Why You Can Trust Bankrate
At Bankrate, we have a mission to demystify the credit cards industry regardless or where you are in your journey and make it one you can navigate with confidence. Our team is full of a diverse range of experts from credit card pros to data analysts and, most importantly, people who shop for credit cards just like you. With this combination of expertise and perspectives, we keep close tabs on the credit card industry year-round to:
- Meet you wherever you are in your credit card journey to guide your information search and help you understand your options.
- Consistently provide up-to-date, reliable market information so you\’re well-equipped to make confident decisions.
- Reduce industry jargon so you get the clearest form of information possible, so you can make the right decision for you.
At Bankrate, we focus on the points consumers care about most: rewards, welcome offers and bonuses, APR, and overall customer experience. Any issuers discussed on our site are vetted based on the value they provide to consumers at each of these levels. At each step of the way, we fact-check ourselves to prioritize accuracy so we can continue to be here for your every next.
Balance Transfer Credit Cards
The length of the 0% balance transfer offer is the main feature to look at. Ideally, you should get a balance transfer card with a 0% intro APR that will last until you can pay off your debt. If that’s not possible, then you should choose the card with the longest 0% balance transfer APR.
Balance transfer fees are also important, especially if two cards are otherwise equal. If you’re stuck on how to select a credit card for balance transfers and one has a lower balance transfer fee, then that’s the clear choice.
How Do I Find Out If I Pre
The Discover pre-approval tool can tell you whether youre pre-qualified for a credit card with no harm to your credit. Since the request for pre-approval only generates a soft inquiry, there is no impact to your credit score.
A credit card company uses your a three-digit number summarizing your credit risk to determine how much credit to extend you. Most FICO® Credit Scores range from 300 to 850 and are calculated based on your unique credit history. Its how lenders decide what interest rates to offer and which credit cards to approve you for.
If credit bureaus report good scores, youre a lower-risk borrower for lenders, which makes you likelier to score favorable interest rates and bonuses on your next card. By contrast, you likely wont qualify for the best benefits lenders have to offer with a lower credit score.
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How To Cancel A Credit Card
To cancel a credit card, you can contact the issuer and ask them to close the account. Youll have to pay off any outstanding balance in full before the account can be closed. Keep in mind that closing a credit card can have an adverse impact on overall credit score. If youre thinking about closing a card that youve held for a long time, your credit history makes up a portion of your score so closing it can ding your credit.
You may want to consider asking the issuer if you can do a product change to a card without an annual fee or to one thats a better fit for your spending patterns.
Be Prepared For The Impact On Your Credit
Nearly all credit card companiesexcept for a handful targeting those with poor creditwill do a hard pull on your credit history. This means their inquiry will appear on your credit report and will likely ding your score.
Too many hard pulls in a short time will have an adverse affect on your credit score, as it can signal to lenders that youre seeking too many lines of credit at once.
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If You Want To Save On Interest: Low
A card with an introductory 0% APR and ongoing low interest could be a good match for you if you plan to use your credit card in case of emergencies, or if you have an irregular income and carry a balance from time to time. A balance transfer offer could help you pay off a high-interest debt interest-free. Keep in mind that these offers may be harder to find if you have average or poor credit.
» MORE: Find the best low-interest or 0% APR credit card with this flowchart
How The Finance Charge Is Calculated
Interest is not calculated the same way for all credit cards. A card will use any of the following methods:
Average daily balance. Each day’s balance in the billing cycle, averaged out.
Beginning balance. The balance at the beginning of the billing cycle.
Adjusted balance. The beginning balance minus any payments made during the month.
Ending balance. The balance at the end of the billing cycle.
Based on your spending and payment behavior, which of these would result in the lowest interest for you? That’s what you must consider.
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Late Payments Damage Your Credit Rating
If you make your payment after the monthly deadline on your statement, youll have to pay a late payment charge.
Any 0% or other introductory rate could also be withdrawn. Plus, other companies will see you were late paying as part of your credit record.
This could have a negative impact on future credit applications, such as applying for a mortgage or a car loan.
What Is The Difference Between Fico Score And Vantagescore
FICO and VantageScore pull from the same data, weighting the information slightly differently. They tend to move in tandem: If you have an excellent VantageScore, your FICO is likely to be high as well.
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Access Your Credit Scores
You can pay to get your FICO score from MyFICO.com, but if you already have a credit card account, you may also already have access to free FICO scores on your monthly statement or online account. And Discover, an issuer of credit cards, offers a free FICO score to everybody, even if youre not a customer.
Some personal finance websites, including NerdWallet, offer a free credit score from VantageScore. VantageScores and FICO scores track similarly because both weigh much the same factors and use the same data from the credit bureaus.
Your credit scores will rise if you:
Make payments on time.
Keep balances low on existing credit cards.
Avoid new debt.
A full 30% of your credit score is determined by how much you owe. High credit card balances can be especially damaging. Your your balance divided by your credit limit should be below 30% on each credit card. For example, if you have a credit limit of $10,000, it’s recommended to keep the balance below $3,000.
Lower your credit utilization by creating a plan to pay down an existing balance as quickly as possible. And consider paying off purchases more than once a month to keep your balance lower throughout the month.
» MORE: 8 ways to build credit fast
Deciding On A Credit Card
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How Old Do You Have To Be To Get A Credit Card
You have to be at least 18 years old to get a credit card in the U.S. The law requires those who apply to have a source of income to demonstrate that they can pay back any amount they might charge to a card. But, sometimes those younger than that can be added as an authorized user on a parent or trusted adults credit card. Some issuers have a minimum age requirement to be an authorized user, others do not.
