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A high-risk personal loan can be a source of funding for people who have a low credit score or no credit history and need money for various reasons. Lenders consider these types of loans to be “high-risk” because the borrower is seen as more likely to default on the loan. For this reason, the interest rate is likely to be significantly higher than what a borrower with a more creditworthy profile would be offered via a conventional personal loan.

Learn the details of high-risk personal loans, their pros and cons, and alternatives if you need a quick infusion of cash.

What Are High-Risk Personal Loans?

High-risk personal loans make cash available to those with a poor credit score or without a credit history. Some points to consider:

•   Most personal loans require a credit score of 580 or higher, but if you have a low credit score (typically between 300 and 579) or lack a robust credit history, you may be able to tap into a high-risk personal loan.

•   These loans can give you access to cash, but they often come with higher interest rates, higher fees, strict repayment terms, and limits on the amount of money you can borrow.

•   While some of these are unsecured personal loans, others may be secured. This means you may be required to put up collateral, or an asset, to be approved for the loan. In this situation, if you default on the loan, the lender can seize your asset.

•   Personal loans typically come with fixed interest rates, and you must repay them in fixed monthly installments over a specified period, usually up to seven years. High-risk personal loans may have much shorter terms, however.

It’s worth noting that personal loans don’t usually have any restrictions on what you use them for. You could use them to pay for a car repair, travel, credit card debt, a new kitchen appliance, and almost any other legal purchase or service.

Recommended: Personal Loan Glossary

Types of High-Risk Loans

Here are some options you might consider for high-risk personal loans.

High-Risk Unsecured Loan

With this loan, you will not need to put up collateral to obtain funding. Typically, the lender will offer you a lump sum of cash, say up to $10,000. While this may supply you with a quick cash infusion, keep in mind that the “high risk” cuts both ways. The lender is taking a gamble on you, as the odds of your defaulting may be high. But you are also probably securing a loan at a high interest rate, with significant fees and limitations.

High-Risk Secured Loan

In the case of a high-risk secured loan, you will be required to put up a form of collateral (such as real estate or a savings account) to gain access to funding. If a lender offers you this kind of loan, keep in mind that if you default, you could lose your collateral.

Payday Loan

Payday loans are short-term, high-cost loans, usually due on your next payday. They typically provide a small amount of money, such as $500, that needs to be repaid within two to four weeks and are offered online or at retail locations of payday lenders.

Here’s how they typically work: You write a post-dated check for the amount borrowed plus fees, and the lender debits the funds from your account on the day the loan is due. You might also grant the lender permission to pull the funds from your bank account electronically. If you can’t pay off the loan on time, it could roll over with more interest and fees accruing.

Note that these loans can involve an annual percentage rate (APR) of up to an eye-watering 400%. For this reason, they are considered to be a last resort.

Car Title Loan

A car title loan lender lets you borrow between 25% to 50% of your car’s value, typically starting at $100, with 15- to 30-day repayment periods. In exchange, you put your car up for collateral. This means the lender can take possession of your car if you don’t repay the loan. (In one review, the Consumer Financial Protection Bureau found that one in five borrowers of this kind of funding winds up losing their vehicle.) Note that not all states offer this type of loan.

Lenders who offer car title loans typically have very low or no credit requirements, and you can get funding fairly quickly, even in a day. They also likely come with extremely steep interest rates of up to 300% APR.

Pawn Shop Loan

With a pawn shop loan, you hand over an item as collateral (such as jewelry, a musical instrument, or a computer), and the pawn shop offers a loan based on the item’s appraised value.

The shop may lend 25% to 60% of the resale value of the item, but note that if you fail to repay the loan, the pawn shop can keep and then sell the item. The pawn shop may give you 30 to 60 days to repay the loan.

Here’s the risky part: The APRs are high, around 200%, and vary based on your state.

Recommended: Using a Personal Loan to Pay Off Credit Card Debt

Figuring Out if You’re a High-Risk Borrower

Here are signs that lenders may consider you to be a high-risk borrower:

•   You have a non-existent or thin credit history, meaning you don’t have a proven record of handling debt responsibly.

