. Since the FDIC’s inception in 1933, no bank customers have lost funds under the FDIC insurance limit. Uninsured losses have occurred, but in recent years, the federal government has gone to extraordinary lengths to protect deposits above the insurance limit as well. Despite well over 90% of its deposits being uninsured, Silicon Valley Bank didn’t lose a cent of its customers’ money when it failed.
Final Word
Your bank probably uses most of the money in your accounts to fund loans to other customers. It might also buy government or corporate bonds with your money. It reserves a small slice of your cash to cover withdrawal requests and operating expenses.
That’s pretty much it. The details can get really convoluted, but you don’t need a finance degree to gain a basic understanding of how banks use customers’ money. And if you’re like me, you probably find that oddly reassuring.
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Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.
Applying for a loan of any kind with subprime credit, generally considered to be a FICO score below 600, can be discouraging.
Fortunately, when it comes to auto loans, people with bad credit have plenty of choices. There are a number of subprime auto lenders not only willing to work with subprime borrowers but competing to offer the best interest rates and terms. You’ll still see higher APRs than you would as a prime borrower, but you can qualify for the money you need now.
So what are some of the best subprime auto lenders and how do you decide which offer to take? Let’s explore the six best bad credit car loans.
What’s Ahead:
Best bad credit auto loans
Best for comparing offers: Monevo
Best for refinance loans: Lending Club
Best for low-income borrowers: Capital One
Best for small down payments: Carvana
Best for refinancing: Autopay
Best for bankruptcies: myAutoloan
Best for comparing offers: Monevo
APR: 1.99% – 35.99% APR
Term lengths: 6 to 144 months
Allows joint filing: Varies
Monevo is not a direct lender but a loan aggregator. It uses the information from your online application to determine your eligibility and show you multiple competing loan offers at once from reputable online lenders. You can look for auto loans for new and used cars or refinance an existing loan. The minimum credit score requirements, loan terms, and interest rates vary by lender, but you can filter your search to show only those that accept bad credit. Monevo tends to offer favorable loan terms and APRs on bad credit car loans.
Monevo is easy to use with a simple and intuitive interface and quick online application. When you apply, Monevo uses a soft credit pull (that won’t affect your credit) to get your personalized offers and shows you auto loans you might qualify for. There is no fee for using this platform — Monevo earns money from its partners when you apply for a loan.
Monevo is a great place to start your search if you’re not sure what you’re looking for and you want to understand your options, but you won’t be able to compare all lenders out there, and you might get a few unwanted phone calls from partner lenders.
Learn more about Monevo.
Best for refinance loans: LendingClub
APR: 2.99% to 24.99% APR
Term lengths: 24 to 84 months
Allows joint filing: Yes
If you want to refinance an existing car loan, LendingClub might be the best choice for you. LendingClub can help you save money on interest by lowering your APR and even shorten your loan term so you can pay off your debt faster. Even if your credit is poor now, if it’s better than it was when you first applied for your loan, you may be able to get approved for a lower interest rate and more favorable terms.
There are a few advantages to refinancing with LendingClub over others, especially if you have bad credit. If you do qualify, the APRs and terms on auto refinance loans are competitive, and LendingClub charges no origination fees or prepayment penalties. Second, LendingClub can get you the money in as little as a few days. This is much faster than the average lender, which can take weeks to process and approve your loan. To qualify, you must owe at least $4,000 but not more than $55,000 on your car and have 24 months or more left on your loan.
LendingClub accepts applicants with bad credit, but approval isn’t guaranteed. Check first to see if you prequalify.
Learn more about LendingClub.
Best for low-income borrowers: Capital One
APR: Varies
Term lengths: 24 to 84 months
Allows joint filing: No
Most big banks have steep minimum credit score and income requirements for auto loans. Capital One is different. They have no minimum credit requirement, so all credit scores are accepted, and they’ll use a soft pull instead of a hard pull to find you an offer.
Capital One also has a low income requirement. If you can show proof of $1,500 in monthly income, you have a decent chance of qualifying for a Capital One auto loan. By contrast, some lenders require $2,500 or more for bad credit auto loans. Other perks of choosing Capital One include stability and dedicated customer service that smaller lenders may not have.
The biggest drawback for this lender is that you must buy a car from one of 12,000 approved dealerships. If you don’t mind this, Capital One is a good option for bad credit auto financing.
Learn more about Capital One.
Best for small down payments: Carvana
APR: 3.90% to 27.90% APR
Term lengths: 36 to 72 months
Allows joint filing: Yes
Carvana is known for making car vending machines and at-home car delivery a thing. But did you also know this company provides auto loans for car buyers with all sorts of different credit scores? You don’t have to use Carvana’s auto loans to use Carvana, but doing so may be a good option if you don’t have much saved for a down payment.
