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One of the best ways to grow your wealth is to take advantage of a high-yield savings account and make money from the interest. Depending on your age, the average savings in America can vary, but those who start younger can build more wealth because they have more time.
Use our free simple savings account calculator to see how your money can make money over time from interest payments.
Simple Savings Calculator
Total Savings
$
Breakdown of Savings
Starting Deposit
Total Contributions
Earned Interest
Simple Savings Account Calculator Help
The simple savings account calculator helps you easily calculate the annual percentage yield (APY) and accurately show how your investment can grow. Below, we go over each aspect of the calculator and how it works.
Starting deposit: When you open a savings account, this is your initial deposit. This first deposit plays a big role in how much your wealth will grow over time.
Monthly contribution amount: It’s beneficial to continue depositing into your savings account monthly. Adjust this amount in the savings account calculator to see how much your money can grow and benefit from compound interest.
Number of years: Giving your money time to grow is the ideal strategy due to compound interest.
Annual interest rate: Interest rates can vary depending on the bank and type of account. You can use certificates of deposit (CDs), a high-yield savings account, or money market accounts. Be sure to shop around to find the best interest rates before you decide.
How Much Should You Save Each Month?
How much you save each month is unique to your financial situation. However much you choose to deposit into your savings account, the important thing is to be consistent. One way to do this is by setting up automatic transfers from your checking to your savings each month after a payday.
You’ll also want to ensure you’re budgeting properly so you don’t fall behind on other expenses like bills or debt payments. A monthly budget template can help you create a strategy and see what amount works for you.
How Do You Calculate APY?
To calculate the simple interest amount in a savings account, multiply the account balance by the annual percentage rate. For example, if you save $10,000 in a year and have a high-yield savings account with a 4% interest rate, the calculation is:
$10,000 x 0.04 = $400
How Savings Can Improve Your Financial Well-Being
Having a savings account is not only helpful for building your wealth, but it also provides you with some security in an emergency. By finding a savings account with a high interest rate, you will make money by simply storing your savings in the account.
Improving your credit score can also help your financial well-being. A good credit score lets you benefit from lower interest fees and access to additional loans and lines of credit. If you want to know where you stand with your credit, sign up for your free credit report card. You can also utilize Credit.com’s ExtraCredit® service to get credit monitoring alerts, additional credit reporting, and more.
Helpful Links to Start Saving
Check out some of our other articles for more tips and strategies for saving and growing your wealth.
The average American net worth varies due to many factors, with some people making far more than others. If you’re behind the national average, it may seem difficult to catch up, but whether you have bad credit or a lot of debt, you can still begin building your net worth by learning how to generate passive income.
Passive income is a great way to generate more income, pay down your debt, and start saving and investing for your future. Here you’ll learn what passive income is, as well as different ways to make passive income online and offline. With 25 passive income ideas, there is something for everyone.
25 Passive Income Ideas:
Write an E-Book
Start a YouTube Channel
Try Affiliate Marketing
Create a Blog
Sell Stock Photos and Videos
Create an Online Course
Make Sponsored Content
Invest in Dividend Stocks
Invest in REITs
Invest in Index Funds and ETFs
Try Peer-to-Peer Lending
Stake Cryptocurrency
Utilize High-Yield Savings Accounts
Buy Government Bonds
Invest in Art
Buy Property to Rent
Rent Out a Room in Your Home
Buy Domain Names
License Your Music
Design Custom Products
Rent Out Your Vehicle
Use Your Vehicle as Ad Space
Create an App
Flip Unique Items
Rent Out Your Parking Space
What Is Passive Income?
Passive income is a type of income that comes from sources other than your regular employment, and involves a more hands-off approach. Passive income isn’t a “get rich quick” scheme, though some companies make big claims about generating passive income without any work. Passive income does take work to set up, but the goal is that you can make money without managing it on a day-to-day basis.
You’ll generally do most of the work by setting up your source of passive income. While it may require some upkeep every now and then, like updating a product or maintaining a rental property, you’ll earn the majority of your income while pursuing other endeavors.
Like other sources of additional income, passive income is taxable, but when done correctly, you can make enough passive income to surpass your tax bill.
1. Write an E-Book
Whether you’re a writer or not, an e-book can be a fantastic way to generate passive income. We no longer live in a world where publishers are the gatekeepers of books, so you can self-publish a book that can generate passive income. Various websites let you self-publish books, like Amazon’s Kindle Direct Publishing, Apple Books, and Barnes & Noble. Some of these sites also offer print-on-demand services for customers who want physical copies.
You can write a nonfiction book if you’re knowledgeable about a certain subject, or you can write fiction if you have an interesting story idea. Although this can generate passive income, self-publishing can require a bit of an investment. You’ll need to pay for an editor and book cover designer, and you may also want to pay for advertisements. But if you can do the cover art and marketing on your own, you may be able to save some money.
2. Start a YouTube Channel
There are many ways to make money using social media, but YouTube is one of the best ways to make passive income. YouTube pays content creators to run ads on their videos. In order to qualify for the YouTube Partner Program, you’ll need at least 500 subscribers, three new videos within the last 90 days, and 3,000 watch hours within the last year. Previously, you needed 1,000 subscribers and 4,000 watch hours, but the policy was updated in June 2023 with lower requirements.
Like other sources of passive income, making money from YouTube will require an up-front investment of time and money. You need a stable internet connection, camera, microphone, computer, and editing software. You also need to make consistent videos to qualify for the partner program. You can eventually generate passive income by making evergreen videos, because people will watch old videos that bring in revenue—and the more videos you have on your channel, the more money you can make.
3. Try Affiliate Marketing
Affiliate marketing is when you share a link to a product or service, and the company gives you a percentage of any sales made through that link. You can share these links on your social media pages, blog, newsletter, or anywhere else that allows you to post a link. Affiliate marketing is one of the best online passive income opportunities, and you can combine it with any other online method we mention in this article.
One of the most popular affiliate link programs is Amazon Associates. Let’s say you have a YouTube channel where you review electronics, and you make a video reviewing a new TV or laptop. If you link to that product on Amazon with your affiliate link, you’ll receive a percentage of the sale each time someone uses your link.
This isn’t only limited to Amazon, either. Many companies offer affiliate links, so it can be advantageous to reach out to companies for products and services you use regularly to see if they have an affiliate program.
4. Create a Blog
There are a variety of ways to make money from writing a blog. Like YouTube, old blog posts can generate passive income even if people read the post months or years after you wrote it. If you create your own website to host your blog, you can integrate Google Ads and use affiliate links to make money online.
Platforms like Substack combine blogs and newsletters, so every time you write a new post, subscribers receive an email. You can have paid subscriptions on Substack, so users pay a monthly fee to read your posts, and you can have free posts that go out to non-paying subscribers as well.
5. Sell Stock Photos and Videos
If you’re a photographer or videographer, you can earn money for your photos and videos. There are many different websites that buy stock photos and videos, like Shutterstock, iStock, and Getty Images. One thing to consider is that the website gets exclusive rights to your images or videos, but on some sites you can make between 15% and 45% in royalties.
6. Create an Online Course
Many people have expertise in a certain area, and utilizing your knowledge and skills to create an online course is a great way to make passive income online. For example, you can create a course for how to knit, how to take amazing photos, or how to program an app. Websites like Kajabi and Teachable allow you to host and sell your courses.
You may need to invest some time and possibly money in marketing your course to ensure you find the right audience. Some course-hosting platforms like Skillshare also categorize courses by topic for better discoverability.
If you start gaining a following on social media platforms or through a blog, you may get the opportunity to do sponsored content. Companies want to ensure they target the right audience, so if you have followers who may buy their product or service, they’re more likely to sponsor a piece of content. This typically means you discuss their product in a video or write about it in a caption.
In order to generate passive income from a sponsored opportunity, the company will give you an affiliate link. This allows you to make money up front for the sponsored content as well as passive income from anyone who uses your link to buy the product or service.
This route for passive income may take some time because companies typically want people to have a decent following before sponsoring content.
8. Invest in Dividend Stocks
Stocks can be a great way to make money while also investing in your future. When you buy a stock, you buy a small portion of a company. If the stock price rises and you sell it at a higher price, you make a profit, but the stock can also drop in price and lose you money. Some, but not all, stocks offer dividends, which pay investors a dividend per share if the company has a profitable quarter.
When the stock pays out dividends, you can receive the payment directly from your brokerage or reinvest the dividends by buying more of the stock. Like other investments, this can compound and turn into a lot of money over time if the company continues to profit. As you invest in dividend stocks, keep in mind the companies can raise or lower the dividend percentage at any time.
Use MarketBeat’s dividend calculator to look up specific stocks and estimate dividend returns.
9. Invest in REITs
Real estate investment trusts (REITs) are another investment opportunity. Rather than investing directly in a property, you can invest in a REIT, which is a company that owns and manages real estate.
Similar to other investments, there is risk that comes along with investing in REITs. For example, there’s a possibility your REIT investments will lose money if there’s a drop in the housing market.
10. Invest in Index Funds and ETFs
Index funds and exchange-traded funds (ETFs) are some of the safest investments because they offer diversification. Rather than investing in one company, index funds and ETFs allow you to invest in multiple companies simultaneously.
Legendary investor and founder of Vanguard John Bogle was a major advocate for index fund investing. More specifically, he advised people to invest in the S&P 500, an index of the 500 largest companies in the United States. ETFs are slightly different because there are higher fees, but they allow you to invest in a group of stocks for a specific industry. For example, ARKK is an ETF that holds shares for companies that work on innovative technology.
There is still a risk when investing in index funds and ETFs, but they are often lower risk than other forms of stock investing.
11. Try Peer-to-Peer Lending
Another way to make passive income is to become your own type of “bank” by doing peer-to-peer lending, sometimes called P2P lending. Banks make money on loans by charging interest to customers, and P2P lending allows you to do the same thing. Websites like Prosper and Funding Circle allow everyday people to lend and borrow money with various interest rates.
12. Stake Cryptocurrency
Cryptocurrency investing is a highly volatile form of investing, making it especially high risk. Some cryptocurrency platforms allow you to “stake” your crypto, which is when you allow the platform to hold your crypto and lend it to other people. Similar to P2P lending, you make money off the interest.
Cryptocurrency lending and trading is also high risk because there is little to no regulation. Crypto platforms like Voyager have been known to offer extremely high returns and then go bankrupt, preventing them from paying back their users. In extreme cases, there are stories of fraudulent activity from crypto platforms. But if you have a high risk tolerance, this form of investing can be incredibly lucrative.
13. Utilize High-Yield Savings Accounts
A safer way to make passive income is to open up a high-yield savings account, which allows you to make money simply by holding it in your account. Banks use customer funds to lend out money, but unlike crypto staking, bank funds are backed by the U.S. government via the FDIC. This means that if, for some reason the bank doesn’t have the money when you want your funds, the government would provide the bank with the money to pay you up to $250,000.
Many banks and financial institutions offer high-yield savings accounts, with some offering an annual percentage yield (APY) of over 4%. So if you opened an account with a 4.5% APY and deposited $1,000, you would have $1,045 after a year.
