If you’re trying to perfect your credit score, it’s important to first understand what makes up your credit report and credit score. Your credit score is determined by an advanced algorithm which was developed by FICO and pulls the data from your credit report to determine your score. When calculating your credit score, the following information is going to affect your credit score in the corresponding percentages:
35 percent: History of on-time or late payments of credit.
30 percent: Available credit on your open credit cards
15 percent: The age of your lines of credit (old = good)
10 percent: How often you apply for new credit.
10 percent: Variable factors, such as the types of open credit lines you have
Many of this may be common sense or information that you’ve already learned over time, resulting in a good credit score but possibly not a perfect score. If you have a bad credit score, it could take a lot of time and work to perfect your score and you may first want to consider repairing your credit. If your credit score is already above 700 but you’re trying to shoot for that perfect score of 850 to ensure the best deals and interest rates, here are 5 ways to perfect your credit score:
1. Maintaining Debt-To-Limit Ratio
To perfect your credit score, it’s recommended that you keep your debt-to-credit ratio below 30% and, if possible, as low as 10%. The debt-to-limit ratio is the difference between how much you owe on a credit card versus how much your credit limit is. For example, if one of your credit cards has a credit limit of $5,000, then you should always keep the balance below $1,500 but preferably around $500. As you can see above, 30% of your credit score is determined by the available credit on your open credit cards, so keeping the debt-to-limit ratio will increase your available credit and also show that you’re responsible with your credit.
2. Keep Your Credit Cards Active
Make sure that you use your cards at least once a year to keep them shown as “active” credit and make sure that you never cancel your credit cards. 15% of your credit score is determined by the age of your lines of credit, so you should always keep your credit cards active to lengthen the age of your line of credit. Many people tend to cancel cards that they no longer use – many times because the rates aren’t very good or because they have another card with better benefits – but even if you don’t use the cards very often (just once a year is fine), you should keep them active. Typically, someone with a credit score over 800 has credit lines with at least 10 years of positive activity.
3. Always Pay Bills On Time
Probably the most well-known factor of a credit score and the factor that has the biggest impact on your credit score (35% of your score) is your history of paying your credit payments on-time. If you have a history of always making your credit card, mortgage, and car payments on time, you will greatly improve your credit score. This can also have an adverse effect as well, should you ever make a late payment. Unfortunately, it only takes one late payment to severely reduce your credit score so it’s crucial that you make sure to always make credit payments on time.
4. Dispute Errors On Your Credit Report
If you don’t already, make sure that you request a copy of your credit report once every year and review it for errors. It is actually quite common for credit reports to contain errors which can be disputed and potentially allow you to have negative items removed from your credit report. If, for instance, your credit report shows a late payment on a credit card but contained errors in the record, you can dispute the negative item and request to have it removed from your report. Having a negative item, like a late payment, removed from your report can improve your credit score significantly. While disputing errors on your credit report can be tedious and take a lot of time, it is usually worth it. Another option would be to contact a credit repair agency to help you dispute any negative items on your credit report.
5. Reduce The Number of Credit Inquiries
While this may only affect 10% of your credit score, keeping the number of credit inquiries down can still help to build that perfect credit score but is often ignored. You should never have more than one credit inquiry per year but many people do not realize how often this is done and often times have their credit checked more than once per year. If you’re applying for a car loan, checking your credit score online, or applying for a new credit card, these type of actions will almost always result in a credit inquiry and should be avoided if you’ve already had a credit inquiry earlier in the year. Make sure you do your research on what will result in a credit inquiry so that you don’t accidentally have more than one a year without realizing it.
If you’re like the 40% of credit card holders the American Bankers Association refers to as “revolvers,” you probably carry at least some debt from month to month. And if you’re a typical American, according to Experian, you have an average balance of $5,897 , with an additional $2,044 on a couple of retail credit cards.
Unfortunately, many consumers are uninformed and unprepared for the responsibility of paying with plastic. Nobody makes you take a class before they hand you that first card—or the next one, or the next. But the consequences of getting in over your head can be troublesome.
What else should you know about credit cards? Here are some do’s and don’ts to keep in mind:
Just Because You Can Get Another Credit Card Doesn’t Mean You Should
Once you prove your credit-worthiness, you’ll likely receive other credit card offers in the mail. Retail stores you shop in often ask if you’d like to apply for their card, offering things like special discounts, partnerships, and card-holder shopping days to draw you in.
But unless the rewards are high and the annual percentage rate (APR) is low, you may choose to pass. Especially if you’re in a store and won’t have time to focus on the terms and fees in the agreement.
Remember: When you apply for a credit card, it can create a credit inquiry on your report because of the hard pull on your credit report. Unless your credit inquiry qualifies as rate shopping , too many inquiries in a short time period could cause a drop to your credit score.
A Credit Card Can Be Convenient—If You Keep Your Balance In Check
The clock starts ticking whenever you make a purchase using your credit card. Many credit card companies will give you a period of interest-free grace, but if you don’t pay off the balance within the grace period, you’ll start racking up interest.
Of course, using cash instead of credit for purchases is an option, especially for purchases made in person.
Thinking Twice Before Just Paying The Minimum
It’s easy to get into the mindset that you’re on track for the month because you paid the minimum payment due on your credit card statement. But that amount is typically based on a small percentage of your balance, typically between 1% and 3%, or a fixed dollar amount.
Unless you have a 0% credit card rate, letting your balance carry over can rack up additional interest.
Checking Your Statements Every Month
A thorough monthly review of credit card statements makes it possible to find billing mistakes and be sure your purchases and returns are accurately reflected.
It’s worth reviewing your statement for any subscription services you might be making automatic payments or renewals for. You could be paying for a service or app you don’t want anymore.
Reviewing your charges can also help you determine if you’ve been the victim of identity fraud . The faster you move to report any problems , the better off you typically are. The Fair Credit Billing Act (FCBA) instructs consumers to report unauthorized charges within 60 days after the statement was mailed, so making it a habit to check your statements as they come in—or reviewing them online at least once a month—can help you be aware of any issues and report them quickly.
If you’ve made late payments or missed a payment, your interest rate may have gone up—and you could be paying a much higher rate than you thought. Keeping track of this information will give you a more complete picture of the amount you owe.
Credit card statements also include information about how long it will take to pay off the bill if you send only the minimum payment each month, as well as how much you’ll pay in interest. Think of this information like nutrition facts on food packaging—it could be an encouragement to be financially healthier.
Reporting Misplaced, Lost, or Stolen Cards
Under the FCBA , a consumer’s liability for unauthorized use of their credit card is limited to $50. However, the FCBA also says if you report the loss before your credit card is used to make unauthorized purchases, you aren’t responsible for any charges you didn’t authorize.
If your credit card account number is stolen, but not the card, the FCBA also says you won’t be liable for unauthorized use. Credit card companies are generally quick to provide customers with new account numbers, passwords, and cards.
Using a Credit Card To Get Cash
Another piece of information available on a credit card statement is the APR charged for cash advances. Most likely, the interest rate charged for cash advances is several points higher than the rate charged for purchases.
If a credit card is used at an ATM, there may also be an additional fee charged by the machine’s owner.
So unless it’s an unavoidable emergency, it’s probably much better for your wallet to stick to your debit card or go old-school and cash a check.
Using a Credit Card For Purchases Just To Get the Rewards Points
Cash back and other perks make some cards more appealing than others. But that probably shouldn’t be an excuse to use a credit card if you’re not in a solid financial position. The trade-off probably isn’t worth it if you carry a balance.
Balance Transfer Cards Can Be Appealing, But…
Again, if you have solid credit, you may be getting offers for 0% balance transfer cards. And they may potentially save you hundreds, even thousands of dollars, if you can realistically pay off that balance in the designated period.
If not, the interest rate will increase after the introductory 0% interest period ends. And moving the remaining amount to yet another balance transfer card could ding your credit record, as every time you apply for a credit card a hard inquiry is pulled.
Negotiating Rates and Fees
Even the most attentive person might sometimes miss a credit card due date. This oversight, however, means a late fee and interest may be added to the account balance. If this happens more than once, you might incur a higher late fee than the first one and the account’s interest rate might increase.
It may be possible, however, to negotiate credit card interest rates and fees. If you’ve only had one late payment, it’s worth a call to customer service asking for the late fee to be waived. If there have been multiple late payments and you’re faced with an increased interest rate, it might take up to six months on-time payments before a credit card issuer is willing to consider lowering the interest rate.
A 2018 poll for CreditCards.com, the latest data on the topic , found that 56% of those who asked got a lower interest rate/APR, and 70% had an annual fee waived or lowered. So it may not hurt to call customer service and ask.
Knowing How Much Credit Is Being Utilized
The amount of debt owed is the second largest factor that makes up a person’s credit score. It accounts for 30% of the total score, and revolving credit accounts like credit cards are important in the calculation of a credit score. Someone who is using a high percentage of their credit card limit might be seen as potentially risky by lenders. But someone who uses a lower percentage of their credit card limit may be considered to be in a favorable financial position.
Credit card companies sometimes raise the credit limit of financially responsible customers. By keeping your account balance low, it can improve the credit utilization rate used to calculate your credit score.
The Takeaway
Credit card debt can feel overwhelming quickly, but a personal loan may help you get things under control.
You can’t just sweep away the debt and forget it, of course. But if your financial history is solid, getting approved for a personal loan interest rate that’s lower than your credit card rates could make your outstanding debt easier to deal with. Using a debt consolidation loan to consolidate multiple credit cards would also mean just one bill to pay each month instead of keeping track of multiple payments and due dates.
A consolidation loan with a respected lender can be part of a smart overall money management plan. SoFi loans offer competitive rates, as well as membership benefits other lenders don’t necessarily offer.