To qualify for an auto loan with Carvana, you need an annual income of just $4,000 per year and no active bankruptcies in your credit report. If you need a car now and can’t wait to save more money, you can trade in your current vehicle and put the money you earn toward the down payment. Using trade credit just takes a few steps out of the process. You can get prequalified with no affect on your credit score and the rates are good for 45 days.
Carvana may be worth it for people looking for convenience, but interest rates may be higher for these bad credit car loans than others.
Learn more about Carvana.
Best for cosigners: Autopay
APR: 2.99%+
Term lengths: 24 to 96 months
Allows joint filing: Yes
Autopay offers both new and refinance bad credit auto loans with decent rates and flexible requirements.
Like Monevo, Autopay is an aggregator, which means you’re shopping multiple lenders with one application. This ensures you get the best rates available, but it also means the interest rate you’re quoted can vary. You can have a credit score as low as fair (which starts at 580) to qualify for a loan through Autopay, but using a cosigner can significantly improve your rate offers and odds of approval.
If you have someone more creditworthy than yourself who’s willing to help you out, consider using AutoPay to shop around. If not, you might want to consider other lenders with a lower minimum credit score requirement.
Learn more about AutoPay.
Best for bankruptcies: myAutoloan
APR: 3.99% to
Term lengths: 24 to 72 months
Allows joint filing: Yes
For our final recommendation for auto loans for bad credit, we chose MyAutoloan. MyAutoloan is another loan marketplace that partners with lenders to secure prequalification offers for applicants. Income and credit score requirements vary by lender, but you can qualify with a FICO credit score as low as 575 and a gross yearly income of $21,600.
You also may be able to qualify if you have bankruptcies in your credit history. Some of myAutoloan’s partners specialize in situational bad credit car loans and accept applicants with Chapter 7 and Chapter 13 bankruptcies that have been discharged or dismissed.
The kicker with myAutoloan is that although this is an aggregator, you’ll only be able to compare up to four offers at a time, which isn’t a ton of options comparatively speaking. But if you’ve had credit trouble and just need a car loan, myAutoloan is an all-around solid option.
Learn more about myAutoloan.
How do auto loans work?
Most folks don’t have tens of thousands in cash lying around to pay for a new car in full. Therefore, they take out a loan from a financial institution like a bank or the other lenders in this list. This is known as auto financing. Auto loan providers can be any type of financial institution including banks, credit unions, and online lenders.
To take out an auto loan, you can apply when you’re at the dealership ready to buy or check to see how much you’re preapproved to borrow even before you’ve started shopping. If you’re approved, the lender gives you a lump sum to buy the car and you pay this back with interest.
Three primary factors dictate your monthly payments:
Loan amount
Loan term (i.e. length)
APR or interest rate
Generally, the shorter your term and the greater your loan amount, the higher your payments. We recommend shorter loan terms to save on interest if you can afford it.
Lenders use your credit score, income, and credit history to determine how risky you are as a borrower and decide what APR to offer you. The worse your credit, the higher the chance (in their eyes) that you’ll default on your loan. Therefore, lenders charge more interest on car loans for bad credit.
Read more: How do auto loans work?
How to choose a car loan
When shopping around for an auto loan, look into these key features.
APR
Naturally, you want the lowest possible APR. But when you have bad credit, securing good rates is tricky. Compare loan offers from multiple lenders to get the best possible deal for you.
Read more: Auto loan interest calculator: monthly payment & total cost
Fixed or variable interest rates
Make sure your APR offer is a fixed rate, meaning it will stay the same for the entire loan. This is better for financial planning and protects you from surprise rate hikes.
Loan amounts
Choose just the right loan amount and don’t take out a dollar more than you need to. If you only need a $5,000 loan, make sure your lender doesn’t have a floor at $10,000.
Some subprime auto loan lenders have high minimums ($15,000+) so they can get you to pay more interest. Unless you need to borrow this much, avoid these lenders.
Term options
Your loan term determines how long it will take you to pay off your loan assuming you just make your minimum monthly payment each month. Loan terms can range from 24 to 96 months, but the minimum and maximum vary by lender.
You don’t want to take too long to pay off your loan if you can help it. Longer terms give interest more time to accrue, so they end up being much more expensive over time than shorter terms. Unless you don’t have the budget for larger payments, resist the urge to stretch your loan out.
Prepayment penalties
Some lenders will charge you a penalty fee for paying off your loan early. This is because lenders profit from interest and want to recoup some of the lost profit from an early payoff.
Prepayment penalties are usually small, like a one-time fee of $50 to $200 or a percentage of the remaining interest. But if you plan to pay off your loan quickly, look into prepayment penalties for your lender of choice. Many lenders do not charge them.