People maximize their passive income by not touching this money because it compounds each year. So using that same example, in the second year, you would then earn 4.5% of the $1,045 rather than the original $1,000. And if you add to the savings account each month, you can make quite a bit of money over time.
14. Buy Government Bonds
Perhaps the safest way to earn passive income from investing is to buy government bonds. A government bond is basically a loan to the federal government that pays you back the original amount with interest over a certain period. The reason government bonds are so safe is because the government backs them. When buying a stock, it’s possible to lose your money if the company goes out of business. Bonds are safer because as long as the government exists, you’ll make your money back.
Although government bonds are very low risk, they also offer low returns. Depending on various factors, government bonds may offer a 3–5% return over two to 30 years. To put that into perspective, S&P 500 index fund investing offers an average return rate of over 7.5%[1] .
15. Invest in Art
Similar to stocks, you can also invest in artwork. One way to do this is to buy works of art that you believe will increase in value later. If you’re knowledgeable about art and can find pieces selling for below their value that you can sell later for a profit, you can make a bit of money. Websites like Masterworks allow you to buy shares of artwork with other investors so you take on less risk.
16. Buy Property to Rent
Many people generate passive income by purchasing properties to rent. If you can afford the initial investment of buying a single-family home or condo, you can then rent them out to tenants for a profit. For example, if you buy a house and your mortgage is only $1,000, you can make a profit by charging any amount over your mortgage cost.
In order to take advantage of the passive income aspect of renting, you may benefit from hiring an individual or company to manage the property. Property managers collect the monthly rent and take care of maintenance issues for a fee. Should you decide to invest in rental properties, it’s helpful to factor in the cost of potential home repairs before, during, and after tenants live there.
17. Rent Out a Room in Your Home
If you don’t have the money for a down payment or don’t want to take on the risk of purchasing a rental home, you can always make some extra income by renting out a room. If you have a spare room in your home, you can rent it out for a monthly fee. This is a great option for families whose children recently moved out.
You can use websites like Airbnb and VRBO to connect you with renters. Although many people use Airbnb for short-term rentals during vacations, you can also offer long-term rentals through the website. These sites also let you vet renters before they move in, so you have control over who rents the room.
18. Buy Domain Names
Buying domain names is a sort of investing, so it does come with some risk. People and businesses buy domain names to host their websites, so you can purchase a variety of inexpensive domain names in hopes of people buying them from you later for more. You can typically buy domain names for less than $10 through websites like GoDaddy, but if they don’t sell, you’ll need to pay the annual cost to keep the name.
While this may be a risky investment, people have made a lot of money flipping domain names. It was a big money-maker during the “dot com boom” in the 1990s, Help.com sold for $3 million and NFTs.com sold for $15 million in 2023. Many domains don’t sell for millions, but you may still be able to make a decent profit off domain names in high demand.
19. License Your Music
If you’re a musician, you can license your music in a similar way to selling stock photos and videos. Some websites like Music Vine pay musicians 30% for nonexclusive deals or more for an exclusive license. There are also websites like Epidemic Sound that market to YouTubers and filmmakers by offering a subscription service for royalty-free music.
20. Design Custom Products
For those who are artistically inclined, you can make money creating designs and selling them on websites that sell custom products. Websites like Redbubble, Teespring, and Society6 offer print-on-demand services for your artwork. These websites sell a wide range of products like T-shirts, coffee mugs, phone cases, and more. You get a percentage of the sale every time a customer goes to the website and chooses your design for any of these products
If you have old artwork you created in the past or simply feel like creating in your spare time, you can generate passive income as long as your art is hosted on these types of websites.
21. Rent Out Your Vehicle
Services like Uber and Lyft are popular side hustles, but you can make passive income by renting out your vehicle instead. When people are traveling or have their car in the repair shop, they often need a vehicle to get around. Rather than going to a rental car company, they can rent a vehicle through other websites like Turo or Getaround.
22. Use Your Vehicle as Ad Space
In addition to renting out your vehicle, you can make passive income by using your vehicle as ad space.
Websites like Wrapify connect businesses and drivers, and depending on how much of your car you’re willing to cover with ads, Wrapify will pay you between $181 and $452 per month. There are also sites like FreeCarMedia.com that pay you for wrapping your vehicle or simply advertising on your rear window.
23. Create an App
If you’re a programmer who can create an app, this may be the best way for you to make passive income. Whether it’s a fun game or an app that provides value and convenience, use your creativity and skills to generate income. Apple and Google allow developers to submit their apps, giving you a percentage of the sale each time someone buys the app.
24. Flip Unique Items
One of the oldest ways to generate passive income is to buy unique items, hold them, and sell them at a later date for a profit. If you’re knowledgeable about a certain type of item or are willing to learn, you can make a decent amount of money by buying and holding items.
This is ideal for people who like shopping at thrift stores or going to garage sales. You may find antique toys, memorabilia, sports trading cards, comic books, or other items for a low price that are either worth a lot of money now or will be in the future.
To sell the items or see how much items are selling for, you can use websites like eBay, OfferUp, Craigslist, or Facebook Marketplace.
25. Rent Out Your Parking Space
Some people are willing to pay for a good parking spot. If you have a space you’re not using or don’t mind giving up, you can make money renting it out—especially if you live in an urban area. Websites like SpotHero allow you to list your space.
What’s the Best Source of Passive Income?
The best source of passive income is unique to each individual. There are many options on this list, and some allow you to capitalize on different skill sets. For example, if you have expertise in certain subjects, the best sources of passive income may be online courses and e-books. If you have knowledge about stocks or are willing to learn, investing may be the best option.
When deciding which passive income sources are right for you, it may be beneficial to weigh out the pros, cons, and risks of each one. Remember that many of these options require an initial investment of money and time to get started. Consider your own risk tolerance and financial situation before going all in on any of these methods.
Do You Need Money to Make Passive Income?
While you’ll need money to get started with many passive income ideas, this isn’t the case for every method. For example, if you own a vehicle or have an extra room in your home, you can start renting them out. If you have a computer and internet connection, you have even more options.
Many people who make passive income succeed because they are willing to learn and can invest time into researching these topics. There’s a wealth of information online where you can learn how to excel at specific passive income opportunities like writing an e-book, succeeding as a YouTuber, or using affiliate links.
The Benefits of Multiple Streams of Income
Depending on your specific situation, you may want more than one source of passive income. Whether you’re already in a healthy financial situation or are trying to build your personal wealth and credit score, more income streams means more financial freedom.
The primary benefit of passive income is that you can make money with minimal effort. This means once you get one source of passive income rolling, you can begin adding others so you have multiple income streams that don’t require too much time or attention.
How Passive Income Can Help Improve Your Credit Score
A poor credit score can lead to many challenges—like making it difficult to get approved for new lines of credit, loans, and rental applications—and cost you a lot of money in interest in the long run. Passive income can help you fix your credit by allowing you to pay off your debts. Lenders also look at your total income, so making additional income can help with approvals for new lines of credit, which can also help improve your score. It’s important to know the current state of your credit health. You can get a free credit report card on Credit.com which breaks down your credit score factors and assigns a letter grade for each area, or sign up for our ExtraCredit® subscription for additional credit tools.
Not only are SUVs spacious, but many are also family vehicles, so they come with high-end safety features. These features make some SUVs cheaper to insure than other popular vehicles on the market. The Subaru Outback takes the top spot on this list, and it’s also rated one of the safest midsize vehicles by the Insurance Institute for Highway Safety.
SUV
Average Annual Premium
Subaru Outback
$1,603
Honda CR-V
$1,635
Honda Pilot
$1,726
Ford Escape
$1,734
Honda Odyssey
$1,735
What Factors Make a Vehicle Expensive to Insure?
The primary factor that makes a vehicle more expensive to insure than another is the risk. Insurance companies calculate the risk for different vehicles based on how many claims people file for those vehicles, plus the cost of the repairs. While this data can’t predict the likelihood of someone getting into an accident, the data gives insurers a rough idea.
Insurance providers look at how much a vehicle costs to repair and the likelihood of the vehicle being in an accident. For example, insurance rates are higher for sports cars because people who buy sports cars are more likely to speed and drive recklessly, based on the data.
Some of the most common factors that make vehicles more expensive to insure include:
Vehicle age: An older vehicle may not have the newest safety features, but premiums may be lower on some older vehicles if the average repairs cost less.
Vehicle value: When cars are more expensive, they’re often more expensive to insure as well.
Cost of parts: Some vehicles have more expensive and specialty parts, which cost more to replace if the vehicle is in an accident. Various trim features in a vehicle can also raise the price of premiums.
Safety rating: Many insurance policies also cover physical injuries to you or another driver, which is why safety ratings play a major role in determining the cost of insurance.
Size: Although a larger vehicle may be safer, it can also cause more damage if it’s involved in an accident.
Most Expensive Cars to Insure
If you’re thinking about purchasing a new or used vehicle, it’s helpful to know which types of vehicles typically have the highest rates. They include:
Sports cars
High-end luxury vehicles
Electric vehicles
Cars that attract thieves
These vehicles are more expensive than others primarily due to the overall cost of repairs. For example, while electric vehicles may save you money on fuel, the cost of the battery can range from $4,000 to $20,000. There are also certain vehicles that thieves commonly target. A recent article from MoneyGeek[1] listed the following as the top 10 most stolen vehicles in America:
Chevrolet trucks
Ford trucks
Honda Civic
Honda Accord
Toyota Camry
GMC trucks
Nissan Altima
Honda CR-V
Jeep Cherokee and Grand Cherokee
Toyota Corolla
5 Tips to Get Cheaper Car Insurance
Whether you want cheap insurance for your new vehicle or to lower the rate for your current vehicle, these five tips may help.
Be a good driver. This sounds obvious, but it’s a must. When you’re a good driver, you save money on insurance. This means avoiding car accidents, DUIs, and other major violations.
Consider the insurance cost when buying a new vehicle. A vehicle’s make and model alone can make car insurance more expensive. Remember this when you’re buying a new vehicle, because not only will you have monthly car payments when financing a car, but you’ll also have insurance premiums.
Shop around. Like many other expenses and purchases, it’s a good idea to get multiple quotes before settling on an insurance company.
Look for discounts. Some insurance providers offer discounts, so be sure to ask. You may also receive discounts for bundling your auto and home insurance through one provider.
Improve your credit score. Your credit score may impact your car insurance rate, so make sure you watch for derogatory marks on your credit report that can lower your score.
FAQ
Here, we go over some of the most common questions people have about car insurance rates.
What Type of Car is the Least Expensive to Insure?
Subaru holds the top two spots for the cheapest cars to insure: the Subaru Outback and the Subaru Crosstrek.
Why Are Some Cars Cheaper to Insure?
Some cars are cheaper to insure because they’re cheaper to repair, have better safety features, and are a low-risk for insurance providers based on their data.
Is Insurance Cheaper for Older Cars?
Insurance for older cars is not necessarily cheaper than newer cars. If an older vehicle is more expensive to repair or has poor safety features, it may have higher rates. on the other hand, older vehicles that meet current safety standards and are inexpensive to repair may have lower rates than some newer vehicles.