If you’re serious about getting and staying on track, a SoFi personal loan might be helpful. Check out a SoFi personal loan if you need help with consolidating credit card debt.
SoFi Loan Products SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal. Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’swebsite . Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified. External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Building a good credit score takes time, when building your credit from scratch, you can typically expect to see a score within six months. If you’re working to rebuild your credit after financial setbacks that resulted in a drop in your credit score, repairing your credit comes down to ensuring you’re being financially responsible from here on out.
Establishing a good credit score doesn’t happen overnight, and sometimes it can feel impossible to recover from financial setbacks. There’s no solid timeline for building good credit, but it’s important to understand how your credit score is calculated so you know what actions you can take to get your credit in good standing. Read on to find out how long it takes to build good credit, as well as tips on maintaining and building your credit score.
How long does it take to get a credit score?
Building up your credit score starts with the basics—using credit. Opening a credit card or becoming an authorized user are two ways to start building your credit from the ground up. Many people think that you start with a credit score of zero and have to work your way up, but you’ll typically start with a score around 500 to 700, depending on the health of your credit history thus far.
As mentioned, it can take up to six months to build enough credit history to obtain a credit score. Credit scores range from 300 to 850, with a score over 670 being considered a good credit score.
While establishing a score can take up to six months, working your way up to an excellent credit score can take much longer. Your credit score will typically update every 30 to 45 days, and building good credit will take years of consistent and responsible credit use.
How are credit scores calculated?
The credit score you receive is calculated based on your borrowing history. There are five main factors that determine your credit score. These factors include:
Payment history (35 percent)
Credit utilization (30 percent)
Length of credit history (15 percent)
Different types of credit (10 percent)
New credit (10 percent)
Since the length of time you’ve been building your credit plays a role in your credit score, building it up to an excellent score can take some patience.
How to increase your credit score now
If you’re new to credit and just beginning to build your credit history, applying for a credit card is a quick way to start building your credit score. Your information is reported to the credit bureaus every 30 days, so it’s an easy way to start building credit quickly.
Besides getting a credit card, make sure you’re making your payments on time every month, since your payment history is worth 35 percent of your credit score. Make at least the minimum payment on time each month and your healthy payment history will be reported to the credit bureaus monthly. This healthy history can help you increase your credit score over time.
Lastly, reducing your available amount of credit can play a significant role in increasing your credit score. If you’re able, increasing your credit limit or paying down your debts in lump sums can help free up some of your available credit. Remember, credit utilization accounts for 30 percent of your credit score—keeping your credit utilization ratio as low as possible is key to improving your credit score.
What to avoid when building your credit score
Unfortunately, when it comes to credit, one financial mishap could end up costing you—sometimes taking years to recover from. To maintain an upward trend of positive credit history, you’ll want to avoid these common mistakes:
Missing payments
Since your payment history accounts for 35 percent of your credit score, missing even one payment can be detrimental, as it can stay on your credit report for up to seven years. Late payments are usually reported 30 days after their due date.
Applying for multiple credit cards or loans
When applying for a credit card or loan, creditors run a hard inquiry to assess credit history and determine the trustworthiness of a borrower. One hard inquiry doesn’t have much of an impact on your credit score and may only drop it by five points. However, having multiple hard inquiries in a short amount of time can hurt your credit score and make you seem like a risky borrower to lenders.
Defaulting on a loan
Defaulting on a loan occurs when you’ve failed to make payments for a consecutive period of time. Your credit score drops every 30 days that you’ve missed a payment, and failure to pay can have an extreme impact on your credit score. If too much time passes, lenders can contact the credit bureaus, resulting in a credit score drop.
If you continue to fail to make a payment on a loan your account could be sent to collections by the loan issuers, where legal action can take place. Depending on the type of loan you have, lenders may try to garnish your wages or take your assets.
Using too much available credit
Your credit utilization accounts for 30 percent of your credit score, making it one of the most important factors contributing to your score. If you use too much of your available credit, your credit score can take a serious hit. For example, if your credit limit is $4,000 and your current balance is $3,000, that puts your credit utilization at 75 percent, which is significantly higher than recommended.
Additional tips for building and maintaining a good credit score
Now that you have a solid understanding of what can hurt your credit score, let’s take a look at how you can increase and improve your credit score.
Open a secured credit card account
Secured credit cards are best for individuals who have no credit or have a low credit score, and they work to help borrowers build or repair their credit. Unlike traditional credit cards, secured cards require the borrower to put down a cash deposit, which can be used to settle any unpaid debt should the issue arise.
In most cases, the amount you put down will be equal to your available credit amount. For example, to get a credit limit of $1,000, you’ll typically need a deposit of $1,000. Credit limits for these cards are traditionally lower than unsecured credit cards and have higher interest rates.
If you’re working on building your credit from the ground up or repairing your bad credit, a secured credit card can be a good option to help build your creditworthiness. Once you’ve built up your credit and have remained a responsible borrower, you can move your way up to an unsecured credit card.
Become an authorized user
If you’re just starting to build your credit, you may not be approved for a traditional credit card just yet. In this case, becoming an authorized user on someone else’s credit card is an easy way to start building your credit history.
As an authorized user, you’ll have access to a credit card and can use it as such, but the primary holder of the account will be legally responsible for the debt. This option is best for those building their credit history from scratch, but it shouldn’t be used as a long-term option.
Apply for a credit builder loan
A credit builder loan is an option for those with no or low credit history looking for a low-risk way to build their credit. Unlike a personal loan, a credit builder loan essentially works backwards—the lender puts your approved loan amount into a savings account, you repay the loan over time and once the loan is paid off, the lender releases the funds to you. This allows you to build a solid payment history, thus increasing your credit score over time.
Keep balances low
Experts suggest that your credit utilization ratio should always be below 30 percent to maintain a positive credit score. If you can, consider paying more than the minimum payment each month to ensure your credit utilization ratio stays as low as possible. So long as you’re paying off high balances before the next reporting period, your credit score should not be negatively impacted.
Pay credit card bills on time
Since payment history is the leading factor in your credit score, it’s important to be on top of your monthly payments. If needed, set up an automatic payment system so you never have to worry about making your payments on time each month.
Don’t close unused credit cards
If you’re not using a credit card, keeping the account open won’t hurt your credit score, but closing the account can. The length of your credit history impacts your credit score, so keeping any accounts open can help build your credit history and increase your total available credit, boosting your score over time.
Monitor your credit report
If you’ve been a responsible borrower and see sudden drops in your credit score, check your credit report and look for any discrepancies. If there are errors on your report, dispute the errors immediately to get them removed. The longer those errors stay on your report, the more damage they can do to your credit score.
Building credit takes time, and getting your credit score in good standing takes years of consistent and responsible credit management. Make sure you understand the ins and outs of credit score ranges, and follow the tips in this article to help build and maintain good credit.
Reviewed by Miriam Allred, an Associate Attorney at Lexington Law Firm. Written by Lexington Law Firm.
Miriam Allred was born and raised in Southern California. After high school she joined the US Navy. She then went on to get an Economics degree from Chapman University where she got to enjoy an internship at the United States Supreme Court. Miriam then went to Brigham Young University where she received her Juris Doctor. Prior to joining Lexington Law, Miriam worked as a civil rights attorney dealing with discrimination and sexual harassment. In this role she helped write and create policies and investigate sexual harassment and discrimination complaints. Miriam also has experience in family law. Miriam is licensed to practice in Utah.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Whether you’re a seasoned cardholder or a first-timer, you may be surprised at how many types of credit cards are available. Depending on your credit score and the length of your credit history, you may not be able to qualify for the ones with the most favorable terms and lowest interest rates. But chances are, there’s a card that fits your needs and—if used responsibly—may help you build credit.
Broadly speaking, there are four different types of credit card categories:
Cards That Help Build Credit
Cards That Can Save You Money
Cards That Offer Cash Back and Rewards
Cards for People With Bad Credit
Here, we’ll break down each category, discuss the specific card types and explain each one’s unique benefits so that you can make the most of your card.
Cards That Help Build Credit
If you’re new to the world of credit, you may be wondering how to build credit quickly, without going into debt. If you’re in college, you may have the added load of student debt. When you’re just starting out, it’s important to find a card that’s right for you and manage it carefully to start your credit health out on the right foot. You may even be able to earn some rewards along the way.
1. Student Credit Cards
Student credit cards operate exactly the same way that standard credit cards do. The main difference is that their total credit limits tend to be lower. Additionally, since they are marketed toward students who likely don’t have much of a credit history, the requirements for approval are typically more lenient.
Benefit: Some student cards offer incentives for good grades, like a small cash reward for each school year that you earn a GPA of 3.0 or higher.
Example: Discover it® Student Cash Back
2. Starter Credit Cards
Starter credit cards are designed for those with little to no credit history. Consider getting one if you’ve never had a line of credit, or if you have one that hasn’t been open very long. These cards typically don’t offer great rewards programs or cash-back incentives, and they come with high interest rates. However, if you can find one with no annual fee, it can be a great option to begin building credit.
Benefit: Establish your credit and build a solid payment history with this type of credit card, which is generally easy to qualify for.
Example: Capital One Platinum® Credit Card
3. Joint Credit Cards
Unlike authorized user credit cards, joint credit cards require both parties to apply together. Both parties are equally responsible for paying the balance. Therefore, late or missed payments may ding both credit scores—while consistent, on-time payments will benefit both scores.
Benefit: If a person doesn’t have a high enough credit score to qualify for a good credit card, they may consider applying with their partner for a joint credit card with more favorable terms.