Things You Need To Know About Credit Cards
There are some important points you need to keep in mind before applying for and using a credit card:
- The credit card provider will carry out a hard credit check when you apply. This will include checking your credit file. If youve got a good credit rating, this will improve your chances of a successful credit application. It could also give you access to cards offering the lowest interest rates and/or promotional offers. A hard credit check will show up on your credit report and will have the potential to affect your credit score.
- Some credit companies will perform a soft check before you apply. This type of credit inquiry will have no impact on your credit rating and will not show up on your credit report. It provides an indication of whether your credit application will be successful.
You can check your credit score for free by using the following websites:
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Tips To Reach The Minimum Score Needed For A Discover Card
You can take steps to improve the chances that Discover or another credit card issuer will approve you for a card. Your credit card qualifications are based on a variety of factors under your control.
First, get your credit score and credit report. If theres anything in your credit report thats hurting your score, you can work on establishing better financial habits, or dispute any incorrect information. Start by trying to reach the minimum credit score needed for a credit card. Once you use one card responsibly, it may be easier to get others.
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- Annual fee: $120
- Welcome bonus:Get 10% cash back for all purchases on your first four statements, or first $2,500 in purchases, up to $250 in cash back). After that, the earn rate becomes 4% on gas and grocery purchases and 1% cash back on everything else.
- Earn rate: 4% back on groceries and gas 2% back on dining, recurring bills and daily transit 1% on all other purchases
- Additional perks: Emergency medical and accident coverage car rental collision and damage coverage mobile device insurance purchase security and mobile device insurance and save up to $0.10 per litre at participating Chevron, Ultramar and Pioneer gas stations when you link your card with Journie Rewards.
- Income required: $60,000 or $100,000 as a household
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What Else Do I Need To Remember When Applying
Depending on the type of credit card youre applying for, you may be required to provide proof of your income and other supporting financial documentation for approval.
- Supporting documentation. After you have submitted the initial application , you may be required to provide documentation that supports the information provided. This typically includes identifying documents with a photo, several recent paystubs and/or tax documents.
- Document submission. Check out how the process works for verifying your documents. In some cases, you may be able upload copies online via a secure service, while in others you might have to bring them into a branch.
- Instant approval. Most credit card applications you submit online will provide you with a response within 60 seconds. Remember that if you are approved at this stage, you may still have to provide the supporting documents in order to receive and activate your card.
If you do the research first and gather together all of the information required, filling out a credit card application online will only take a few minutes. And thanks to the convenience of 60-second approval times, you could know within 15 minutes of clicking Apply now whether you will be getting a brand new credit card.
How Are Credit Card Interest Rates Determined
While some credit cards offer a single APR to all cardholders that are approved, most provide a range of APRs. The APR you receive is based on the type of credit card you apply for and your creditworthiness. If you have a stellar credit history, a low debt-to-income ratio and other favorable attributes, your chances of getting an APR on the lower end of the spectrum increase.
However, if your credit history has some issues or your debt payments take up a large portion of your gross monthly income, you could end up with a higher interest rate.
People with limited, fair or bad credit may not even qualify for some of the better credit cards that are available. Credit cards for these types of credit profiles typically carry higher APRs. For example, the average interest rate on a card for people with bad credit is 25.80% APR as of Jan. 26, 2022. In contrast, the national average is 16.13%.
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American Express Application Rules
In my experience, American Express cards are among the easiest to be approved for assuming you have good credit. There are also lots of lucrative cards earning Amex Membership Rewards points, which is the icing on the cake.
If youre new to credit cards, I always recommend starting with Amex, because its the issuer thats often the most generous when it comes to instant approvals, and having these cards can help you further build your credit history over time. In some ways Amex has strict rules for getting approved, while in other cases it doesnt, so here are the rules to be aware of:
How Does My Credit Score Impact The Credit Card Application Process
Your credit score is an indicator of your credit risk. Your credit risk shows how likely you are to make your credit card payments on time.
A strong credit score can improve your chances of getting approved for a credit card because it shows creditors you can use your credit card responsibly. Having a low credit score means you might be approved for a credit card, but with a lower credit limit.
Your credit history directly impacts your credit score. Your credit history includes a record of transactions, and lists the types of credit you have like credit cards or loans. Your credit history will also show your payment history, including your on-time payments, late payments or missed payments.
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Save Money On Credit Card Debt
Balance transfer credit cards help you pay less interest on your debt. Like 0% intro APR cards, these cards have 0% intro APR offers that apply to balance transfers instead of purchases. You can transfer your balance from credit cards with high interest rates to a balance transfer card with a 0% intro APR.
According to research by The Ascent, the average credit card balance reached $5,897 in 2020. If you have that kind of debt, knowing how to choose a credit card with a balance transfer offer can score you big savings. Use our balance transfer calculator to see how much you could save.
Minimum Credit Score Needed
The minimum credit score needed to qualify for a credit card varies with the type of card. Theres no exact number that your credit score has to be to get a credit card.
The most commonly used credit score is the FICO® Score, and these can range from 300 to 850. If you have a low credit score or limited credit history, a secured card may be the type of credit card youre most likely to qualify for. The minimum credit score needed for a Discover secured card is lower than the minimum score you need to qualify for an unsecured credit card like the Discover it Chrome card, and most credit card issuers also have different requirements for different types of cards. If youre a student with little or no credit history, a student credit card can be a good choice.
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Bmo Preferred Rate Mastercard*
For those looking to minimize debt, this $20-a-year Preferred Rate Mastercard from Bank of Montreal is our pick for the best low-interest credit card. The annual fee is refunded in the first year, and a lower-than-average interest rate of 12.99% means you can minimize interest on balances and new purchases. Plus, get a 3.99% introductory interest rate on balance transfers for nine months .