What’s the Most Expensive Car to Insure?
Out of the top 25 most popular vehicles in the United States, the Tesla Model Y is the most expensive car to insure, and the Tesla Model 3 is the second most expensive.
How Your Credit Score Affects Your Car Insurance Rate
Many people don’t realize that not only does your credit score affect the cost of your vehicle, but it can also affect your insurance rates. If you have derogatory marks on your credit report from late payments, missed payments, or collections, you may face higher insurance premiums.
Before you shop for auto insurance, it’s helpful to know your credit score. You can receive a free credit report card at Credit.com, and our ExtraCredit® subscription offers even more credit management tools.
Methodology
Data was sourced from Quadrant Information Services and provided to NerdWallet[1] and Bankrate[2] . Both studies analyze data from ZIP codes throughout all 50 states and Washington, D.C., and are weighted based on geographic region and population.
NerdWallet’s research used data from Kelley Blue Book for the top 25 best-selling models, along with rates from different ZIP codes in the United States. NerdWallet based its data on both male and female drivers 35 years old with good credit and clean driving records using the following coverage limits:
$100,000 bodily injury liability coverage per person
$300,000 bodily injury liability coverage per crash
$100,000 property damage liability coverage per crash
$100,000 uninsured motorist bodily injury coverage per person
$300,000 uninsured motorist bodily injury coverage per crash
Collision coverage with $1,000 deductible
Comprehensive coverage with $1,000 deductible
The Bankrate study analyzed rates for a 40-year-old female and male who have clean driving records and good credit. Rates are for full coverage and are based on the following limits for a 2021 Toyota Camry that drives five days per week and roughly 12,000 miles per year:
$100,000 bodily injury liability per person
$300,000 bodily injury liability per accident
$50,000 property damage liability per accident
$100,000 uninsured motorist bodily injury per person
$300,000 uninsured motorist bodily injury per accident
Here are some alternatives to no-credit-check loans that are ideal for individuals with little to no credit history.
Search for Lenders Who Take Alternative Credit Backgrounds Into Account
While credit history is typically used to assess a borrower’s risk, some banks will accept alternative data to determine your eligibility such as salary, rent, or utility payment history and bank statements. Remember that most lenders will only accept alternative data for smaller loans like credit cards, personal loans, and auto loans as opposed to larger loans like mortgages.
To find a lender that accepts alternative credit backgrounds, contact financial institutions in your area or apply for loans online. Make sure to have important documents such as bank statements, W-2s, tax returns, and rent payments readily available.
You can also opt to have alternative data reflected in your credit history. For example, you can sign up for a service that reports your rent and utility payments to the three credit bureaus. This is an excellent way to start building your credit.
Credit tip: You may have better luck if you consult with a lender face-to-face rather than over the phone.
Request a Payday Alternative Loan (PAL) Through Your Credit Union
Some credit unions offer payday alternative loans that are typically lower-cost substitutes to pricey payday loans. PALs are small loans granted in amounts ranging from $200 to $1,000, and they have a maximum APR of 28%. To qualify, you must have been a member of a credit union for at least one month.
Credit tip: You can research credit unions to join by visiting MyCreditUnion.gov.
Apply for a Secured Loan
Secured loans involve putting down a valuable asset as collateral. Assets typically used as collateral include cars, houses, or savings accounts. While these types of loans are beneficial because they have less strict credit history requirements, they are risky in the sense that you could potentially lose the asset you put down as collateral if you’re unable to pay the loan back.
Credit tip: Assess whether you can avoid losing the asset before putting it down as collateral.
Borrow Money From Your Retirement Account
If you have a 401(k) plan, you can take out a loan against your account. Most plans allow you to borrow up to 50% of your savings up to $50,000. Since you are essentially borrowing money from yourself, you won’t need to show credit history to take out a 401(k) loan.
While taking this route could cost you in investment earnings, it is generally a better option than other no-credit-check loans that charge high interest rates. Just make sure to repay the loan within five years to avoid paying taxes and penalties.
Credit tip: Avoid taking out a 401(k) loan if you plan on leaving the company, as you may have to pay it off right away.
Find a Trustworthy Cosigner
If you lack credit history, including a trustworthy family member or friend as a cosigner might help you secure a loan. For a cosigner to improve your chances of being approved, they need to have a good credit score and preferably a long credit history.
However, getting someone to agree to cosign may prove to be difficult, because if you miss payments or default, the cosigner’s own credit will be hurt. Note that this could strain your relationship with the cosigner if you get behind on payments.
Credit tip: If someone in your life agrees to cosign, consider scheduling a reminder to make payments on time.
Turn to a Family Member
If you’re in a position where you need money to cover an expense, consider asking a family member or close friend for a loan. While it might be tough to bring it up, this route can help you avoid getting stuck in a situation with a predatory lender.
Credit tip: When borrowing money from family, consider drafting up a contract to ensure everyone is on the same page about the loan amount, repayment timelines, and any interest that may be charged.
How to Get a Loan With No Credit FAQ
Below, we’ve answered some common questions regarding getting a loan with no credit.
Can I Get a Loan With No Credit?
Yes, it’s possible to get a loan with no credit, although it will be more difficult to get approved, and you may incur a higher interest rate.
What Loans Can I Get With No Credit?
Types of loans you can get with no credit include no-credit-check loans, secured loans, online loans, credit union loans, and family loans.
How Much Can I Borrow With No Credit?
The exact amount you can borrow with no credit will depend on the type of credit account you’re approved for. Remember that the higher your credit score, the more money you’ll be able to borrow.
What Is a Good Credit Score to Get a Loan?
While the exact credit score to get a loan varies, borrowers need a FICO® score of at least 670 to fall within the good credit score range.
How to Build Credit
Establishing credit from the ground up can seem daunting. Here are some ways to start building credit so you can get approved for loans more easily in the future:
Become an authorized user: Ask a trusted person in your life to add you as an authorized user to their credit card account so that you can establish credit history.
Apply for a secured credit card: A secured credit card is a type of beginner-friendly card that requires you to put down a refundable deposit. Since these cards pose less risk to the lender, they’re easier to get approved for when first establishing credit.
Report rent or utilities: While most companies don’t report to the credit bureaus, you can sign up for a rent and utility reporting service that reports these payments to build credit faster.
Apply for a credit-builder loan: A credit-builder loan is an installment loan specifically geared to individuals looking to build credit history. When you take out a credit builder loan, the borrowed funds are placed in a secure savings account or certificate of deposit (CD) and held as collateral until you repay the loan.
Ready to start building your credit? ExtraCredit® is a tool that provides complete credit coverage, including rent and utility reporting and other credit profile-building offers. Try it for free today.
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Information in this piece is accurate as of August 2023.
The best credit cards provide you with cash back rewards, points you can redeem for purchases at your favorite stores, travel miles and much more. Each credit card is fine-tuned with specific perks and benefits, and you’ll find plenty here that will fulfill your needs.
We’ve reviewed 25 credit cards from our partners that not only provide great rewards, but we’ve found the best credit cards for people with no credit, bad credit and fair credit. We’ve also provided a complete guide to help you better understand how credit cards work, as well as some tips to assist you in choosing the right one.
Table of Contents:
Best Overall Cards From Our Partners
The best credit cards bring in new customers by providing various perks, bonuses and benefits. The following credit cards have some of the best sign-up offers that come in the form of cash back rewards and travel miles.
Best for: Repairing credit
Secured Chime Credit Builder Visa® Credit Card
Apply Now
on Chime’s secure website
Annual fee
Recommended credit score
You can qualify for the Secured Chime Credit Builder Visa® Credit Card with a $200 direct deposit
or more, and all you need is a checking account. As you use this secured credit card, you can
build your credit score—and there’s no minimum security deposit.
see more details
Pros
Helps build credit
No security deposit required
No interest
Cons
Needs Chime checking account
Best for: Low APR
Upgrade Cash Rewards Visa®
Apply
Now
on Upgrade’s secure website
Annual fee
Recommended credit score
The Upgrade Cash Rewards Visa® card has a flat rate rewards program for all purchases, which go on
your card when you make your monthly payments. The card also comes with peace of mind from its free
fraud liability program.
see more details
Pros
No annual fee
Fraud liability
Flat rate rewards
Cons
No debt card for welcome bonus
Balance Transfer
Balance transfer credit cards allow you to transfer debt from one account to another, and the best ones come with little to no fees.
Best for: Bonus categories and balance transfers
UNITY® Visa Secured Credit Card – The Comeback Card™
Apply
Now
on OneUnited Bank’s secure website
Annual fee
Recommended credit score
The UNITY® Visa Secured Credit Card – The Comeback Card™ is not only a balance transfer card, but
it’s a secured credit card as well, so there’s no minimum credit score required. This card has a
9.95% balance transfer rate for six months and a low fixed-interest rate of 17.99%.
see more details
Pros
No minimum credit score required
Low fixed interest rate
Fast approval
Cons
Annual fee
$250 deposit to open account
No Interest
Low interest is great, but having 0% interest is even better. These cards have their advantages and disadvantages, such as the advantage of not needing a good credit score, but their usage may be limited.
Best for: No interest
Merit Platinum Card
Apply
Now
on Merit Platinum’s secure website
Annual fee
Recommended credit score
The Merit Platinum Card does have an annual fee broken into monthly payments of $14.77, but their 0%
APR makes up for this. They also allow for a seven-day risk-free trial. With this card, you’ll gain
access to a $750 line of credit for Horizon Outlet and have other member benefits like roadside
protection and credit report monitoring.
see more details
Pros
0% APR
$750 line of credit
Works with bad or no credit
Cons
Annual fee
Can only use at Horizon Outlet
Doesn’t report to credit bureaus
Best for: No interest
Net First Platinum
Apply
Now
on NetFirst Platinum’s secure website
Annual fee
Recommended credit score
The Net First Platinum is a credit card that you can get approved for without any credit as well as
if you have bad credit. It provides you with a $750 line of credit for Horizon Outlet, and you also
receive member benefits like legal assistance, roadside protection and identity theft insurance.
see more details
Pros
0% APR
$750 line of credit
Works with bad or no credit
Cons
Annual fee
Can only use at Horizon Outlet
Doesn’t report to credit bureaus
Best for: No APR
Freedom Gold Card
Apply
Now
on Freedom Gold’s secure website
Annual fee
Recommended credit score
The Freedom Gold Card gives cardholders a $750 line of credit for Horizon outlet, which sells a wide
range of products as well as clothing. There’s no credit check or employment check required to get
approved, either. It also comes with additional member benefits like roadside protection.
see more details
Pros
No activation fee
$750 credit limit
No credit check
Cons
Annual fee
Can only use at Horizon Outlet
Lowest Interest
One of the primary factors people look for in a credit card is a low annual percentage rate (APR). This is the interest you pay on purchases after the introductory rate.