Example: Bank of America® Cash Rewards Credit Card
Cards That Can Save You Money
Sometimes applying for a credit card is a strategic move. Maybe you want to transfer your balance to a card with a lower interest rate, avoid paying interest for an introductory period or customize features for your business. These cards can help you save money—your way.
4. Zero Percent Purchase APR Credit Cards
Sometimes cards will offer temporarily lower APRs for an introductory period. Cards that boast zero percent APR don’t require you to pay interest on new purchases for a set amount of time, usually about 12 months.
Benefit: Save money on interest by borrowing money essentially for free. Just make sure to pay off your balance by the time your introductory period is over to avoid interest charges.
Example: U.S. Bank Visa® Platinum Card
5. No Annual Fee Credit Cards
Many credit cards charge annual fees for the convenience of having the card and for the benefits and rewards they offer. Depending on how elite the card is, these fees can be up to $450 or more. However, almost three-fourths of cards offer no annual fee—and many of these still come with decent cash back programs. Scan your credit card offer or the terms and conditions to make sure your card has no annual fee.
Benefit: Save an average of $58 each year by avoiding unnecessary annual credit card fees.
Example: Citi® Double Cash Card
6. Balance Transfer Credit Cards
Similar to zero percent purchase APR credit cards, balance transfer cards offer temporarily low introductory rates—but specifically for balance transfers. This is a great option for those who want to save money on a high-interest credit card. Rather than closing the unfavorable card—which may lower your credit score—a balance transfer may be a better option.
Benefit: Avoid paying hefty amounts of interest by transferring your balance to a card with a much lower introductory rate.
Example: Wells Fargo Platinum Card
7. Business Credit Cards
If you’re a business owner, you may want to apply for a credit card specifically for business use. This will help you separate personal and business expenses, and the rewards may help your business save money. You’ll then begin to build business credit. To apply you’ll need decent credit and either a federal tax ID or employer identification number (EIN).
Benefit: Enjoy business-specific perks like higher credit limits, expense management reports and the ability to add more cards for employees.
Example: Costco Anywhere Visa® Business Card by Citi
Cards That Offer Cash Back and Rewards
In order to get the most out of their spending, most cardholders gravitate toward credit options that offer cash back and rewards.
8. Cash Back Credit Cards
Cash back credit cards allow you to earn a certain percent—typically ranging from one to five—of the money back every time you make a purchase with the card. Some issuers will pay this amount annually, while others pay monthly.
Benefit: Find a card that allows you to customize where you get your cash back. For example, certain cards allow you to earn five percent cash back in a store category of your choice.
Example: Chase Freedom Unlimited®
9. Retail Credit Cards
Retail or store credit cards are offered by specific businesses and can only be used to make purchases with that store. While these cards aren’t ideal for everyday purchasing needs, they’re a great way to earn generous rewards with stores that you frequently shop at. There are over 300 store credit cards available, from Walmart and Target to Lowe’s and JCPenney.
Benefit: Store cards typically don’t charge annual fees, don’t require excellent credit and offer substantial first-purchase discounts as well as long-term cash back rewards.
Example: Amazon Prime Store Card
10. Hotel Credit Cards
Hotel credit cards are affiliated with a specific hotel chain and offer rewards on a “points” basis. Typically, they’ll offer some points for purchases made at unrelated businesses such as grocery stores, gas stations and restaurants. But the main attraction is the bonus points earned on eligible purchases made directly with the hotel.
Benefit: Earn generous sign-up bonuses, rewards when you spend money on hotel bookings and yearly free nights.
Example: Hilton Honors American Express Surpass® Card
11. Airline Credit Cards
Certain credit cards offer rewards on purchases made with a specific airline, while others allow you to earn rewards with any airline or travel-related expense. These rewards rack up in the form of “miles.” For example, many cards offer two miles for every one dollar spent on flights.
Benefit: For frequent travelers, airline credit cards are a great way to score free and discounted flights.
Example: Delta SkyMiles® Gold American Express Card
12. Gas Rewards Credit Cards
Not to be confused with gas station credit cards—which operate like retail cards—a gas station rewards card offers cash back when you pay at the pump. It can be used anywhere, but you’ll enjoy bonus rewards at gas stations.
Benefit: Earn up to three to five percent cash back on gas purchases, often with no annual fee and a zero percent introductory APR.
Example: PenFed Platinum Rewards Visa Signature® Card
13. Charge Cards
Charge cards operate in exactly the same manner as regular credit cards, except for one major caveat: you must completely pay off the total balance each month. Failure to do so results in late fees and penalties and will cause a drop in your credit score. On the flip side, they typically come with sizable initial bonuses and rewards.
Benefit: Enjoy higher credit limits and generous point systems—oftentimes offering up to five points per one dollar spent.
Example: ThePlatinum Card® from American Express
Cards for People With Bad Credit
If you’re struggling to get approved for credit cards, loans or other lines of credit because of bad credit, don’t be discouraged. There are credit cards with terms designed specifically for those with poor credit.
14. Secured Credit Cards
Most credit cards are unsecured. This means that you are not required to put up a security deposit. Secured cards, on the other hand, require an up-front payment to act as collateral in the event that you can’t pay your balance. Credit card issuers see borrowers with bad credit scores as riskier, so this deposit helps mitigate some of that risk.
Benefit: Secured cards give borrowers with poor credit access to credit when they otherwise wouldn’t be able to qualify for a card.
Example: Capital One® Secured Mastercard®
15. Prepaid Cards
Prepaid cards aren’t technically credit cards, because they don’t involve borrowing money. Instead, a cardholder loads a set amount of money onto the card, and purchases are subtracted from the card’s balance, similar to a gift card. The spending limit then renews if and when the card is reloaded.
Benefit: Prepaid cards help you stay within a budget and avoid getting into credit card debt.
Example: American Express Serve® FREE Reloads
What Type of Credit Card Is Best?
Ultimately, the decision for which card to get is up to your personal preferences and financial goals. However, there are a few good rules of thumb when looking for the best credit cards. Remember to read the terms and conditions carefully before signing up. Generally, cards with any of the following perks may be worth pursuing:
Zero percent introductory APR
Low APR after the introductory period
Sign-up bonus
Solid rewards or cash-back program
No annual fee
All of the different types of credit cards may seem daunting at first, but once you understand the unique benefits of each one, you’ll be able to find a card that fits your needs. Remember that—regardless of credit card type—good credit management is the key to keeping your credit healthy. After years of on-time payments, low credit utilization, a good mix of credit and few hard inquiries, you’ll be well on your way to your best score yet.
Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.
Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Chase Bank is unmatched in accessibility and customer service, but it may not be the best option for those looking for high interest-earning potential.
Savings APY
0.01%
Min. Deposit
N/A
J.D. Power Rating
827/1,000
SimpleScore
3 / 5.0
SimpleScore Chase 3
Savings APY 2
1Y CD APY 2
Customer Satisfaction 3
Mobile App 4
Product Variety 4
Chase offers all major banking services, including checking and savings accounts, credit cards, loans, and investments. Its mobile tools are the best of the national banks, and it has the second-largest network of branches in the country, behind Wells Fargo. It also has the most ATMs, with 16,000 around the nation. Customers have reported a high degree of satisfaction with Chase, with its easy accessibility being a key determiner.
The only thing customers seem mildly dissatisfied with was Chase’s rates and fee schedule. Its monthly maintenance fees are nothing special, though there is the opportunity to waive them if you meet certain criteria. Its interest rates, too, are disappointing.
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In this article
Chase Bank at a Glance
Savings Interest Rate (APY)
0.01% effective as of 6/12/20. Interest rates are variable and subject to change
Branches
4,900
ATMs
16,000
ATM Surcharge
$5 per withdrawal and $2.50 for any transfers or inquiries at ATMs outside the U.S., Puerto Rico and the U.S. Virgin Islands. Fees from the ATM owner still apply.
Credit Cards
21
Best For
Customers who value easy access to their money
Not For
Customers interested in earning a lot of interest on their accounts
Standout Features
Offers all major banking products High customer satisfaction ratings Large selection of credit cards Excellent mobile banking tools
Chase Bank Highlights
Chase Bank offers a huge network of ATMs and branches, with 4,900 brick-and-mortar banks and 16,000 ATMs nationwide.
Chase offers an impressive selection of mobile banking tools, including mobile deposit and on-the-go account management.
Chase offers some of the best rewards credit cards on the market, which are easily integrated into their mobile app.
Chase Bank has received high marks for its solid, U.S.-based customer service.
The Claim
Chase Bank puts the customer first. It offers a broad range of services, from checking and savings accounts, to credit cards and loans. It lets you decide what you need, and how you want to access your money.
Is it True?
Yes. Chase Bank provides all major banking services, including checking and savings accounts, credit cards, CDs, auto loans, mortgages, investing, and business banking. Within each service, you have several options, so you can choose the one that best fits your lifestyle. This is especially true of its credit cards. Chase offers 21 cards, each catered to different interests like small businesses or cash back rewards.
Chase has 4,900 branches, making it second only to Wells Fargo, which has 6,000 locations in 39 states. Chase was also named one of Time Magazine’s Best Banks in America in 2015 because of its huge network of 16,000 ATMs. But where the company really excels is its mobile banking. As brick-and-mortar banks continue to disappear, a clean web interface and user-friendly apps become increasingly important. Chase outshone its competitors, earning a 4.5 out of 5 rating for iOS devices and a 4.6 for Android. The next best was Citi, earning a 3.5 and 4.1 on iOS and Android, respectively. The worst — U.S. Bank — only scored a 2.5 and 3.8.