Income requirements
Most auto loans for bad credit require proof of a certain minimum monthly income to show that you have the means to repay your debt. When applying, you’ll need a paycheck from the past 45 days. If you’re self-employed, use bank statements to show cash flow.
Unfortunately, unemployment checks typically don’t count since lenders may require proof of employment as well.
Cosigning options
If you can’t meet a lender’s income or credit requirements, or you want a better rate, you may decide to ask a friend or family member to cosign. Applying with someone who has a higher credit score and income than you can help you get better auto loan rates and terms.
However, cosigning a loan document is no small favor to ask. If you can’t make the payments for whatever reason, your cosigner will become responsible.
Read more: What does being a cosigner really mean?
Overall lender reputation
Last but certainly not least, you’ll want to consider a lender’s real-life reputation. Browse user reviews on BBB and TrustPilot for indicators of overall customer satisfaction. Research customer service, response times, hidden fees, transparency, app usability, and more.
How to get a bad credit auto loan
When it comes to getting a car loan with bad credit, you’ll need to follow some steps to ensure you’re getting the best rate.
Here’s a quick step-by-step guide:
Understand how much you can really afford. Poor credit unfortunately means you’ll be saddled with a relatively high interest rate, so you need to make sure you’re not borrowing more than you can repay. Factor not only the monthly payments but the interest into your budget to determine what you can afford to spend on a car.
Save for a down payment. The larger the down payment you make, the less you’ll pay over the life of your auto loan. You may also be able to secure a lower rate if you’re willing to put more money down.
Shop around. Shopping around is the best way to find the lowest interest rates. It can also help you weed out lenders with terms or requirements that won’t work for you. Use aggregators and marketplaces if you’re not sure where to start.
Apply! Once you’ve shopped around, all that’s left to do is apply fully for the loan. But before applying, check to see if you prequalify. This can save you the trouble of being denied and negatively impacting your credit for nothing.
Average auto loan rates
Subprime credit will cause you to pay more interest on an auto loan than someone with a higher credit score and better credit history.
According to data from myAutoloan, the average interest rate on a new car loan for borrowers with good credit (700-749) is 10.94% and the average interest rate for borrowers with bad credit (451-599) is almost double at 20.45%. For fair credit (600-699), the average rate is 15.40%.
Auto lenders only give their best interest rates to their most creditworthy applicants. If you don’t need a car right now, it’s worth waiting a while and focusing on improving your credit. Applying with a better score can help you save hundreds.
FAQs
What defines “bad credit?”
This is somewhat subjective, but most lenders would agree that anything above 600 is good or at least nonprime, and anything below 600 is bad/subprime.
Can I get an auto loan with a 500 credit score?
Yes, but you’ll be stuck with the worst interest rates and may not be approved to borrow as much as you would like to. Apply for prequalification offers before you submit any applications to avoid adding too many hard pulls to your credit report.
When should I start applying for loans?
Many borrowers wait until they’re in the dealer’s office to begin exploring financing options. That’s when the dealer will swoop in with their lender’s offer, which may or may not be the best offer (it usually isn’t). In reality, the best time to start browsing loan offers is as soon as you have a budget and know precisely how much you’ll need to borrow.
Compare prequalification offers with multiple lenders before you decide to apply for anything. And if you can wait to bring your credit score up before getting a car loan, wait.
Summary
Hopefully, you feel encouraged that there are many bad credit auto loans out there for subprime borrowers. Though poor credit does limit your options, you can still get the money you need with a great lender.
As you begin the process of shopping for cars and comparing auto loans, continue working on your credit. Even the smallest improvements can make a difference and help you save money.
If you’re looking for the most affordable way to go to Disney World, Disneyland or on a Disney Cruise, you may have wondered if Disney’s credit card offerings, the Disney Visa Card and the Disney Premier Visa Card, are good options.
Both earn Disney Rewards Dollars that you can use to pay for most things Disney, including trips to the parks or a cruise. And, after all, anything that makes a Disney trip more affordable can be a very good thing to consider.
But the answer to whether or not the cards are worth it is a little more complicated than a simple yes or no. We’ll break down how the cards work and when they are — and aren’t — worth getting in anticipation of an upcoming Disney vacation.
Disney Visa card welcome offers
The Disney Visa is the entry-level product that has no annual fee and currently awards a $150 bonus after you spend $500 on purchases in the first three months. The Disney Visa Premier has a $49 annual fee, but currently awards a $300 statement credit after $1,000 in spending in the first three months. Both are issued by Chase and thus are subject to Chase 5/24 rules.
I’m not one to turn down $150 to $300 in statement credits, but remember that several credit cards have sign-up bonuses worth $1,000 or more.