Best for: Bonus categories and balance transfers
UNITY® Visa Secured Credit Card – The Comeback Card™
Apply
Now
on OneUnited Bank’s secure website
Annual fee
Recommended credit score
The UNITY® Visa Secured Credit Card – The Comeback Card™ is not only a balance transfer card, but
it’s a secured credit card as well, so there’s no minimum credit score required. This card has a
9.95% balance transfer rate for six months and a low fixed-interest rate of 17.99%.
The Applied Bank® Secured Visa® Gold Preferred® Credit Card provides you with a credit limit of up to
$5,000 and has no minimum requirement for your credit score. You can open an account with a deposit
as low as $200.
see more details
Pros
Low fixed APR
High max credit limit
Cons
Annual fee
Cash Back
Cash back credit cards put money back in your pocket based on your spending. This can be either a flat rate or for specific categories like dining, entertainment or retail shopping.
Best for: Auto, home and health spending
Upgrade Triple Cash Rewards Visa®
Apply
Now
on Upgrade’s secure website
Annual fee
Recommended credit score
The Upgrade Triple Cash Rewards Visa® credit card provides 3% cash back for auto, home and health
categories. This is a quality choice if you’re doing home upgrades, repairing your car or purchasing
medications and using a gym membership
see more details
Pros
Up to 3% cash back
Umlimited rewards
Fraud liability coverage
Cons
Niche reward categories
Need debit card for welcome bonus
Best for: High percentage rewards
Petal® 2 Card
Apply Now
on Petal’s secure website
Annual fee
Recommended credit score
The Petal 2 card has no fees and is the perfect card for individuals with credit scores from poor to
excellent. You’ll receive 1% to 1.5% cash back on all purchases and up to 10% cash back when
shopping at certain stores.
see more details
Pros
No fees
High cash back rewards
No minimum credit score
Cons
No introductory offer
High APR
Travel
For those who travel, travel cards with top-tier rewards may be the right choice for you. You can get free airline miles along with other perks like points for rental cards and hotel stays.
Best for: Travel
Mastercard® Black Card™
Apply
Now
on Luxury Card’s secure website
Annual fee
Recommended credit score
The Mastercard® Black Card™ is a travel card that has 2% airfare redemptions with no blackout dates
or seat restrictions. You’ll also receive enrollment in Priority Pass™ Select, with access to 1,300+
airport lounges worldwide with no guest limit.
see more details
Pros
Low ongoing
Lounge access
Luxury travel benefits
Cons
High annual fee
Best for: Low APR and travel
Mastercard® Titanium Card™
Apply Now
on Luxury Card’s secure website
Annual fee
Recommended credit score
The Mastercard® Titanium Card™ is a travel card with a low ongoing APR of 19.24%. You’ll receive 24/7
Luxury Card Concierge® as one of the benefits along with 2% for airfare demptions with no blackout
dates or seat restrictions.
see more details
Pros
Luxury Card Travel® benefits
Airfare rewards
Cell phone protection
Cons
Annual fee
Best for: Low APR and travel
Mastercard® Gold Card™
Apply
Now
on Luxury Card’s secure website
Annual fee
Recommended credit score
The Mastercard® Gold Card™ has 2% airfare redemptions with no blackout dates or seat restrictions and
2% cash back. You also receive lounge access at over 1,300 airports worldwide and additional
benefits at hotels like room upgrades and free wifi.
see more details
Pros
Luxury Card Travel® benefits
Airfare rewards
Lounge access
Cons
High annual fee
Bad Credit
In order to build credit, you need a history of good credit—these are our top picks for credit cards if you’re working on improving your mid- to low-range credit score by adding more positive payments to your credit report.
Best for: Groceries and gas
Aspire® Cash Back Reward Card
Apply
Now
on Aspire’s secure website
Annual fee
Recommended credit score
The Aspire® Cash Back Reward Card gives cardholders a credit line of up to $1,000, and you’ll also
receive 1% cash back on all of your purchases. When shopping for groceries or getting gas, you can
earn up to 3% cash back as well.
see more details
Pros
Up to 3% cash back
1% flat-rate on other purchases
Up to $1,000 credit limit
Cons
Annual fee
High APR
Fair Credit
If your credit score falls within the 630 to 689 range, while not an excellent credit score, there are still plenty of cards you can apply for.
Best for: Building credit
Avant Credit Card
Apply
Now
on Avant’s secure website
Annual fee
Recommended credit score
The Avant Credit Card allows people with a credit score of 580 to 669 begin building their credit
score. It can be difficult to get a credit card with a fair credit score, so this card can be quite
helpful—they alsoregularly review your payment history for potential credit line increases.
see more details
Pros
Fast and easy application
Soft inquiry for credit check
Cons
Annual fee
High APR
Best for: Low APR
Upgrade Cash Rewards Visa®
Apply
Now
on Upgrade’s secure website
Annual fee
Recommended credit score
The Upgrade Cash Rewards Visa® card has a flat rate rewards program for all purchases, which go on
your card when you make your monthly payments. The card also comes with peace of mind from its free
fraud liability program.
see more details
Pros
No annual fee
Fraud liability
Flat rate rewards
Cons
No debt card for welcome bonus
Secured Credit Cards
Secured credit cards are a great option for those with no credit or bad credit. They work by providing you a credit line that uses your own money. You simply make a deposit, which becomes your credit limit, and you raise your score as you use your card and make your monthly payments.
Best for: Repairing credit
Secured Chime Credit Builder Visa® Credit Card
Apply
Now
on Chime’s secure website
Annual fee
Recommended credit score
You can qualify for the Secured Chime Credit Builder Visa® Credit Card with a $200 direct deposit
or more, and all you need is a checking account. As you use this secured credit card, you can
build your credit score—and there’s no minimum security deposit.
see more details
Pros
Helps build credit
No security deposit required
No interest
Cons
Needs Chime checking account
Best for: Repairing credit
PREMIER Bankcard® Secured Credit Card
Apply
Now
on PREMIER Bankcard®’s secure website
Annual fee
Recommended credit score
The PREMIER Bankcard® Secured Credit Card doesn’t require a checking account, and you can have a
credit limit of however much you deposit, up to $5,000. Regardless of your credit score, you can use
this card to begin building or repairing your credit.
The Applied Bank® Secured Visa® Gold Preferred® Credit Card provides you with a credit limit of up to
$5,000 and has no minimum requirement for your credit score. You can open an account with a deposit
as low as $200.
see more details
Pros
Low fixed APR
High max credit limit
Cons
Annual fee
Best for: Secured credit
The First Latitude Platinum Mastercard® Secured Credit Card
Apply Now
on First Latitude’s secure website
Annual fee
Recommended credit score
The First Latitude Platinum Mastercard® Secured Credit Card offers lines of secured credit between
$100 and $2,000. During your first year, they have an introductory offer for a $25 annual fee, which
changes to just $35 per year after that.
see more details
Pros
Low first-year annual fee
No credit score requirement
Low minimum deposit
Cons
Annual fee
*FICO scores and credit scores are used to represent the creditworthiness of a person and may be one indicator to the credit type you are eligible for. However, credit score alone does not guarantee or imply approval for any credit offer.
The Top Cards
The best credit cards depend on what you need. Whether you’re looking for a card that has low interest, one with the most rewards or one that gives you points for traveling, we broke down the top cards into nine categories.
Using similar criteria to our overall methodology, we’ve chosen the top card from each category.
How We Chose the Best Credit Cards
To rank the best credit cards, we reviewed over 25 credit cards from our partners. The primary criteria we looked at takes into consideration aspects cardholders look at during their decision-making process and includes:
Intro APR (10 points)
Regular APR (20 points)
Fees (15 points)
Works with low credit scores (15 points)
Cash back rewards (20 points)
Bonus offers (15 points)
Additional perks (5 points)
The best credit cards depend on your specific wants, needs and circumstances based on your specific credit score. Below, we discuss more about how to choose the right credit card for your situation.
There’s a lot of information about each specific card, so we listed the top cards with each of their primary benefits below to give you an overview at a glance.
Best Overall Cards From Our Partners
Secured Chime Credit Builder Visa® Credit Card: This is a card that is for individuals with bad credit or no credit, and it also has 0% interest on purchases. There’s no minimum security deposit as well.
Upgrade Cash Rewards Visa®: For every purchases, you make with this card, you’ll receive 1.5% cash back, and it also comes with a $200 signup bonus.
Best Balance Transfer Credit Cards
UNITY® Visa Secured Credit Card – The Comeback Card™: 9.95% on balance transfers for the first six months and then 17.99% fixed APR after.
Best Credit Cards for No Interest
Secured Chime Credit Builder Visa® Credit Card: This secured credit card helps those looking to repair or build credit and comes with 0% interest. There’s also no minimum security deposit.
Merit Platinum Card, Net First Platinum and Freedom Gold Card: Each of these cards comes with the same benefit of 0% interest as well as member benefits for their $177.24 annual fee. Although the card is limited to shopping at Horizon Outlet, 0% interest is hard to beat.
Best Credit Cards for Low Interest
UNITY® Visa Secured Credit Card – The Comeback Card™: 9.95% on balance transfers for the first six months and then 17.99% fixed APR after.
Applied Bank® Secured Visa® Gold Preferred® Credit Card: This card gives cardholders a credit limit of up to $5,000, and there’s no minimum credit score required. It also has a low 9.99% fixed interest rate and is great for anyone looking to build their credit score.
Best Cash Back Credit Cards
Upgrade Triple Cash Rewards Visa®: Ongoing APR as low as 14.99% on all purchases along with 3% cash back on home, auto and health purchases.
Petal® 2 Card: The Petal® 2has one of the highest cash back percentages at 10% when you shop at select merchants, and you’ll receive 1.5% cash back on all other purchases.
Best Travel Credit Cards
Mastercard® Titanium Card™: 0% APR for the first 15 billing cycles and 2% rewards on airfare redemptions with no blackout dates or seat restrictions.
Mastercard® Gold Card™: 0% APR for the first 15 billing cycles and 2% rewards on airfare redemptions with no blackout dates or seat restrictions.
Mastercard® Black Card™: 0% APR for the first 15 billing cycles and 2% rewards on airfare redemptions with no blackout dates or seat restrictions.
Best Credit Cards for Bad Credit
Secured Chime Credit Builder Visa® Credit Card: Secured credit card you can open with a $200 deposit or more along with a checking account.
Aspire® Cash Back Reward Card: A secured credit card option that also gives you 1% cash back on all of your purchases. You can also earn up to 3% cash back on groceries and gas.
Best Credit Cards for Fair Credit
Avant Credit Card: Can qualify with a credit score between 580 and 669.
Upgrade Cash Rewards Visa®: Ongoing APR as low as 14.99% and 1.5% flat-rate cash back on purchases.
Best Secured Credit Cards
Secured Chime Credit Builder Visa® Credit Card: Secured credit card you can open with a $200 deposit or more along with a checking account.
PREMIER Bankcard® Secured Credit Card: Secured credit card with a spending limit of up to $5,000.
Applied Bank® Secured Visa® Gold Preferred® Credit Card: Requires a $200 deposit and can go up to $5,000.