Customers have reported a high degree of satisfaction with Chase. The Consumer Financial Protection Bureau reports Chase has a below-average number of consumer complaints for a bank of its size, which is a good indication that customers are largely satisfied with the service they receive. In J.D. Power’s 2017 U.S. Retail Banking Satisfaction Study, Chase Bank scored above the regional average in all 11 regions and consistently outscored competitors like Bank of America and Citibank. The survey found customers were most impressed with the ease of accessing their Chase accounts, but they were less impressed with the company’s fee structure. Chase’s monthly maintenance fees are slightly above average, and it’s one of the only large banks to charge customers for mobile check deposits, along with U.S. Bank.
Our Deep Dive
Branches: Chase has 4,900 branch locations around the country, making it one of the largest networks of any bank. However, most of them centered in the West, New England, and only parts of the Midwest. Residents of the Southeast and North Central U.S. won’t have the option of visiting a brick-and-mortar location, but they can still access their Chase accounts online or through the mobile apps.
16,000 ATMs: Chase has the most ATMs of any national bank, so no matter where you live, you shouldn’t have to travel far to find one.
Credit cards for all lifestyles: Chase currently offers 21 credit cards tailored to a variety of customers. Frequent travelers can choose between several options that earn them travel rewards and have no foreign transaction fees. There are also cards designed for small businesses and, of course, your standard rewards cards. If you’re unsure which card is best for you, Chase’s Card Finder tool can help you narrow it down.
On-the-go account management: Chase’s mobile apps for iOS and Android devices enable you to view your account balances, find the nearest ATM, pay your credit card bills, and transfer money. There’s also Chase QuickDeposit, which enables you to deposit checks simply by taking photos of them. Chase is one of the few banks that charges a small fee for its QuickDeposit service, however, so if you can make it to a branch office to deposit your check, that’s the better way to go. (You’ll need to check the fine print on your account to know just how much those fees are.)
Offers all types of mortgages: Chase Bank offers 10-, 20- and 30-year fixed-rate mortgages, and 5/1 and 7/1 adjustable-rate mortgages. It also provides more specialized loans, including FHA, VA and Jumbo loans.
Broad range of investment products: Chase Financial Advisors can help set you up with the right investment strategy based on your goals and risk tolerance. The company offers managed accounts, college savings plans, and mutual funds. If you’re looking to save for retirement, you can also set up a traditional or Roth IRA. Chase doesn’t offer annuities directly, but it partners with several insurance providers that do offer this product, so your Chase Financial Advisor can still point you in the right direction if you’re interested in an annuity.
Business banking: No matter the size of your organization, Chase offers checking accounts, credit cards, and lines of credit to suit your needs. Chase’s Merchant Services enable you to easily collect payment from your customers, wherever you are — even on the go, if you have the Chase Mobile Checkout app. Chase also partners with ADP to offer you payroll solutions, as well as the ability to track time and attendance.
Cost Rundown
Chase offers banking solutions to individuals and businesses of all financial situations. The cost to you will depend on your lifestyle and the services you choose. For example, a basic checking account from Chase could cost you a $12 monthly service fee. But if you meet the account’s criteria, you won’t have to pay a fee at all. Certain credit cards have annual fees while others do not. And if you frequently deposit checks via mobile apps or visit out-of-network ATMs, you’ll incur additional charges.
You also have to weigh the gains of opening an account with Chase. In some cases, it may be worth it for you to pay an annual fee on a credit card if it’s going to offer you great rewards down the road. On the other hand, individuals interested in savings accounts with high interest rates may be disappointed with Chase’s. Those interested in a higher earning potential may want to consider another option, like Wells Fargo.
Cheaper (or Free!) Alternatives
Before committing to any financial institution, you should do some research and see what your options are. If you were looking to take out a mortgage, for example, you wouldn’t go with the first company to pre-approve you. You’d want to compare the rates that several companies offered you to be sure you were getting the best deal. Similarly, you should consider the terms of any credit cards or checking and savings accounts to ensure you’re choosing the one that’s most in line with your goals.
The right bank for you largely depends on your values. If it’s all about the money to you, you may prefer a company like U.S. Bank over Chase. Its monthly maintenance fees are lower than Chase’s and it gives you the option to lower them further by opting for paperless statements. It also gives you the option to earn more interest on your savings accounts, in some cases up to 0.01% APY. But on the flipside, U.S. Bank has a much smaller network of branches and ATMs than Chase does, and its mobile tools aren’t as strong. If convenient access to your money is more important to you, Chase may be the better option.
The Competition
Wells Fargo: Wells Fargo has the largest network of branch locations of any national bank. With over 6,000 branch locations in 39 states and 13,000 ATMs, accessing your money is quick and convenient. Its fees are on par with Chase’s, but its interest rates are higher, so it’s a good company to choose if you’re looking for greater earning potential. Wells Fargo doesn’t have the selection of credit cards that Chase does, but there are still several options for those looking to earn rewards on their purchases.
U.S. Bank: U.S. Bank may not have the network of Chase or Wells Fargo, but it hangs right with them in terms of customer service. It scored well in the J.D. Power survey, and it has fewer CFPB complaints than any other bank on this list. Its mobile banking isn’t as strong as its competitors, so if that is a priority for you, U.S. Bank isn’t the best choice. It does offer lower monthly maintenance fees and higher savings account interest rates than Chase, though.
Citibank: Citibank has the smallest branch network of any bank on this list, with less than 800 brick-and-mortar locations across the U.S. Citi has a good selection of checking accounts with no minimum opening deposits. The fees on its basic accounts are about on par with Chase’s. The downside is you have to pay a $30 monthly fee, and it’s unlikely that most people will meet the criteria necessary to waive that fee. Citi’s savings account is less impressive. The company only offers one account option, and interest rates are low until you accumulate a sizeable balance. Citi also failed to impress when it came to customer service, consistently scoring average or below in the J.D. Power survey.
Bank of America: Bank of America has a sizeable branch network and a decent selection of services, but it regularly fails to please its customers. It received the most CFPB complaints of any bank on this list, and it scored average or below in every region in J.D. Power’s customer satisfaction survey. Its selection of checking and savings accounts is smaller than most of the other companies as well. That being said, its fees aren’t unreasonable, and Preferred Rewards clients can earn up to 0.01% APY with the Advantage Savings Account. And it has a decent selection of credit cards, too.
Ally: One of the top online banks, Ally doesn’t have any branch locations you can visit. But it makes up for this with no monthly maintenance fees, convenient mobile tools, and interest rates higher than what you’ll find with any traditional bank. Ally also offers a rewards credit card, CDs, IRAs, and auto loans.
Barclays: Barclays is another online bank that’s worth considering if you’re after high interest rates. Barclays isn’t a good choice if you want to do all your banking in one place, though. It only offers savings accounts and CDs, so those interested in credit cards, checking accounts, or loans will have to check out other options.
What Others Are Saying
The Dallas Morning News reported that Chase, along with four other national banks, were cited for failing to develop adequate plans for how they would restructure their organization in the event of bankruptcy. The banks had been ordered to remedy the problem by October 2016. Chase’s CEO assured reporters that the company would resolve the issue as quickly as possible. But while this may seem like a significant issue, it’s unlikely to cause issues for consumers, as the article points out: “The big banks are in strong financial shape and are facing no threat of collapse. They sit on sturdy bases of capital that the regulators ordered them to shore up in recent years. The banking industry as a whole has recovered steadily since the financial crisis, racking up climbing quarterly profits.”
The Chicago Tribune picked up a story about Chase’s bank error policies. Per their terms of service, the company may not attempt to correct deposit errors of $10 or less. In some cases, this means the bank keeps your $10. In other cases, it may mean you get a bonus $10 you shouldn’t have had. This shouldn’t be an issue for most consumers, unless you make frequent deposits. If you do and you notice an error, you can contact Chase and they will fix it, according to their spokesperson: “If we haven’t done it and you call us within a year, we’ll definitely make the adjustment…This is just saying we may not automatically do it.”
U.S. News & World Report named Chase one of its 10 Best Banks of 2016, citing its broad range of services and large branch network as key factors. It does point out its low interest rates as a detractor, though: “Accessibility through its 5,300 branches and 15,500 ATMs is a major feature for Chase because, although its savings rate of 0.01 percent APY is similar to many banks on this list, its 0.02 percent APY CD rate is one of the lowest on this list.”
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Too long, didn’t read?
Chase makes it easy to access your money wherever you are, and customers have continually voiced their approval. Whether you’re planning for retirement, opening a new savings account, or taking out your first mortgage, Chase has options for you.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Whether you’re a seasoned cardholder or a first-timer, you may be surprised at how many types of credit cards are available. Depending on your credit score and the length of your credit history, you may not be able to qualify for the ones with the most favorable terms and lowest interest rates. But chances are, there’s a card that fits your needs and—if used responsibly—may help you build credit.
Broadly speaking, there are four different types of credit card categories:
Cards That Help Build Credit
Cards That Can Save You Money
Cards That Offer Cash Back and Rewards
Cards for People With Bad Credit
Here, we’ll break down each category, discuss the specific card types and explain each one’s unique benefits so that you can make the most of your card.
Cards That Help Build Credit
If you’re new to the world of credit, you may be wondering how to build credit quickly, without going into debt. If you’re in college, you may have the added load of student debt. When you’re just starting out, it’s important to find a card that’s right for you and manage it carefully to start your credit health out on the right foot. You may even be able to earn some rewards along the way.
1. Student Credit Cards
Student credit cards operate exactly the same way that standard credit cards do. The main difference is that their total credit limits tend to be lower. Additionally, since they are marketed toward students who likely don’t have much of a credit history, the requirements for approval are typically more lenient.
Benefit: Some student cards offer incentives for good grades, like a small cash reward for each school year that you earn a GPA of 3.0 or higher.