Just as an example of what else is out there, the Capital One Venture Rewards Credit Card is currently offering 75,000 bonus miles after you spend $4,000 total on purchases within the first three months from account opening, and the Chase Sapphire Preferred Card has a bonus of 60,000 bonus points after you spend $4,000 on purchases in the first three months from account opening.
So while $300 toward a Disney vacation sounds great (and it can be) — it’s good to compare to the value of other cards.
Related: How much does it cost to go to Disney World?
Disney Visa card rewards
Now that we’ve discussed the bonuses, when you look at everyday spending, the Disney credit cards earn rewards at different rates.
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The no-annual-fee Disney Visa earns a simple 1% back on all card purchases in the form of Disney Rewards Dollars you can use at Disney. The Disney Visa Premier, meanwhile, earns 5% back on card purchases made directly at DisneyPlus.com, Hulu.com or ESPNPlus.com, 2% back on purchases at gas stations, grocery stores, restaurants and most Disney locations, and 1% back everywhere else.
Disney Rewards Dollars are extremely limited — they’re only good for use at Disney locations With the Premier, you can also redeem your dollars for a statement credit toward airline travel, but it’s likely that there are still better options out there for you. Earning up to 5% back in Disney Rewards Dollars in some spending categories isn’t bad, but just for perspective, there are many credit cards out there that provide a better return for everyday spending than either of the Disney cards.
For example, the Capital One Venture earns 2 miles per dollar spent on all purchases, albeit for a higher annual fee of $95 per year. Some credit cards award up to 4 or 5 points per dollar at places such as grocery stores and on gas purchases, travel purchases, etc.
In other words, you can do much better than earning Disney Reward Dollars with your everyday purchases via a wide variety of credit cards.
Related: Earn more than 1 point per dollar with these cards
Disney Visa card perks
The unique perks are where the Disney Visa products get more interesting for those looking to vacation with Mickey Mouse.
First, you can save 10% on some Disney merchandise purchases of $50 or more and save 10% on select dining locations on eligible dates at Disneyland and Disney World. Some eligible spots include: Skipper Canteen at the Magic Kingdom, Rose & Crown Dining Room (lunch only) at Epcot, Kona Cafe at the Polynesian Village Resort, the Hollywood Brown Derby at Hollywood Studios and Storytellers Cafe at the Grand Californian at Disneyland (I highly recommend the breakfast with characters at Storytellers).
Related: Best restaurants at Disney World
You can also get a 10% discount on some activities, such as the horseback rides at Fort Wilderness. Finally, Disney card members also get some exclusive photo opportunities.
Related: Is Disney Cruise concierge level worth it?
Why the Disney debit card may be better
At TPG, we aren’t huge fans of using debit cards for everyday purchases, as you typically don’t earn rewards or have the same level of built-in protections as with credit cards. That said, the Disney debit card may make sense if you’re mainly interested in the Disney perks that come by having the card.
Having the debit card won’t count against Chase 5/24 status and carries no annual fee. However, you will need a Chase checking account to access this debit card option.
The Disney debit card doesn’t earn rewards (so there is no need to really use it much), but it gets you access to many of the same photo ops and discounts on Disney merchandise, dining, cruise expenses, park tours, etc., as the Disney Visa credit cards. This is a way to get the perks but avoid fees or using a 5/24 slot on a Disney credit card.
Related: Why you shouldn’t use debit cards
Why the Disney Visa cards aren’t always the best choice
I’m a bit of a Disney fanatic, so I get the appeal of having one of these Disney cards — they’re cute, too, with the different available Disney design options. If the built-in perks — the in-park character photo ops and available discounts — sound intriguing, then a Disney Visa might be right for you since those are perks not really replicated on other cards.
If you are big on Disney dining and some out-of-park experiences, saving 10% or so on those charges can add up for frequent Disney visitors.
However, if your main goal is to get a rewards-earning credit card that will rack up points or rewards you can use toward a Disney vacation, you can probably do better both in terms of a larger welcome bonus and better everyday earning rates that you can use at Disney than a Disney Visa.
Here are my favorite credit cards for families who want to use perks to travel.
Related: How to use points for Disney tickets
If you spend a lot of money at Disney and want to earn as many points or as much cash back as possible on these expenses, the Disney Visa Premier is a good choice but not always.
Bottom line
The Disney Visa credit cards are fun rewards choices for fans of all things Disney. However, the cards are far from slam dunks for Disney enthusiasts looking to earn or use rewards for a Disney vacation in all situations.
In terms of rewards, the Disney cards are better than paying for things with checks or debit cards, but they often aren’t the absolute best credit cards on the market if your goal is to use points for your next Disney trip.
Instead, have read our guide to the best credit cards for Disney vacations to save the most money and earn maximum points on your ticket, flight and hotel expenses on your next Disney vacation.
Read more: Disney Premier Visa and Disney Visa card reviews