The First Latitude Platinum Mastercard® Secured Credit Card: Secured credit card with a limit of between $100 and $2,000.
A Beginner’s Guide to the Best Credit Cards
Whether you’re new to credit and credit cards or are experienced and just looking for the best options, this brief guide will provide you with additional information before choosing your new card.
How Do Credit Cards Work?
Credit cards are like taking out small loans, allowing you to buy something now and pay for it later on. You’ll need to pay back the money you borrowed on your credit card, and this comes with interest.
Some cards offer 0% interest for a certain amount of time, which means you’ll only pay back the same amount charged on the credit card.
Here’s what a basic credit card transaction looks like:
The purchase: Make a purchase with your credit card.
The authorization: The card reader used to run your card contacts your credit card company to ensure the funds are available based on your max limit.
The merchant payment: Your credit card company pays the merchant for the product or service you purchased.
The credit card payment: Each month, you’ll have a statement that shows how much you owed based on all of the purchases you made.
Learn more: How do credit cards work?
How Do Credit Card Rewards Work?
Credit cards with the best rewards will give you a high percentage of cash back or points that you can use at places you make purchases. The following are the two main types of rewards:
Cash back: Cash back rewards pay down your balance. For example, if you’re getting five percent cash back on $5,000 worth of purchases, those purchases would technically cost $250 less.
Points and miles: Rather than cash back, some cards offer points or miles. You can use points to redeem gift cards and other merchandise. With travel cards, your earned miles give you discounted or free travel, depending on how much you have saved.
The rate of the rewards come in two different forms as well:
Flat rate: Cards that offer flat rate rewards give you the same percentage on all purchases. While this is more consistent, they’re lower than tiered rewards.
Tiered rewards: The most common rewards cards offer tiered rewards, which means you receive different rates based on where you use your card. For example, you may receive five percent cash back on groceries, travel and fuel but one percent for everything else.
Which type of reward structure you choose should be based on how you spend. If a card has tiered rewards with a high percentage cash back on purchases you make regularly, that type of card may be a better option. And if you travel a lot, you may benefit more from a travel card rather than a cash back rewards card.
Learn more: 5 ways to maximize credit card rewards without overspending
How Do You Track Credit Card Rewards?
The majority of credit cards have a separate account that stores your rewards, which you can access through your credit card’s website or mobile app. Depending on the card and card issuer, you may see your rewards instantly after purchases, or they may not appear until the following billing cycle.
Here’s how the reward process looks:
You make a purchase
Your rewards are calculated based on a flat rate or tiered rewards
Your rewards are credited to your account
You redeem your rewards through the card issuer’s website or mobile app
Learn more: Ways to redeem your credit card reward points
How Does APR Work?
APR stands for annual percentage rate, which is the interest you’ll pay on your purchases. Simply put, this is what the card issuer charges you for borrowing money through your line of credit. Depending on the credit card, the APR may be fixed or changed based on the current economic conditions.
Below, we’ve listed some more helpful information about interest:
Your interest rate is generally based on your credit score, and you’ll get approved for lower rates when you have a better credit score.
While interest is shown as an annual rate, you’re charged, daily. For example, a 20 percent APR divided by 365 days in the year means you pay roughly .055 percent per day.
Your monthly statement shows how much interest you’re being charged.
Interest is not compounded, so you’ll pay your full interest cost each month.
Learn more: Help! I really don’t understand my credit card APR
How Does the Credit Card Application Process Work?
In the early days, credit card applications were done on paper, but now, you mainly do them online. When you apply for a credit card, the card issuer is evaluating your level of risk and trustworthiness based on your credit score. A good credit score indicates that you’ll pay back the money you borrow from your line of credit.
Here’s what the application process looks like:
Step 1: Fill out the application. You’ll need some personal information like your name, address and Social Security number. The card issuer may request other items.
Step 2: The card issuer runs your credit, which will check your score as well as your actual credit report. The credit score is just a number, but the report gives additional details such as how many cards you recently applied for or any additional details they may need.
Step 3: You’ll receive an approval or denial. These days, many online applications approve or deny you within just a few minutes.
If you’re approved for the credit card, you’ll typically receive the card by mail within 10 business days. Once you receive it, you can activate it and begin spending.
Learn more: How to apply for a credit card online
How Many Credit Cards Should You Have?
How many credit cards you have is really dependent on your situation and your preferences. There’s no optimal number of credit cards. Rather than the number of credit cards you have, you should take into consideration your credit utilization as well as how often you’re applying for new cards.
For example, if you have 10 credit cards but have a 20 percent credit utilization ratio, you’re doing great. But if you have three cards with a 70 percent utilization ratio, that can hurt your score. If you were to have that high of a utilization ratio with 10 cards as well, that would hurt your score. If you apply for new cards too often, this can also harm your score.
Learn more: How many credit cards is too many?
Types of Credit Cards Explained
When choosing a credit card, it’s helpful to know the various types. Different cards are beneficial for different lifestyles, purchasing decisions and personal preferences. Below, we’ve listed some of the most common types along with a brief summary of what they do.
Rewards cards: These cards pay you back via cash that you can use to pay down your credit card debt or points that you can redeem at stores or in the form of airline miles. You earn rewards by using your card.
Balance transfer cards: All credit cards have interest that you need to pay, but some have lower rates than others. Balance transfer cards allow you to move debt and give you a year or more to pay it back with no interest. This often comes with a fee, but the fee is usually less than the interest.
Low and no interest cards: These cards are some of the most popular because interest payments make purchases cost more than the original price. For those who plan on carrying their balance over to the following month, these are the ideal cards.
College student cards: Young people are just starting out with credit building, so these cards get marketed towards college students and can help with the process. They’re easier to get approved for, but you’ll still need to meet qualifications beyond being a student to receive an approval.
Small business cards: Business owners and entrepreneurs often need to make purchases with credit, and these cards offer perks that are specifically geared towards business categories.
Cards for building credit: Whether you have no credit or bad credit, these cards can help you repair or build your credit score when you use them responsibly and make payments on time. They’re easier to receive an approval for, but they sometimes come with high interest rates or deposits.
How Credit Card Companies Work
In order to understand how credit card companies work, it’s helpful to know that they’re more than just companies. Each card company works within a network, and, sometimes, they’re partnered with another brand.
Credit card issuers: A credit card company is the card issuer. This can be a bank or financial institution that maintains your account. For example, Wells Fargo, Chase and Capital One are all card issuers.
The network: On every credit card, you’ll see names like Visa, Mastercard, American Express or Discover. These are basically the go-between companies that manage the transaction.
Co-brand partners: In some cases, cards have branded partners. An example would be an airline, hotel or store credit card.
Let’s look at an example using one of the top cards from our Travel category, the Citi Premier® Card. Citi Bank is the card issuer, using the Mastercard network and doesn’t have a co-brand partner. Then, there are cards like the Hilton Honors American Express Card, where American Express is the card issuer and the network, and Hilton Hotels is the co-brand partner.
Top Credit Card Companies
There are quite a few credit card companies out there, but which one is the best? J.D. Power does a regular study to see which one is the best.
Here are the rankings of the top 10 companies from the 2022 J.D Power U.S. Credit Card Satisfaction Study based on a 1,000-point scale:
American Express (848 points)
Discover (841 points)
Bank of America (818 points)
Segment Average (814 points)
Chase (813 points)
Capital One (812)
Citi (808)
Barclays (797)
Wells Fargo (797)
U.S. Bank (791)
Remember, what’s considered “the best” is subjective, so you may want to do additional research to see which company is right for you. Some may have benefits that suit your needs and spending habits, or you may find it better to get a card through your current bank.
How to Choose the Card That’s Right for You
There’s a lot to consider when choosing the right credit card, so we’ve listed some of the primary features of various cards to help you make the best for you. It’s also helpful to remember that by improving your credit score, you’ll have more options for which credit card companies will approve your application.
Annual Fees
Many cards come with no annual fee, but the ones that do often offer some additional perks and benefits. You’ll need to see if the fee makes sense based on what you’ll use the card for.
A great example is when it comes to travel credit cards. These may come with a fee, but you might save more than enough due to the rewards you gain in comparison to the annual fee.
Other Fees
Different cards come with different fees, and they’re not always advertised front and center when you’re applying for a credit card. You’ll often need to go looking on the application page for additional information to find out which fees you’ll pay as you use your card.
Some of the most common fees include:
Balance transfer fee: A fee for transferring debt from one card to another, which is often a percentage of the amount transferred.
Foreign transaction fee: When you’re out of the country, many cards charge up to 3% for using your card while traveling abroad.
Cash advance fee: Some credit cards allow you to use them like an ATM card for a cash advance, but these come with high interest rates as well as a fee.
Late fees: Credit cards usually have a grace period for making your payments, but these may also come with a late fee.
Learn more: How much does one late payment affect credit scores?
Introductory Rates
Credit card companies make money by charging interest, but many have promotional offers where you’ll receive low interest on purchases for a certain amount of time. Some are as low as 0% interest.
Regular Rates
Regular rates, also called “ongoing rates,” are the interest rates you pay once the introductory period is over. You can find this rate in the terms and conditions on the application, so you can use it to compare it to other cards.
Rewards
We’ve gone over the various types of rewards, such as flat-rate, tiered and points. This is where comparing cards gets specific to your lifestyle. If you travel a lot, a card with travel rewards may be right for you, but if you don’t, you may want to look at cards that give you cash back at places where you shop. You may also get a sign-up bonus with some credit cards that come as cash back rewards or points.
Perks
In addition to rewards, there are sometimes additional perks like cell phone insurance, identity theft security, rental car coverage and more.
How to Get a Credit Card in Six Steps
Now that you have all the knowledge you need to choose the right card, we’re going to put it all together in six simple steps:
Step 1: Check your credit score to know what types of cards you can apply for.
Step 2: Research various cards that sound like they might be the right ones for you
Step 3: Narrow down your options so you don’t apply for too many cards. Remember, each application may trigger a hard inquiry on your credit report, which can temporarily drop your credit score.
Step 4: Apply for the card through the card issuer’s website.
Step 5: Wait for a decision.
Step 6: If you’re approved, you should receive your card within 10 business days, and then you can start using the card for purchases once the card is activated.
FAQ
The following are some additional questions people have about finding the best credit cards.
What’s the Best Credit Card?
There’s no single best credit card. The card that’s the “best” will vary from person to person based on their needs, credit score and lifestyle.
What’s the Best Credit Card Company?
According to J.D. Power’s 2022 survey, American Express is the best credit card company. This is based on criteria like customer satisfaction based on a specific sample size, so some people may prefer a different card issuer.
When is it Time to Get a New Credit Card?
Here are a few reasons you may want to get a new credit card:
To increase your credit limit
To increase your credit utilization ratio
To accommodate a lifestyle change like traveling more often
Improve Your Odds of Getting the Best Card
To get the best credit cards and have endless options, improving your credit score should be your top priority. The best credit cards with the most rewards and best perks typically look for applicants with a score of 690 or higher—falling within the “good” to “excellent” range.