Example: Discover it® Student Cash Back
2. Starter Credit Cards
Starter credit cards are designed for those with little to no credit history. Consider getting one if you’ve never had a line of credit, or if you have one that hasn’t been open very long. These cards typically don’t offer great rewards programs or cash-back incentives, and they come with high interest rates. However, if you can find one with no annual fee, it can be a great option to begin building credit.
Benefit: Establish your credit and build a solid payment history with this type of credit card, which is generally easy to qualify for.
Example: Capital One Platinum® Credit Card
3. Joint Credit Cards
Unlike authorized user credit cards, joint credit cards require both parties to apply together. Both parties are equally responsible for paying the balance. Therefore, late or missed payments may ding both credit scores—while consistent, on-time payments will benefit both scores.
Benefit: If a person doesn’t have a high enough credit score to qualify for a good credit card, they may consider applying with their partner for a joint credit card with more favorable terms.
Example: Bank of America® Cash Rewards Credit Card
Cards That Can Save You Money
Sometimes applying for a credit card is a strategic move. Maybe you want to transfer your balance to a card with a lower interest rate, avoid paying interest for an introductory period or customize features for your business. These cards can help you save money—your way.
4. Zero Percent Purchase APR Credit Cards
Sometimes cards will offer temporarily lower APRs for an introductory period. Cards that boast zero percent APR don’t require you to pay interest on new purchases for a set amount of time, usually about 12 months.
Benefit: Save money on interest by borrowing money essentially for free. Just make sure to pay off your balance by the time your introductory period is over to avoid interest charges.
Example: U.S. Bank Visa® Platinum Card
5. No Annual Fee Credit Cards
Many credit cards charge annual fees for the convenience of having the card and for the benefits and rewards they offer. Depending on how elite the card is, these fees can be up to $450 or more. However, almost three-fourths of cards offer no annual fee—and many of these still come with decent cash back programs. Scan your credit card offer or the terms and conditions to make sure your card has no annual fee.
Benefit: Save an average of $58 each year by avoiding unnecessary annual credit card fees.
Example: Citi® Double Cash Card
6. Balance Transfer Credit Cards
Similar to zero percent purchase APR credit cards, balance transfer cards offer temporarily low introductory rates—but specifically for balance transfers. This is a great option for those who want to save money on a high-interest credit card. Rather than closing the unfavorable card—which may lower your credit score—a balance transfer may be a better option.
Benefit: Avoid paying hefty amounts of interest by transferring your balance to a card with a much lower introductory rate.
Example: Wells Fargo Platinum Card
7. Business Credit Cards
If you’re a business owner, you may want to apply for a credit card specifically for business use. This will help you separate personal and business expenses, and the rewards may help your business save money. You’ll then begin to build business credit. To apply you’ll need decent credit and either a federal tax ID or employer identification number (EIN).
Benefit: Enjoy business-specific perks like higher credit limits, expense management reports and the ability to add more cards for employees.
Example: Costco Anywhere Visa® Business Card by Citi
Cards That Offer Cash Back and Rewards
In order to get the most out of their spending, most cardholders gravitate toward credit options that offer cash back and rewards.
8. Cash Back Credit Cards
Cash back credit cards allow you to earn a certain percent—typically ranging from one to five—of the money back every time you make a purchase with the card. Some issuers will pay this amount annually, while others pay monthly.
Benefit: Find a card that allows you to customize where you get your cash back. For example, certain cards allow you to earn five percent cash back in a store category of your choice.
Example: Chase Freedom Unlimited®
9. Retail Credit Cards
Retail or store credit cards are offered by specific businesses and can only be used to make purchases with that store. While these cards aren’t ideal for everyday purchasing needs, they’re a great way to earn generous rewards with stores that you frequently shop at. There are over 300 store credit cards available, from Walmart and Target to Lowe’s and JCPenney.
Benefit: Store cards typically don’t charge annual fees, don’t require excellent credit and offer substantial first-purchase discounts as well as long-term cash back rewards.
Example: Amazon Prime Store Card
10. Hotel Credit Cards
Hotel credit cards are affiliated with a specific hotel chain and offer rewards on a “points” basis. Typically, they’ll offer some points for purchases made at unrelated businesses such as grocery stores, gas stations and restaurants. But the main attraction is the bonus points earned on eligible purchases made directly with the hotel.
Benefit: Earn generous sign-up bonuses, rewards when you spend money on hotel bookings and yearly free nights.
Example: Hilton Honors American Express Surpass® Card
11. Airline Credit Cards
Certain credit cards offer rewards on purchases made with a specific airline, while others allow you to earn rewards with any airline or travel-related expense. These rewards rack up in the form of “miles.” For example, many cards offer two miles for every one dollar spent on flights.
Benefit: For frequent travelers, airline credit cards are a great way to score free and discounted flights.
Example: Delta SkyMiles® Gold American Express Card
12. Gas Rewards Credit Cards
Not to be confused with gas station credit cards—which operate like retail cards—a gas station rewards card offers cash back when you pay at the pump. It can be used anywhere, but you’ll enjoy bonus rewards at gas stations.
Benefit: Earn up to three to five percent cash back on gas purchases, often with no annual fee and a zero percent introductory APR.
Example: PenFed Platinum Rewards Visa Signature® Card
13. Charge Cards
Charge cards operate in exactly the same manner as regular credit cards, except for one major caveat: you must completely pay off the total balance each month. Failure to do so results in late fees and penalties and will cause a drop in your credit score. On the flip side, they typically come with sizable initial bonuses and rewards.
Benefit: Enjoy higher credit limits and generous point systems—oftentimes offering up to five points per one dollar spent.
Example: ThePlatinum Card® from American Express
Cards for People With Bad Credit
If you’re struggling to get approved for credit cards, loans or other lines of credit because of bad credit, don’t be discouraged. There are credit cards with terms designed specifically for those with poor credit.
14. Secured Credit Cards
Most credit cards are unsecured. This means that you are not required to put up a security deposit. Secured cards, on the other hand, require an up-front payment to act as collateral in the event that you can’t pay your balance. Credit card issuers see borrowers with bad credit scores as riskier, so this deposit helps mitigate some of that risk.
Benefit: Secured cards give borrowers with poor credit access to credit when they otherwise wouldn’t be able to qualify for a card.
Example: Capital One® Secured Mastercard®
15. Prepaid Cards
Prepaid cards aren’t technically credit cards, because they don’t involve borrowing money. Instead, a cardholder loads a set amount of money onto the card, and purchases are subtracted from the card’s balance, similar to a gift card. The spending limit then renews if and when the card is reloaded.
Benefit: Prepaid cards help you stay within a budget and avoid getting into credit card debt.
Example: American Express Serve® FREE Reloads
What Type of Credit Card Is Best?
Ultimately, the decision for which card to get is up to your personal preferences and financial goals. However, there are a few good rules of thumb when looking for the best credit cards. Remember to read the terms and conditions carefully before signing up. Generally, cards with any of the following perks may be worth pursuing:
Zero percent introductory APR
Low APR after the introductory period
Sign-up bonus
Solid rewards or cash-back program
No annual fee
All of the different types of credit cards may seem daunting at first, but once you understand the unique benefits of each one, you’ll be able to find a card that fits your needs. Remember that—regardless of credit card type—good credit management is the key to keeping your credit healthy. After years of on-time payments, low credit utilization, a good mix of credit and few hard inquiries, you’ll be well on your way to your best score yet.
Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.
Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Refinancing your mortgage with a bad credit score is completely possible, but is a more complicated process than refinancing with a good score. Because your credit score is such a large aspect of any loan application and refinancing process, it is in your best interest to consider all of your options before moving forward.
Refinancing your mortgage could be a great opportunity to gain some payment flexibility or even take advantage of a lower interest rate. To avoid leaving money on the table, explore all of your options for refinancing with bad credit.
How Credit Scores Affect Refinancing
Lenders use your credit score and overall lending history to calculate the risk of lending you money. A lender will view a borrower with a low credit score caused by loan defaults and constant late payments as a high risk. Because the borrower has shown negative borrowing practices in the past the lender will be more reluctant to sign or refinance a loan.
30-Year Mortgage Rates Based on Credit Scores
FICO Score
APR
760–850
4.6%
700–759
4.8%
680–699
5.0%
660–679
5.2%
640–659
5.6%
620–639
6.1%
Based on 2018 national averages for a $200,000 fixed loan. Source: FICO
Putting together a mortgage refinancing package for a borrower with a bad financial history might cause the lender to increase the length of the loan term, increase the total interest rate or even increase the total monthly payments. Unfortunately, when a borrower has a pattern of falling behind on payments, a lender will offer more expensive refinancing packages to make up for the added risk.
Is Refinancing Right for You?
It is important to note that refinancing your mortgage may not always save you money. You might come out with the same financial deal or a worse option than you currently have, especially if you have a low credit score. In fact, looking at the average outcomes of Freddie Mac mortgages that were refinanced between 1994 and 2018 shows that only a small fraction of refinances actually resulted in the borrower saving money.
Source: Freddie Mac
While refinancing may not be right for everyone, it’s still important to consider the benefits of flexibility and length of terms. If you see yourself falling behind on payments or want to pay off your loan faster, refinancing your mortgage might still offer you some benefits.
Refinancing With Your Current Lender
When approaching your current lender about refinancing your mortgage it is first important to assess where you stand as a borrower. If you make payments on time and are in great financial health the lender will most likely want to continue doing business with you. However, if you have been late on payments and are struggling to cover other financial responsibilities the lender might be more reluctant to refinance your mortgage.
1. Shop Around for Low Rates
Before approaching your current lender for refinancing options, it is important to check for other options. To aid with any negotiations you should first check with other banks to see what interests rates are the best. Coming to your current lender after already shopping around for prices will give you more bargaining power to get a lower rate.