Credit.com has a wide range of services like our ExtraCredit program, which can help you learn more about credit and may lead to better credit health. If you’re unsure of your credit score, get your credit score for free here.
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Debt collectors send debt validation letters show what debts you owe, the amount, and to whome you owe it to.
While a debt collector contacting you can be stressful, it’s important to pause and remember your rights as a debtor. Before paying the debt collector, verify that the debt is actually yours. The debt collection industry is subject to mishaps and mistakes, with some individuals being asked to pay debts they don’t owe.
That’s why you should receive a debt validation letter from the debt collector proving the debt is yours. If you still don’t recognize the debt, you can send a debt verification letter requesting more information or disputing the debt.
In this article, we’ll discuss the importance of debt validation letters and what information they should include. We’ll also provide a debt verification letter sample and a free template to help you get started.
Key takeaways:
Debt collectors are legally required to send you a debt validation letter within five days of initially contacting you.
A debt validation letter should include information about the debt, such as the amount you owe and the original creditor’s name.
If you’re unsure if the debt is accurate, send a debt verification letter to dispute the debt or ask for additional details.
Table of Contents:
What Is a Debt Validation Letter?
What Should a Debt Validation Letter Include?
When to Send a Debt Verification Request
Debt Verification Letter vs. Debt Validation Letter: What’s the Difference?
Debt Verification Letter Template + Sample
How Long Does a Creditor Have to Respond to a Debt Verification Request?
What to Do If a Debt Collector Doesn’t Respond to a Debt Verification Request
What Is a Debt Validation Letter?
A debt validation letter is written correspondence that debt collectors are legally obligated to send you that provides information about the debt they’re collecting. The letter should include details about the debt, the original lender, and the debt collector’s authority to collect the money.
The creditor should send a debt validation within five days of their initial contact with you. If you don’t receive a debt validation letter, the debt collector could be an illegitimate person attempting to scam you. Therefore, you should avoid providing sensitive information to the debt collector until you’ve verified they’re legitimate.
What Should a Debt Validation Letter Include?
According to the Consumer Financial Protection Bureau (CFPB), the debt validation letter should include:
The amount of debt you owe
The name of the original lender requesting payment
The account details associated with the debt
An option to dispute the debt within a 30-day time period
An opportunity to request more details about the original lender
A statement acknowledging that the collector will provide verification if you dispute the debt
When to Send a Debt Verification Letter
If after receiving the debt validation letter and you’re still unsure of whether the debt is accurate, you can send a debt verification request to the debt collector. A debt verification request is a letter that you, as the consumer, can send to the debt collector to ask for information about the debt they’re collecting.
Typically, you have 30 days to send your debt verification request after receiving the debt validation letter. If you don’t send the letter within this time frame, the debt collector will assume the debt is valid and legally continue their efforts to collect.
Debt Verification Letter vs. Debt Validation Letter: What’s the Difference?
It’s important to understand the difference between a debt verification letter and a debt validation letter:
A debt verification letter is a correspondence that you, the consumer, send to the debt collector requesting more information about the debt.
A debt validation letter is a document the debt collector sends to you, providing details about the debt.
Debt Verification Letter Template + Sample
When writing a debt verification letter, it’s important to be clear and concise. State that you’re disputing the debt and list what information you’re requesting from the debt collector.
Below is a debt verification letter sample and a template to help you get started. Remember to use your own information where there is bolded text.
[Name]
[Address]
[Today’s date]
[Name of the debt collector]
[Address of the debt collector]
Re: [Debt account number, if it was provided to you]
Dear [Name of the debt collector]:
I’m replying to your communication regarding a debt you’re attempting to collect. You reached out to me via [phone/mail] on [date] and provided the following account details:
[Account number, if provided]
[Name of the original creditor, if provided]
I am informing you that I dispute the debt you’re claiming I owe.
If you have reason to believe that I’m still responsible for this debt, kindly provide the following details to ensure I have all the necessary information:
The creditor’s name and address who is currently requesting payment
The original creditor’s name and address (if different from above)
The amount owed
The account number
Documentation that proves there is a legitimate reason you think I owe the debt, i.e., a copy of the original contract
The most recent billing statement the original creditor sent to me
An itemized list of any additional interest or fees
An itemized list of any payments since the most recent billing statement
If you’re providing this data to a credit bureau, please report that I’m disputing this debt.
Sincerely,
[Your name]
How Long Does a Creditor Have to Respond to a Debt Verification Request?
There isn’t a specific time frame in which creditors must reply to a debt verification request. However, if you send the debt verification letter within 30 days of receiving the validation letter, they must cease all collection efforts until they respond to your letter and provide verification.
What to Do If a Debt Collector Doesn’t Respond to a Debt Verification Request
If the debt collector doesn’t respond to your debt verification request, it could be due to one of the following reasons:
The debt collector requires additional time to gather the information you’ve asked for.
The debt collector cannot verify the debt.
The debt is beyond the statute of limitations, so the debt collection agency cannot file a lawsuit.
You were dealing with a debt collection scammer.
If you sent the debt verification letter within the 30-day time frame, the debt collector cannot attempt to collect until they provide the information you requested. If the debt collector continues with attempts to contact you, you can submit a complaint with the CFPB, your state’s attorney general’s office, or the Federal Trade Commission.
Debt validation and verification letters can help you exercise your rights and avoid potential debt collection scams. If the debt collector fails to verify your debt, be aware that it may be wrongfully hurting your credit. Check your credit report for inaccurate information and report errors to the credit bureaus to potentially remove the accounts from your credit report.
It’s important to monitor your credit so you can get alerted if inaccurate information is hurting your credit. Try ExtraCredit® for free today for help managing your credit.
Buying a home is an exciting—and typically very expensive—venture. Understanding the mortgage process, your financial status, and what you really want and need in a home are all important to ensuring a desirable outcome when you begin your home search. But what you might not realize is that when you do find the home that ticks most of the boxes, you don’t necessarily have to pay what the seller is asking. Learn more about negotiating house prices below.
Tips for Negotiating House Price
Can You Offer Less Than Asking Price on a House?
It may feel odd to haggle over house price, but you can offer less than what the seller is asking for a home. That’s why it’s called making an offer. The seller doesn’t have to accept the offer, though, and you might find yourself entering into negotiations if you do want the home. During this process, it’s important to balance your desire for the home with a practical approach to how much you should, can, or even want to spend on it.
Tips for Negotiating House Prices
Knowing how to negotiate house price is important because it helps you get a better deal. But you aren’t the only one that might be making an offer, so you also want to follow some best practices so your dream home doesn’t get scooped up by someone else while you’re hedging your bets with the seller.
1. Partner with a real estate agent who can help.
You might start by entering the homebuying process with a bit of help. A qualified real estate agent can serve as your partner as you look for homes and make offers. Here are some of the services a real estate agent can do for you:
Help you drill down to what you really want in a home
Offer greater understanding of the local real estate market
Find homes that meet your criteria that you might not know were for sale or be able to find otherwise
Arrange showings
Act as your go-between and advisor during negotiations with sellers
It’s important to note that not all real estate agents have negotiation experience or even offer this service in an aggressive manner. As a buyer hiring an agent, make sure you look for one with experience writing real estate contracts and negotiating on behalf of clients.
2. Understand how motivated the seller is.
Try to gauge how motivated a seller is to determine where you can start your negotiation. For example, a seller that must sell one home before buying another may be motivated to sell at anything but a loss. But one that doesn’t have to sell the home or is listing a property just to see if it might sell isn’t that motivated and may be able to reject any offer under asking price.
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A good real estate agent can also help you understand seller motivation. Here’s some information that can help you gauge it:
How long the house has been on the market. In general, the longer a home is on the market, the likelier a seller is to accept a lower offer.
How many offers have been made. If the seller hasn’t had any offers over a period of time, they may be more willing to consider yours. If they’ve declined many offers, it could be a sign they aren’t super motivated.
Whether the seller is on a deadline. If the seller has to move or needs to sell the home in a short time period for any other reason, it may put you in a good position as a buyer.
The home has been foreclosed on, which means the lender may be motivated to sell it to recoup whatever it can.
3. Be realistic with your offer.
Whatever state the markets and the seller are in, make sure you’re realistic when you make an offer. First, that means being realistic about what you can pay every month and whether you can get approved for a mortgage for the offer amount.
Getting pre-approved for a mortgage before you start negotiating can be a good idea. This process lets you know around what amount you’re likely to be approved for, how much down payment you might need, and whether you can get an interest rate that works for you. It also demonstrates to sellers that you’re a serious buyer and that you are likely to be able to obtain funding if your offer is accepted. That can make a difference in negotiations.
On the flip side, you should also be realistic about what the seller is likely to accept as an offer. Lowball offers can be seen as insulting and don’t set you on a good foundation for future negotiations.
What is considered a lowball offer? That varies, and your real estate agent can help you determine an appropriate offer in each case.
4. Show enthusiasm but don’t be too tied to the property.
The art of negotiation involves keeping a straight face, right? Actually, in the homebuying process, it might benefit you to demonstrate that you do really like the home in question. After all, the seller may have called this property home for a number of years and be personally attached to it. Selling it to someone else who will genuinely love and care for it could be important.
If it comes down to two similar offers from separate buyers and you’re the one who was delighted with the home and the seller saw you connect with the property, the odds might balance out in your favor. Just don’t overdo it and ensure that you’re making logical choices about financial matters no matter how much you love a house.
5. Put a deadline on the offer.
Finally, put a deadline on your offer. That helps reduce the chances that competing offers might come in and pushes the seller to make a decision or counteroffer so you can move on with the negotiation or your hunt for a different home.
What Else Can You Negotiate with Home Sellers?
If the seller’s firm on the price, you might be able to negotiate other things. Here are some tactics to consider:
Ask the seller to pay some or all of the closing costs.
Use the home inspection to point out items of concern and ask the seller to make repairs to the home in exchange for you paying the full asking price.
Agree to make certain repairs yourself, but ask the seller to agree to a cash payout at closing. This means they come to closing with a check for you to cover the costs of the repairs.
Get creative and ask the seller to leave certain appliances, such as a washer and dryer or refrigerator in the home.
Shop Mortgages Online
If you’re ready to buy your next home, you can start the mortgage process online. Follow these steps to get started.
Check your credit. You can sign up for ExtraCredit to see 28 FICO® Scores, including those commonly used by mortgage lenders.
Make sure your credit score is accurate by challenging inaccurate negative items, if necessary.
Continue to make strong financial decisions to help boost your score so you stand a better chance at getting approved for a mortgage.
Shop mortgage rates at Credit.com, get pre-approved or apply for a mortgage with one of our partner lenders.
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations.
The average household credit card debt in America is $9,654, and the states with the largest amount of credit card debt are Alaska, Hawaii, and New Jersey.
Between the first quarters of 2022 and 2023, The Federal Reserve Bank of New York reported that the credit card debt in America rose by $145 billion. As of June 2023, we saw a 12-month inflation increase of 3%, the smallest year-over-year increase since March 2021.
By understanding American credit card debt statistics, you’ll better understand where you stand and what you can do to potentially lower your debt. Credit card debt increases your credit utilization ratio, which can hurt your credit and ultimately cost you more money in interest.