2. Show Proof of Savings
If your credit score is low but you have money in the bank a lender may still offer you a competitive rate. Showing proof of income and savings is a good option for new borrowers with short lending historys. For lenders, any proof that a borrower will be able to make payments toward a mortgage or loan will lower the overall lending risk and make a positive impact on the terms of the refinancing agreement.
3. Get a Loan Cosigner
If you have a low credit score and do not have sufficient money in the bank to lower your overall risk, you can use a loan cosigner. A cosigner shows the validity of an agreement and essentially promises to pay any debts that are outstanding if the borrower cannot pay. Depending on your financial situation, it can be difficult to get someone to agree to be your loan cosigner. As such, you should only approach people you’re close with.
4. Show Proof of Income
Even if you do not have a large amount of savings in the bank you can still demonstrate you will make payments on time and carry through with your mortgage agreement by showing proof of income. If you have a well-paying job or have sufficient income coming in, a lender will be more likely to offer a good refinancing option to you. Even without money in the bank or a good credit score, showing proof of income demonstrates that you are financially stable enough to make payments on the loan.
5. Improve Your Credit Score
Before visiting your lender to inquire about mortgage refinancing options you should first look at your credit report for points of action around how you can build your credit score. If your credit report is full of negative items like late payments, hard inquiries and delinquent accounts there could be some places to make up some extra points. Through a series of disputes, letters and phone calls with the major credit agencies you can work toward getting a higher score. There are also companies that offer credit repair solutions that can get your credit removal cases rolling to help improve your score.
Consider Cash-Out Refinancing
Cash-out refinancing is a mortgage refinancing option ideal for people who owe less than their house is worth. It is important to note that a cash-out refinancing option trades your current loan for a cash payment and a larger loan. Lenders can typically refinance a loan for up to 80 percent of the current market value.
Equity is earned on a home when its market value price increases over the price in which you paid for it. Earned equity is normally cashed out with the sale of a home, but it can also be tapped into with cash-out refinancing.
The largest disadvantage to a cash-out refinance is the equity loss of your investment. Although the amount of money between what you currently owe and what your house is valued can be a sizable help for short-term debts, you will still be accountable to pay back the new and larger loan in the long term.
Apply for the Home Affordable Refinance Program
The Home Affordable Refinance Program (HARP) is an initiative created by the Federal Housing Finance Agency following the 2008 economic recession, which caused large mortgage defaults in America. With the sudden drop in housing prices, many Americans were overpaying for their mortgages. HARP has helped refinance over 3 million mortgages so far and represents over 20 percent of all refinances. It is important to note that HARP is not the best solution for everyone, and has five main requirements for eligibility.
Your loan is currently owned by the mortgage-backed securities companies Freddie Mac or Fannie Mae.
Your mortgage/loan was signed before May 31, 2009.
Your current loan-to-value ratio is over 80 percent.
You are up to date with your mortgage payments and have not missed a payment in the last six months nor missed more than one payment in the past year.
The mortgage was either for your current residence, a second home or a four-unit investment property.
Seek FHA Refinancing
The Federal Housing Administration has a number of refinancing options built to help homeowners with existing FHA secured loans. Unfortunately, the streamlined refinancing is not available for loans that originated outside of any Federal Housing Administration secured lenders. One benefit of refinancing through the FHA is credit or income checks are not part of the process. If your mortgage is secured with the FHA, there are some prerequisites for the refinancing program.
You are current on payments and have not missed or been late on a payment for the past year.
You have owned the house for over six months.
You use an FHA approved lender or an FHA approved bank when refinancing.
If you are still unsure if you qualify the FHA mortgage portal includes a step-by-step guide that can give you an estimate of your best refinancing options available.
Mortgage Refinancing During the Coronavirus Outbreak
The coronavirus outbreak has impacted our lives on every front. Loss of jobs and income has lead to uncertainty and has made it difficult for many Americans to make their mortgage payments. Many homeowners have been taking advantage of the mortgage relief that was part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), legislation that was signed in on March 27, 2020. This allows eligible homeowners with FHA-insured mortgages to have their payments due dates pushed back, also known as forbearance.
Other homeowners are taking this opportunity to refinance their mortgage. According to the Mortgage Bankers Association, refinancing applications are being filed at a rate that’s 168% higher than during the same period in 2019. Though re-financing sounds like an attractive plan-of-action, it may not be right for everyone — there are additional considerations to make if your credit score is less than ideal.
To better understand your options, see some refinancing factors, considerations, challenges and resources below.
Is Refinancing Worth It?
It is worth looking into refinancing but this may not be the right move for you depending on a variety of factors. In a broader sense, this is a great opportunity to save money if the determining factors are on your side — in that case, yes, it could be worth refinancing your mortgage.
Refinancing Factors To Consider
Before you jump on the phone with your mortgage lender, there are some factors that you should consider that can help you determine if you are a good candidate.
Your credit score: As mentioned before, a lower score will typically equate to a higher APR. See the table above for an idea of how your FICO credit score correlates with your APR. Refinancing typically doesn’t negatively affect your credit but there are instances where it could, like refinancing too often.
Your recent payment record: If you have a recent history of late or missed payments (not tied to the coronavirus pandemic) that could have a negative impact on your results.
Occupancy length: How long you’re planning on living at your house is another huge factor that can affect your savings.
How old your mortgage is: The amount of years that you have left on your mortgage is a huge factor. If you are close to paying off your mortgage, it’s likely not worth it.
Many of the same rules apply: Regardless of coronavirus, there are certain actions that can improve or hurt your chances when refinancing. To recap, those best practices are:
Shopping around for low rates
Showing proof of your savings
Getting someone to cosign your loan
Showing proof of your income
Improving your credit score
Current Mortgage Rates
Mortgage rates are historically low right now, the lowest being 3.13% on March 2, 2020. As of April 16, 2020, the average 30-year fixed mortgage rate was 3.780%, according to Bankrate and 3.341% according to NerdWallet. These rates are changing rapidly so it’s important to keep tabs on their movements if you’re considering refinancing. Check out daily rate updates on Mortgage News Daily to stay up-to-date on mortgage rate information.
Challenges and Risks of Refinancing Your Home
There are always risks that come with refinancing your home. One of the biggest challenges that the current climate has created is the time it may take to get your refinancing request through due to the high demand right now. See that challenge and additional ones below:
Longer to acquire: Requests are backed up because lenders don’t have the capacity to process all of the requests that are coming in due to demand coupled with staffing shortages.
Closing costs: Most refinancing processes require some sort of fee for processing the request. Depending on your situation, that’s something to consider.
Savings loss: Just like refinancing at any other time, there is no guarantee of savings and many people end up in the same spot or with a loss in savings due to increased rates or loss of certain benefits.
Questions To Ask Your Mortgage Lender
Before calling or making an appointment with your lender it’s a great idea to use a mortgage refinancing calculator to get a preliminary idea of how refinancing could work out for you. If you see a positive result and decide to call your lender, make sure you have your proper documents handy and have questions ready to ask them. Some of those could include:
What is the estimated turnaround time for this process?
What are the new interest rate and APR?
Will I be able to lock in my loan rate?
What additional costs would I incur (title policies, inspections, credit reports, etc.)?
Will the new agreement include prepayment penalties?
H3: COVID-19 Mortgage Resources
Below is a collection of helpful resources to make sure you understand your options and keep up with the ever-changing rates and information that’s being distributed.
Coronavirus-Specific Resources
Additional Mortgage Information
In the end, there is no ‘one size fits all’ answer to whether or not you should attempt to refinance your home. We recommend reaching out to an advisor who can evaluate your individual situation. If you’re worried about your credit score hurting your chances of refinancing, try a free credit consultation to learn more about your score and how credit repair could help your financial situation.
Refinancing your mortgage with a bad credit score is completely possible, but is a more complicated process than refinancing with a good score. Because your credit score is such a large aspect of any loan application and refinancing process, it is in your best interest to consider all of your options before moving forward.
Refinancing your mortgage could be a great opportunity to gain some payment flexibility or even take advantage of a lower interest rate. To avoid leaving money on the table, explore all of your options for refinancing with bad credit.
How Credit Scores Affect Refinancing
Lenders use your credit score and overall lending history to calculate the risk of lending you money. A lender will view a borrower with a low credit score caused by loan defaults and constant late payments as a high risk. Because the borrower has shown negative borrowing practices in the past the lender will be more reluctant to sign or refinance a loan.
30-Year Mortgage Rates Based on Credit Scores
FICO Score
APR
760–850
4.6%
700–759
4.8%
680–699
5.0%
660–679
5.2%
640–659
5.6%
620–639
6.1%
Based on 2018 national averages for a $200,000 fixed loan. Source: FICO
Putting together a mortgage refinancing package for a borrower with a bad financial history might cause the lender to increase the length of the loan term, increase the total interest rate or even increase the total monthly payments. Unfortunately, when a borrower has a pattern of falling behind on payments, a lender will offer more expensive refinancing packages to make up for the added risk.
Is Refinancing Right for You?
It is important to note that refinancing your mortgage may not always save you money. You might come out with the same financial deal or a worse option than you currently have, especially if you have a low credit score. In fact, looking at the average outcomes of Freddie Mac mortgages that were refinanced between 1994 and 2018 shows that only a small fraction of refinances actually resulted in the borrower saving money.
Source: Freddie Mac
While refinancing may not be right for everyone, it’s still important to consider the benefits of flexibility and length of terms. If you see yourself falling behind on payments or want to pay off your loan faster, refinancing your mortgage might still offer you some benefits.
Refinancing With Your Current Lender
When approaching your current lender about refinancing your mortgage it is first important to assess where you stand as a borrower. If you make payments on time and are in great financial health the lender will most likely want to continue doing business with you. However, if you have been late on payments and are struggling to cover other financial responsibilities the lender might be more reluctant to refinance your mortgage.
1. Shop Around for Low Rates
Before approaching your current lender for refinancing options, it is important to check for other options. To aid with any negotiations you should first check with other banks to see what interests rates are the best. Coming to your current lender after already shopping around for prices will give you more bargaining power to get a lower rate.
2. Show Proof of Savings
If your credit score is low but you have money in the bank a lender may still offer you a competitive rate. Showing proof of income and savings is a good option for new borrowers with short lending historys. For lenders, any proof that a borrower will be able to make payments toward a mortgage or loan will lower the overall lending risk and make a positive impact on the terms of the refinancing agreement.
3. Get a Loan Cosigner
If you have a low credit score and do not have sufficient money in the bank to lower your overall risk, you can use a loan cosigner. A cosigner shows the validity of an agreement and essentially promises to pay any debts that are outstanding if the borrower cannot pay. Depending on your financial situation, it can be difficult to get someone to agree to be your loan cosigner. As such, you should only approach people you’re close with.
4. Show Proof of Income
Even if you do not have a large amount of savings in the bank you can still demonstrate you will make payments on time and carry through with your mortgage agreement by showing proof of income. If you have a well-paying job or have sufficient income coming in, a lender will be more likely to offer a good refinancing option to you. Even without money in the bank or a good credit score, showing proof of income demonstrates that you are financially stable enough to make payments on the loan.
5. Improve Your Credit Score
Before visiting your lender to inquire about mortgage refinancing options you should first look at your credit report for points of action around how you can build your credit score. If your credit report is full of negative items like late payments, hard inquiries and delinquent accounts there could be some places to make up some extra points. Through a series of disputes, letters and phone calls with the major credit agencies you can work toward getting a higher score. There are also companies that offer credit repair solutions that can get your credit removal cases rolling to help improve your score.
Consider Cash-Out Refinancing
Cash-out refinancing is a mortgage refinancing option ideal for people who owe less than their house is worth. It is important to note that a cash-out refinancing option trades your current loan for a cash payment and a larger loan. Lenders can typically refinance a loan for up to 80 percent of the current market value.
Equity is earned on a home when its market value price increases over the price in which you paid for it. Earned equity is normally cashed out with the sale of a home, but it can also be tapped into with cash-out refinancing.
The largest disadvantage to a cash-out refinance is the equity loss of your investment. Although the amount of money between what you currently owe and what your house is valued can be a sizable help for short-term debts, you will still be accountable to pay back the new and larger loan in the long term.
Apply for the Home Affordable Refinance Program
The Home Affordable Refinance Program (HARP) is an initiative created by the Federal Housing Finance Agency following the 2008 economic recession, which caused large mortgage defaults in America. With the sudden drop in housing prices, many Americans were overpaying for their mortgages. HARP has helped refinance over 3 million mortgages so far and represents over 20 percent of all refinances. It is important to note that HARP is not the best solution for everyone, and has five main requirements for eligibility.
Your loan is currently owned by the mortgage-backed securities companies Freddie Mac or Fannie Mae.
Your mortgage/loan was signed before May 31, 2009.
Your current loan-to-value ratio is over 80 percent.
You are up to date with your mortgage payments and have not missed a payment in the last six months nor missed more than one payment in the past year.
The mortgage was either for your current residence, a second home or a four-unit investment property.
Seek FHA Refinancing
The Federal Housing Administration has a number of refinancing options built to help homeowners with existing FHA secured loans. Unfortunately, the streamlined refinancing is not available for loans that originated outside of any Federal Housing Administration secured lenders. One benefit of refinancing through the FHA is credit or income checks are not part of the process. If your mortgage is secured with the FHA, there are some prerequisites for the refinancing program.
You are current on payments and have not missed or been late on a payment for the past year.
You have owned the house for over six months.
You use an FHA approved lender or an FHA approved bank when refinancing.
If you are still unsure if you qualify the FHA mortgage portal includes a step-by-step guide that can give you an estimate of your best refinancing options available.
Mortgage Refinancing During the Coronavirus Outbreak
The coronavirus outbreak has impacted our lives on every front. Loss of jobs and income has lead to uncertainty and has made it difficult for many Americans to make their mortgage payments. Many homeowners have been taking advantage of the mortgage relief that was part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), legislation that was signed in on March 27, 2020. This allows eligible homeowners with FHA-insured mortgages to have their payments due dates pushed back, also known as forbearance.
Other homeowners are taking this opportunity to refinance their mortgage. According to the Mortgage Bankers Association, refinancing applications are being filed at a rate that’s 168% higher than during the same period in 2019. Though re-financing sounds like an attractive plan-of-action, it may not be right for everyone — there are additional considerations to make if your credit score is less than ideal.
To better understand your options, see some refinancing factors, considerations, challenges and resources below.
Is Refinancing Worth It?
It is worth looking into refinancing but this may not be the right move for you depending on a variety of factors. In a broader sense, this is a great opportunity to save money if the determining factors are on your side — in that case, yes, it could be worth refinancing your mortgage.
Refinancing Factors To Consider
Before you jump on the phone with your mortgage lender, there are some factors that you should consider that can help you determine if you are a good candidate.
Your credit score: As mentioned before, a lower score will typically equate to a higher APR. See the table above for an idea of how your FICO credit score correlates with your APR. Refinancing typically doesn’t negatively affect your credit but there are instances where it could, like refinancing too often.
Your recent payment record: If you have a recent history of late or missed payments (not tied to the coronavirus pandemic) that could have a negative impact on your results.
Occupancy length: How long you’re planning on living at your house is another huge factor that can affect your savings.
How old your mortgage is: The amount of years that you have left on your mortgage is a huge factor. If you are close to paying off your mortgage, it’s likely not worth it.
Many of the same rules apply: Regardless of coronavirus, there are certain actions that can improve or hurt your chances when refinancing. To recap, those best practices are:
Shopping around for low rates
Showing proof of your savings
Getting someone to cosign your loan
Showing proof of your income
Improving your credit score
Current Mortgage Rates
Mortgage rates are historically low right now, the lowest being 3.13% on March 2, 2020. As of April 16, 2020, the average 30-year fixed mortgage rate was 3.780%, according to Bankrate and 3.341% according to NerdWallet. These rates are changing rapidly so it’s important to keep tabs on their movements if you’re considering refinancing. Check out daily rate updates on Mortgage News Daily to stay up-to-date on mortgage rate information.
Challenges and Risks of Refinancing Your Home
There are always risks that come with refinancing your home. One of the biggest challenges that the current climate has created is the time it may take to get your refinancing request through due to the high demand right now. See that challenge and additional ones below:
Longer to acquire: Requests are backed up because lenders don’t have the capacity to process all of the requests that are coming in due to demand coupled with staffing shortages.
Closing costs: Most refinancing processes require some sort of fee for processing the request. Depending on your situation, that’s something to consider.
Savings loss: Just like refinancing at any other time, there is no guarantee of savings and many people end up in the same spot or with a loss in savings due to increased rates or loss of certain benefits.
Questions To Ask Your Mortgage Lender
Before calling or making an appointment with your lender it’s a great idea to use a mortgage refinancing calculator to get a preliminary idea of how refinancing could work out for you. If you see a positive result and decide to call your lender, make sure you have your proper documents handy and have questions ready to ask them. Some of those could include:
What is the estimated turnaround time for this process?
What are the new interest rate and APR?
Will I be able to lock in my loan rate?
What additional costs would I incur (title policies, inspections, credit reports, etc.)?
Will the new agreement include prepayment penalties?
H3: COVID-19 Mortgage Resources
Below is a collection of helpful resources to make sure you understand your options and keep up with the ever-changing rates and information that’s being distributed.
Coronavirus-Specific Resources
Additional Mortgage Information
In the end, there is no ‘one size fits all’ answer to whether or not you should attempt to refinance your home. We recommend reaching out to an advisor who can evaluate your individual situation. If you’re worried about your credit score hurting your chances of refinancing, try a free credit consultation to learn more about your score and how credit repair could help your financial situation.
A balance transfer card can be a shortcut to getting out of debt faster if it means paying a lower interest rate.
While many card issuers have pulled back on balance transfer offers, largely due to financial uncertainty surrounding the COVID-19 pandemic, there are still 0% APR deals to be found.
“Balance transfers are tools,” says Howard Dvorkin, personal finance expert and Debt.com chairman.
Dvorkin says in the best-case scenario, you execute a 0% APR transfer and pay the balance down before the promotion expires.
Getting approved for a balance transfer card isn’t always a lock, however. Learn why your balance transfer application may be denied and what you can do to increase your approval chances.
See related: 9 things you should know about balance transfers
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Why are balance transfers denied?
Generally, there are two scenarios that can keep you from executing a balance transfer successfully:
Your application for a balance transfer card is turned down by the card issuer.
Your application for a balance transfer card is approved, but when you try to transfer a balance to the new card, the transfer is declined, or the credit limit you were approved for is insufficient to cover the amount you want to transfer.
Here’s a closer look at some specific reasons for a balance transfer denial.
1. Applying for a balance transfer card with the same card issuer
Trying to transfer balances between two cards from the same bank could be a roadblock to your balance transfer goals.
“Most card issuers won’t allow a balance transfer between two cards that they issue,” says Marshall Armond, CEO of consumer credit education site CreditRevo.
That’s because credit card companies rely on balance transfers to make money through fees and interest charges. There’s little financial incentive for a card issuer to allow you to transfer balances between cards if you’re likely to pay the balance off before the promotional period expires.