We surveyed over 1,100 Americans to learn more about credit card debt statistics in the United States. This data covers the average debt by state, average interest rates, and more. While many of the statistics from our other sources look at the situation as a whole, our data helps us see what’s happening on an individual level.
Despite the national average of Americans having over $9,000 in credit card debt per household, only 14% say they’re “very worried” about their debt.
67% of respondents said they have less than $2,000 in debt, which may indicate that only a concentrated number of people have high amounts of credit card debt.
20% of respondents don’t know how long they’ve been in debt.
The majority of respondents (56%) say their credit card debt is due to unexpected expenses.
74% of respondents said at least one collection agency has contacted them about a past due debt.
In this article, we’ll also provide tips on how to get out of debt and work toward better credit.
Table of contents:
Key Credit Card Debt Statistics
Many factors play into credit card debt, such as the average interest rates, which cards have the best offers, and the balance people carry on their card. These statistics will help you compare your own credit card balance to the national average and see if you’re getting a good deal with your current cards.
Here are the standout findings of various debt statistics:
The average American household has over $9,000 in credit card debt. (WalletHub)
Mississippi has the least credit card debt at $5,259 per person. (Credit Karma)
Alaska has the most credit card debt on average at $8,139. (Credit Karma)
Credit cards 90 days or more past due rose to 4.57% in 2023. (FRBNY)
Individuals making $184,000 or more per year have the most credit card debt at an average of $12,600. (Federal Reserve)
The total credit card debt in America as of Q3 2022 was $910 billion. (Experian®)
How Many Credit Cards Carry a Balance
The American Bankers Association releases a quarterly report for consumer credit conditions, and the most recent data comes from the third quarter of 2022.
In America, approximately 43% of credit cards carried a balance, 23% were dormant, and 34% were used but paid off each month. Those who pay off their credit card balance are able to keep a low credit utilization ratio and prevent the accumulation of debt.
Tip: Use our credit card payoff calculator to estimate when you’ll be debt free.
Average Interest Rates for New Credit Card Offers
LendingTree analyzed the terms and conditions of 200 credit cards from upwards of 50 different credit card companies, banks, and credit unions. With this data, they were able to gather an assortment of information involving annual percentage rates (APR).
The APR is the amount of interest consumers pay for their purchases, and the following table is broken down by credit card type.
The following table is based on data from July 2023.
Average Credit Card Debt by State
In February 2023, Credit Karma gathered data from 74 million of their members to see which states had the most and least amount of credit card debt. Below, we’ve compiled a complete list based on Credit Karma’s data that contains the average credit card debt for each of the 50 states alphabetically.
Top 10 States With the Most Credit Card Debt
The following states had the most credit card debt, with Alaska having the highest average credit card debt in America at $8,139 per person.
State
Average credit card debt
1.
Alaska
$8,139
2.
Hawaii
$7,444
3.
New Jersey
$7,306
4.
Maryland
$7,248
5.
Virginia
$7,174
6.
Connecticut
$7,032
7.
New York
$7,029
8.
California
$6,952
9.
Washington
$6,869
10.
Florida
$6,783
Top 10 States With the Least Credit Card Debt
The major credit bureau, Experian, tracks credit card debt data as well and found that between 2021 and 2022, overall credit card debt in the U.S. increased from $785 billion to $910 billion—a 16% increase. The average debt also increased in many states, according to Credit Karma’s report.
State
Average credit card debt
1.
Mississippi
$5,259
2.
Kentucky
$5,455
3.
Wisconsin
$5,593
4.
Arkansas
$5,600
5.
Indiana
$5,601
6.
Alabama
$5,647
7.
West Virginia
$5,674
8.
Iowa
$5,732
9.
Idaho
$5,737
10.
Maine
$5,788
Average Credit Card Debt by Age
Credit Karma’s report with the state-by-state data also broke down credit card debt by age group. Currently, Generation X carries the most credit card debt, while Generation Z carries the least.
Age group
Average credit card debt
11-26 (Generation Z)
$2,781
27-42 (Millennials)
$5,898
41-58 (Generation X)
$8,266
59-77 (Baby Boomers)
$7,464
78-95 (Silent Generation)
$5,649
Average Credit Card Debt by Income
The following data comes from the Federal Reserve’s Survey of Consumer Finances (SCF) and was most recently updated in 2019. The Federal Reserve completed a new survey at the end of 2022 and will have updated data later in 2023.
As you’ll see, higher-income individuals have much more credit card debt than those who make less. This makes sense because high-income individuals are able to get much larger credit lines. But when you look at the debt-to-income ratio, lower-income households have much more consumer debt compared to the amount of money they make.
Percentile of Income
Average credit card debt
Less than 20%
$3,800
20%-39%
$4,700
40%-59%
$4,900
60%-79%
$7,000
80%-89%
$9,800
90%-100%
$12,600
Average Household Credit Card Debt
A recent study from WalletHub found that while total credit card debt in the United States rose 14.1% between 2022 and 2023, household credit card debt only rose by 8.39%.
Their data shows that the average household credit card debt at the end of the first quarter in 2023 was $9,654 adjusted for inflation, which is $738 higher than the same time the previous year. WalletHub’s chart goes back to 1986, and the highest household credit card debt was in 2007 when it was $12,221 on average per household.
Average Credit Card Debt by Race or Ethnicity
Research from Annuity.org shows that Black and Hispanic Americans are less likely to feel financially stable and less likely to have a bank account. This information can help us better understand what’s happening in the financial lives of different communities.
This data comes from the Federal Reserve’s 2019 SCF.
Race
Average credit card debt
White (non-Hispanic)
$6,940
Black or African American (non-Hispanic)
$3,940
Hispanic or Latino
$5,510
Other or multiple races
$6,320
Credit Card Delinquency Rates in America
When someone is at least 30 days past due on their credit card payment, their status becomes delinquent. The number of delinquencies in the United States can be a measure of people’s ability to pay down their credit card debt.
To track this data, Experian conducted a study between 2021 and 2022:
Accounts 30 to 59 days past due increased from 1.04% of total accounts to 1.67%.
The delinquency rate of accounts 60 to 89 days past due increased to 1.01%.
Accounts 90 to 180 days past due rose to 0.63%.
How to Get Out of Credit Card Debt and Improve Your Credit
Credit card debt in America is something many individuals struggle with, and when your debt isn’t under control, it can affect your credit. A lower credit score leads to higher interest rates, which means you’re paying more for your purchases. It can also lead to being denied new credit lines.
Here are some simple steps you can take to start getting out of debt sooner rather than later:
Reduce additional credit card spending: You don’t want to add to your current debt if you don’t have to.
Create a budget: Cutting your spending can help you save additional funds to pay down your debt.
Use the snowball method: Each month, pay off your smallest debt in full. This can help you build momentum as you chip away at your overall debt.
Try debt consolidation: Consolidating your debt may help reduce the interest rate and keep your debt in one place rather than with different creditors.
Get a balance transfer card: Balance transfer cards allow you to transfer credit card debt to a different account, which may have a lower interest rate and will also help you consolidate your debt.
If you need help getting your debt under control and improving your credit, Credit.com has resources to help you learn to better manage your finances. To begin managing your credit, sign up for a free credit report card and check out ExtraCredit®. Our services can help you learn how to work on your credit and educate you about managing your finances so you know how to work toward the life you want.
Methodology for Credit.com data: This survey was conducted for Credit.com using Suzy. The sample consisted of a total of 1,154 responses per question and is statistically representative of the general population. This survey was conducted in December 2022.
The amount you need to borrow to buy a new or used car is higher than normal due to the COVID-19 pandemic. Although the world appears to be back to normal, during the height of the pandemic, there were many supply chain shortages and factory shutdowns. Due to supply and demand, this made the price of vehicles higher than normal. Although people are still trying to get their finances back on track post-COVID, we’re still experiencing the effects as the world recovers.
Credit Score
New vehicles
Used vehicles
All
$40,068
$25,041
781 to 850
$36,663
$27,303
661 to 780
$42,438
$28,402
601 to 660
$43,807
$26,527
501 to 600
$40,746
$23,065
300 to 500
$36,690
$19,912
Total Auto Loan Debt in America
During the first quarter of 2011, the total auto loan debt in America was close to $700 billion. Since then, it’s more than doubled and was over $1.5 trillion by 2023. Not only are vehicle prices continuing to rise over the years, but part of the overall debt may be due to more people having access to auto financing as well.
Auto Loans as Percentage of Consumer Debt
As mentioned earlier, buying a vehicle is one of the largest purchases you’ll ever make. Millions of Americans are in debt, and a lot of this comes from auto loans. The average American credit card debt is only 5.8% of consumer debt, but auto loans are the third largest portion at 9.2% of consumer debt. The two largest amounts of debt come from mortgages and student loans.
How Much Do Americans Borrow for Car Loans?
Each quarter, Americans borrow money to purchase new and used vehicles. In 2011, Americans borrowed a little over $72 billion during the first quarter. As you can see in the chart below, the number rises and falls over the years, but as of the first quarter of 2023, the quarterly total is close to $159 billion. This is lower than the third quarter of 2022, when it was over $181 billion.
Average Car Loans by Age Group
The age group that takes out the largest auto loans is those between the ages of 30 and 49. During the first quarter of 2023, Americans between 30 and 39 took out about $37 billion in auto loans, and those 40 to 49 took out $36.5 billion. The lowest borrowers are younger people ages 18 to 29 as well as the older age group of 50 to 59.
Average Car Loan Term by Credit Score
The loan term of your car is the length of the loan if you’re making minimum monthly payments. The loan term is shorter when you make extra payments or larger payments. Based on the recent data from Experian, people with credit scores of 601 to 660 have the longest loan terms for new vehicles. When you have a longer loan term, you’re also paying more in interest fees, which you can see by using a simple loan calculator.
Credit score
New vehicle loans (in months)
New leased vehicles (in months)
Used vehicle loans (in months)
Overall average
70.5
35.88
66.11
781 to 850
61.6
35
64.7
661 to 780
70.15
35.91
68.41
601 to 660
74.20
36.30
68.34
501 to 600
73.80
36.31
66.27
300 to 500
72.79
N/A
62.85
Car Loans by Lender Type
When purchasing a new or used vehicle, you have a variety of options for lenders. For new vehicles, most people use dealer financing, which is 54% of new car loans. Used vehicles have more of a mix with people using banks, credit unions and other options. “Buy here, pay here” lenders typically have the highest interest rates and market toward people with poor credit.
4 Tips to Lower Your Car Payments
If you’re in the market for a new car, there are ways that you can lower your car monthly car payments. Knowing these tips before walking into the dealership can help you create a plan. Below, we list four ways to lower your monthly payments:
Put down a larger down payment: Your monthly payments are based on your overall loan amount. When you make a larger down payment, you have lower monthly payments.
Trade in your old vehicle: If you don’t have the money for a larger down payment, your old vehicle has a value the dealer applies to lower the loan amount. You can also trade in your vehicle and make a larger down payment.