“While this might seem like a way of simplifying the task by staying with an institution you know, it’s actually just a guaranteed way of getting your application rejected,” says Tina Hay, founder and CEO of Napkin Finance.
2. Having a low credit score
A too-low credit score could keep you from making the approval cut, even if you were prescreened for a balance transfer offer.
Armond says that while there are some balance transfer offers geared toward people with fair or average credit, most promotions are designed for people with scores in the good to excellent range.
“Generally, they like to offer balance transfer promotions to customers they don’t think will default on their balance,” says Armond.
Applying for balance transfer requests too frequently could also block your way to approval if multiple hard inquiries ding your credit score.
Every balance transfer credit card is different regarding the minimum score it requires for approval.
For example, the Citi Rewards+ Card offers a 0% introductory APR on balance transfers for 15 months from the date of your first transfer (then a variable APR of 13.49% to 23.49% after that) but you’ll need excellent credit to qualify for the card.
By comparison, it’s possible to get approved for a balance transfer with the Discover it® Secured card with bad to fair credit. This card doesn’t offer a 0% APR balance transfer, but you can get an introductory APR of 10.99% for six months if your transfer posts to your account by July 10, 2021. (After the introductory period, there’s a variable APR of 22.99%.)
Hay offers a good rule of thumb to follow: “The better your credit, the more likely it is that you’ll be approved, and be approved for better terms.”
She says the same things that can dim your chances of approval for other loans or lines of credit also apply to balance transfers. That includes late or missed payments and accounts that are close to their limit or maxed out.
Having a thin credit file could also be problematic. Credit card companies may not be willing to approve a balance transfer if you’ve only been using credit a short time or have just one or two active credit accounts.
3. Balance transfer requests that exceed your credit limit
You might be approved for a balance transfer credit card, only to be told later that your transfer request didn’t go through.
Not having enough available credit to complete the transfer could be the reason, says Armond.
It’s possible to be denied if you’re requesting a balance transfer for a larger amount than your credit card company allows.
Banks can limit balance transfer requests to a set dollar amount or percentage of your new credit line. USAA, for example, caps balance transfers at 95% of the balance transfer card’s credit limit.
Before requesting a balance transfer, it’s helpful to ask what your credit limit and balance transfer limits will be with the new card. This way, you can request a transfer amount that’s likely to be approved.
What to do when your balance transfer is denied
Getting denied for a balance transfer card may be inconvenient, but you can recover by taking the right steps.
First, you could ask the credit card company to reconsider. Whether you get the green light depends largely on why you were denied to begin with.
If you’re planning to ask the credit card company to give your balance transfer request a second look, be prepared to make a case for approval. For example, if you have a strong credit score or a low debt-to-income ratio, those things might work in your favor.
If a denial is due to poor credit or low income
You may be able to succeed in getting a reversal if you can offer extenuating circumstances to explain negative marks on your credit report.
The same goes if your request was denied because of low income, but you have other sources of income that weren’t reported on your initial application.
If your request was denied due to a lack of available credit
Armond says you can resubmit your original request using a smaller dollar amount. You’d then have to decide whether to pay off any remaining balance to the first card or apply for a second balance transfer card elsewhere.
How to increase your balance transfer approval odds
If you’re interested in getting a balance transfer, you’ll need good credit to do it, as offers have become more competitive.
These tips can help as you prepare to apply for a balance transfer card.
Fix credit reporting errors. Credit report errors are not uncommon, and they can damage your credit. If you spot a mistake on yours, file disputes with the three major credit bureaus – Equifax, Experian and TransUnion.
Know the issuer. If you have a card or two in mind for a balance transfer, scout out the card issuer’s transfer policies. You don’t want to waste time (or risk a potential credit score ding) applying for a balance transfer if it’s likely to be denied because you already have a card with that bank or because the amount you want to transfer is more than the credit card company allows.
Review your credit limit. Make sure your card has enough room to accommodate a balance transfer.
Toe the line with your existing credit accounts. If your score isn’t quite what it needs to be to get approved for a balance transfer, work on doing what you can to improve it. “Make at least the minimum payments on time,” says Dvorkin, and focus on paying down some of your credit card debt to improve your credit utilization.
Carefully consider how additional applications will affect your credit. If you apply for too many credit cards within a short time frame, you could damage your score via multiple hard inquiries. And a flurry of card applications could send a signal to prospective lenders that you’re too reliant on credit.
Bottom line
Balance transfers can save money on interest charges, but getting approved for one can be tricky if you have a lower credit score or your approved credit limit is lower than expected. When applying for balance transfer offers, consider your budget and how much you’ll be able to pay each month. This can help ensure that you’re not left with a remaining balance once the introductory rate period ends.
Within two minutes, you’ll get access to your credit score, any debt-carrying accounts and a handful of personalized tips to improve your score. You’ll even be able to spot any errors holding you back (one in five reports have one). Getting your free credit score takes less than two minutes.
A debit card called Aspiration lets you earn up to 5% cash back every time you swipe the card and up to 16 times the average interest on the money in your account. Plus, you’ll never pay a monthly account maintenance fee.
Here’s a trick the Richie Riches of the world love: slapping a fancy marketing term on a free service and charging you for it. The nerve of these people, seriously.
1. Say Goodbye to Your Big Brick-and-Mortar Bank
Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.
James Cooper, of Atlanta, used Credit Sesame to raise his credit score nearly 300 points in six months.* “They showed me the ins and outs — how to dot the I’s and cross the T’s,” he said.
It takes two minutes to sign up, and it’s totally secure. With Stash, all your investments are protected by the Securities Investor Protection Corporation (SIPC) — that’s industry talk for, “Your money’s safe.”2
Yup. That could be 0 back in your pocket just for taking a few minutes to look at your options.
AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.
2. Stop Paying Your Credit Card Company
The Penny Hoarder is a Paid Affiliate/partner of Stash.
Plus, when you use the link above, Stash will give you a sign-up bonus once you deposit into your account.*
The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.
Think those high-flying billionaires on the top floor are just sitting pretty on their cash? No way — they’re investing it and making even more millions.
First, they charge all those insane fees. Then, they make tons of interest on your money — but only give you .05% (on average). Peanuts for the poor. Billions for the bank.
Using Insure.com, people have saved an average of 9 a year.
3. Stop Paying For Free Services
Privacy Policy
That’s right — you can invest in pieces of well-known companies, such as Amazon, Google, Apple and more for as little as . The best part? If these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.1
But with an app called Stash, you can take on those expensive brokers. It lets you be a part of something that’s normally exclusive to the richest of the rich — on Stash you can buy pieces of other companies for as little as . *Offer is sunbject to Promotion Terms and Conditions. To be eligible to participate in this Promotion and receive the bonus, you must successfully open an individual brokerage account in good standing, link a funding account to your Invest account AND deposit .00 into your Invest account. Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.
The system is rigged, man. And over the last year, it’s become a lot more apparent. The rich get richer, and many of us are just trying to make ends meet.
4. Cancel Your Car Insurance
So, call them out. Cancel those thieves! But make sure you have better, cheaper insurance lined up.
If you owe your credit card companies ,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.
So if you’re sick of getting ripped off, find an account that won’t charge you ridiculous fees and earn you way more interest on your savings — it is your money, after all.
Get the Penny Hoarder Daily Source: thepennyhoarder.com
It doesn’t seem fair they get to have their own hedge fund managers who make them richer every day. The system wasn’t set up to make it easy for us worker bees.
5. Fight the Billionaire Hedge Fund Managers
A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options. Make sure you do this every six months so you can be confident you’re getting the best price.
How much do you think the billionaire CEO of JPMorgan Chase is making? You don’t even want to know.
How would you feel if you found out your car insurance company was overcharging you by 0 each year?
It’s better to just stop giving your credit card company more of your money. They’re getting richer and richer by ripping you off with high interest rates — some up to 36%. But a website called AmOne wants to help.
Pretty peeved, we’re sure. It’s just another cog in the machine working hard to rip you off.
You can ask for a raise or try your chances playing the lotto, but neither of those are guaranteed to land in your favor. So how can you get your slice of the pie, too? Here are some surefire ways you can stick it to The Man.
Here’s one that’s really going to irk you — paying for a credit monitoring service isn’t necessary for most people. You might be, though, because you know how important a good credit score is to buy a car, take out a mortgage or even open up a business. Kari Faber is a staff writer at The Penny Hoarder.
But if you’re looking to get your credit score back on track — or even if it is on track and you want to bump it up — stop paying anyone to monitor it for you. You can get the same help from a free website, like Credit Sesame.
Not that you’d be surprised by this, but the place you trust to keep your money safe and growing is getting rich by ripping you off.
Today, according to research pulled by Bloomberg, the typical Fortune 1,000 CEO makes 144 times more than their average worker. But wait, it gets worse: at The Coca-Cola Company, CEO James Quincey makes an insultingly high 1,621 times more. *Like Cooper, 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.
In the 1950s, CEOs were earning about 20 times more than their average employees. Seems fair considering their title, right? Sure.
It takes two minutes to see if you qualify for up to ,000 online. You do need to give AmOne a real phone number in order to qualify, but don’t worry — they won’t spam you with phone calls. For Securities priced over ,000, purchase of fractional shares starts at Ready to stop worrying about money? 2To note, SIPC coverage does not insure against the potential loss of market value.1Not all stocks pay out dividends, and there is no guarantee that dividends will be paid each year.
To see how much you could earn, enter your email address here, link your bank account and add at least to your account. And don’t worry. Your money is FDIC insured and under a military-grade encryption. That’s nerd talk for “this is totally safe.”