Extend the loan term: By opting for a longer loan term, your monthly payments will be less.
Improve your credit: Improving your credit score is one of the best ways to lower your monthly payments because you’ll likely get a better interest rate, which also decreases the total amount of a vehicle.
When buying a vehicle, keep in mind that although lower monthly payments are helpful, the more important factor is the overall cost of the car. A longer loan term may lead to lower monthly payments, but you may pay thousands more for the car due to interest fees.
How Your Credit Score Affects Your Car Payments
Your credit score is a determining factor when getting a car loan, so it’s beneficial to improve your score before getting an auto loan. The average car loan interest rate for those with low credit scores can be 2% to over 13% more than someone with a good credit score.
If you’re unsure of your credit score, get a copy of your free credit report card to find out. You can also sign up for ExtraCredit® and receive additional credit reporting, which may help you know where you need to work on your credit.
On average, homeowners insurance in the United States is $1,424 annually and about $118 per month. This price varies based on the state you live in, along with other factors like previous home insurance claims, credit score, and the age of your home.
If you’re buying a home, there are a lot of cost considerations, from the monthly closing costs to the mortgage payments and interest rate. One factor many people often overlook is the additional cost of home insurance. To properly budget for your new dream home, it’s helpful to know the average cost of home insurance in your state.
Today, we’ll go over the average insurance cost for each state, which companies have the best rates, and what factors can affect your rates. By learning more about home insurance, you can find the best deals to save money and enjoy the experience of moving into your new home. If you’re considering moving to a new state, this information may also help influence your decision.
Table of contents:
Homeowners Insurance Facts
The cost of your homeowners insurance is affected by various factors. The cost of homeowners insurance can vary by state because some states are more prone to natural disasters than others. For example, Florida is more prone to hurricanes than other states, so the average cost is higher than in a state like Nevada.
As you’ll learn, homeowners insurance can range from less than $1,000 to over $3,000 per year. Here are some key facts about homeowners insurance in the United States:
The average annual cost of homeowner’s insurance in the United States is $1,424.
The state with the cheapest homeowners insurance at $382 per year is Hawaii.
Oklahoma has the highest homeowners insurance rates, averaging $3,659 annually.
Portland, Oregon, is the most populous city with the lowest average annual insurance rate at $686 per year.
People with a credit score of 740 or higher have the lowest average insurance rates at roughly $1,207 per year.
Average Cost of Home Insurance by State
The overall average cost of home insurance in the United States is $1,424 annually or $118 per month.
The following chart and table show the average cost of home insurance for each state and includes Washington, D.C. These prices are based on $250,000 for dwelling coverage.
Top 5 States With the Cheapest Homeowners Insurance Rates
Hawaii has the lowest annual rate of $382 per year, which is 73% lower than the national average. Vermont, Delaware, Utah, and Oregon are also in the top five states with the lowest homeowners insurance rates, and each is close to 50% lower or more than the national average.
Hawaii: $382 per year
Vermont: $658 per year
Delaware: $679 per year
Utah: $696 per year
Oregon: $723 per year
Top 5 states With the Most Expensive Homeowners Insurance Rates
The states with the most expensive homeowners insurance rates in the country are Oklahoma and Kansas at $3,659 per year and $3,083 per year respectively. Some of the other states with the highest rates include Nebraska, Colorado, and Arkansas.
According to Insurance.com, these states have high rates because they’re more likely to experience tornadoes, hurricanes, hailstorms, and other natural disasters.
Oklahoma: $3,659 per year
Kansas: $3,083 per year
Nebraska: $2,951 per year
Colorado: $2,152 per year
Arkansas: $2,123 per year
Average Cost of Homeowners Insurance by City
The city you live in may also determine the cost of your homeowners insurance rates. In addition to the possibility of natural disasters, population, crime statistics, and local materials and labor costs are also factors.
The following cities are the 25 largest cities in the United States, organized alphabetically. The table includes their average annual and monthly rates.
How Much Does Homeowners Insurance Cost by Company?
As with all forms of insurance, it’s typically a good idea to shop around for the best rates. Your rates may change depending on the provider based on the size of your home, claim history, and additional factors. And keep in mind that the level of coverage will also change the cost of your insurance premiums.
The following table shows 11 of the country’s most popular homeowners insurance providers sorted by annual rates.
4 Factors That Can Affect Homeowners Insurance Rates
Outside of your home’s location, some other factors can determine the cost of homeowners insurance. We’ve listed four of the most common factors that could affect your insurance rates.
1. Credit Score
Some states may look at your credit score to help determine your rates. Your credit score may be a factor because a low credit score or bad credit history can be considered a risk factor.
There are some exceptions. According to Experian®, states like California, Hawaii, Maryland, and Massachusetts prohibit using credit scores as a determining factor for insurance rates.
Credit Score:
Poor (300-579)
Fair (580-669)
Good (670-739)
Excellent (740-850)
Average Annual Rate:
$3,274
$1,571
$1,428
$1,207
2. Claims History
Similar to automotive insurance rates, if you have an extensive history of home insurance claims, this can raise the price of your rates. Although you have less control over the damage that may happen to your home, insurance companies require higher premiums to help cover the costs of damages or injuries.
This table shows what types of claims may raise your rate based on the average amount paid out for the claim. The average payouts are taken from the Insurance Information Institute’s research for dwellings with $250,000 in coverage.
Type of Claim
Average Dollar Amount of Claim Paid Out
Average Annual Rate After a Claim
Wind
$11,650
$1,570
Liability
$30,324
$1,749
Theft
$4,415
$1,763
Fire
$77,340
$1,773
3. Deductible Amount
Your deductible is another factor to consider. Some people opt for a higher deductible because it lowers their rate. Should something happen to your home, you’ll have a higher out-of-pocket expense due to that higher deductible. This is helpful to remember as you budget around your home insurance costs.
Another consideration is that while you may save money while paying for your homeowners insurance, you may face financial hardships should you need to file a claim.
Deductible Amount
Average Annual Rate
$1,500
$1,368
$2,000
$1,273
$5,000
$1,111
4. Age of Home
If you own an older home, it may be more expensive to repair the home if it’s damaged. Older homes typically have higher rates due to these higher costs for repairs. The repairs are often more expensive, and the contractors may need to bring the home up to the most current building and safety codes. The first year of recorded data was in 1959.
What Does Homeowners Insurance Cover?
Knowing what your homeowners insurance policy covers can help you better prepare for situations when you might need to use it. With a better understanding of what is and isn’t covered, you can protect yourself from the potential of financial losses if you need to file a claim.
Depending on which insurance provider you choose, they may offer some or all of the following coverages.
Dwelling coverage: The averages listed throughout this post are based on the dwelling coverage of $250,000, which means the insurance will cover up to $250,000 in repairs. Should you get a policy with a higher dwelling coverage amount, more repairs will be covered.
Additional structures: Basic dwelling coverage covers damages to your home, but if you have other structures like a guest house, shed, or detached garage, you’ll need this extra coverage. This coverage is often 10–20% of the dwelling coverage’s limit.
Medical payments: If someone who doesn’t live in your home gets injured on your property, you can get coverage for their medical payments. Medical payment coverage usually ranges from $1,000 to $5,000 of coverage.
Personal liability: Personal liability coverage can be between $100,000 and $500,000, which is for property damage to someone else’s property or if you’re legally liable for injuries on your property. Personal liability coverage may also cover legal fees if someone were to sue you after being injured.
Loss of use: If your home gets damaged to the point where you cannot live there until the repairs are done, this coverage will help cover living expenses. Loss of use coverage can range from 10% to 30% of dwelling coverage.
Personal property: Ranging from 50% to 75% of your dwelling coverage, this provides coverage for the personal property in your home, like clothing, furniture, and electronics. If you have this coverage, be sure to read the details because it may have a max limit of coverage on certain types of items.
What Characteristics Affect Homeowners Insurance?
Earlier, we went over different factors that can affect your homeowners insurance, like your credit score and history of claims. Home and location characteristics may also give you lower or higher rates.
Home Characteristics
Various characteristics of your home and how it’s built may make it more at risk for damage. As with other forms of insurance, if there are higher risks, they can increase your rates.
One of the common characteristics affecting your rates is the condition of your roof. Your roof is a primary part of your home that protects the inside of your home. If you have an older roof that may not withstand harsh weather or is made from poor materials, you may have to pay a higher insurance rate.
Some insurance providers may also have higher rates for special features. Some of these include having a pool, hot tub, sauna, or any other feature that may cause an injury.
Location characteristics
Earlier, you learned how the average home insurance cost varies from state to state, and much of this has to do with the area’s characteristics. In addition to weather risks, home insurance rates are often higher in areas prone to wildfires. Some insurance providers calculate risk based on how close the home is to fire stations and fire hydrants.
Another location characteristic that home insurance providers look at is crime rates. Home insurance policies may have theft coverage, but in higher crime areas, the rates will be higher due to a higher likelihood of break-ins. Sometimes, you can lower your insurance rates by installing security measures like cameras and alarms.
8 Ways to Lower the Cost of Your Homeowners Insurance
Your mortgage is the primary expense for your home, and it’s important to factor in the cost of your homeowners insurance as well for budgeting purposes. Fortunately, there are ways to lower your homeowners insurance through different methods. Here, we’ve listed different ways you can get better rates for your home insurance.
Improve your credit score: Many states allow insurance providers to use your credit score as a factor. By improving your score, you can likely lower your rates.
Bundle your policies: You may be able to bundle your home and car insurance for a better price on both.
Do some renovations: An old roof or out-of-date parts of your home may increase your rate, so it might be worth it to do some renovations.
Opt for the higher deductible: Although you’ll have to pay more when you file a claim, a higher-deductible policy can save you on your annual rate.
Compare insurance quotes: There are many different homeowners insurance providers, so it may be helpful to shop around to find the best price.
Try an independent agent: You don’t have to work with an insurance company directly. Some independent agents are licensed insurance professionals who can offer you a good deal.
Get the right coverage: Educate yourself about what coverages you need and which you don’t. Some people may pay for coverage they won’t need to use.
Check for discounts: There are a variety of discounts you could get in addition to bundling your policies. Your provider may offer a loyalty discount, an alarm system discount, or a claims-free discount.
Methodology
The primary source of this data comes from Bankrate. To conduct their analysis, Bankrate uses the data provided by Quadrant Information Services. The data comes from various insurance providers across all 50 states as well as Washington, D.C., for 2023.
The average rates use the following base insurance profile:
Homeowner: Male, 40 years of age
Dwelling coverage: $250,000
Personal property coverage: $125,000
Liability coverage: $300,000
Loss of use coverage: $50,000
Medical payments coverage: $1,000
Repair Your Credit Before Getting Homeowners Insurance
Depending on your state, your credit score may play a significant role in your homeowners insurance rates. By improving your credit score, not only can you potentially save on your home insurance rates, but your credit score can also help you when purchasing or refinancing your home.
Credit.com offers a free credit report card that provides you with an analysis of your credit health. You can also utilize our ExtraCredit® subscription for additional credit reporting and other services.