•   You have a low credit score (generally, below 580).

•   You have made repeated late payments on loans or credit cards.

•   You have defaulted on a loan in the past.

•   You have a high debt-to-income ratio (DTI); typically, this means your debts add up to more than 35% of your income.

•   You are unemployed.

•   You have declared bankruptcy in the past seven to 10 years.

Each lender will have its own guidelines for whom they will lend to, how much they are willing to lend, and at what rate and fees. It’s therefore important to check with your lender about the requirements for their personal loans and their terms.

Why Choose a High-Risk Loan?

If you have poor credit or no credit and want to borrow money, a high-risk loan may be the most suitable (or only) option to access a loan, particularly if you urgently need money. You can often access high-risk loans with a lower credit score or minimal credit history than you would need to qualify for traditional loans.

You might seek this kind of loan vs. dipping into an emergency fund you just started or a college or retirement fund. It could help you preserve those assets if, say, you need quick cash for a move.

It’s important to consider both the pros and the cons of these personal loans so you can make the right choice about whether to pursue this type of funding.

Disadvantages to High-Risk Loans

High-risk loans come with several downsides, including the following:

•   Higher interest rates and fees: High-risk loans typically have higher APRs and fees, meaning that you’ll pay more over the loan term. As of February 2026, some nontraditional lenders’ (such as those for payday loans) APRs may reach up to 400%, compared with the average APR of 12.16% for conventional personal loans. Some people can get caught in a debt cycle of taking out high-risk loans continually (particularly in the case of payday loans).

•   Risking collateral: You may have to put up an asset as collateral for your loan. If you fall behind on payments, you may lose the asset if your lender decides to seize it.

•   Lower amounts: You may not get to borrow as much as you’d like, as many lenders will only pay out small amounts to high-risk borrowers. For instance, some payday loans max out at $500.

How to Qualify for a High-Risk Personal Loan

Here’s how you could qualify for a personal loan as a high-risk borrower. Personal loan lenders will want to see that you can cover a new loan payment. Among other factors, they may use your credit score, your income, and your DTI to assess your ability to repay a loan. In terms of a target DTI, lenders like to see you keep it below 35% for a standard personal loan. With a high-risk loan, you may qualify with a significantly higher figure.

Next, you’ll need to gather your documents, including:

•   ID

•   Social Security number

•   Pay stubs

•   W-2 forms

•   Federal income tax forms

•   Bank account statements

You can apply online for a high-risk personal loan in just a few minutes once you have your materials ready. Your lender will let you know if you need to submit more documentation. In most cases, you’ll have a loan decision fairly quickly (some lenders advertise approval in minutes). If approved, you’ll likely receive funds within one week or less.

Alternatives to High-Risk Loans

You can also consider alternatives to high-risk loans, including:

•   Payday alternative loans: Credit unions may offer their members short-term loans as an alternative to payday loans. Payday alternative loans (PALs) are divided into PALs I and PALs II. PALs I offer between $200 and $1,000 with a maximum APR of 28%, and one- to six-month repayment terms. PALs II offer up to $2,000, a maximum 28% APR, and one- to 12-month repayment terms.

•   Family or friend loan: Family members or friends may be willing to lend you money. However, ensure that you can repay the loan in a timely manner so you don’t risk damaging the relationship.

•   Get a cosigner: You can approach someone you know who has good credit to become a cosigner on your application to help you qualify for a standard personal loan. Make sure, however, that both of you understand that the cosigner is responsible for taking over your monthly payments if you default on repaying the loan. That’s a major commitment on your cosigner’s behalf.

•   Look for “buy now, pay later” offers: These allow you to purchase an item and then pay it off on an installment plan, which may or may not charge interest.

•   Build your credit: Perhaps it seems obvious, but building your credit can play a key role in helping you qualify for more favorable loans in the future. You might work on positively impacting the factors that determine your credit score or meet with a qualified credit counselor to learn strategies.

Recommended: Guide to Personal Loans

The Takeaway

High-risk personal loans can be a source of quick cash for people with a low credit score or a thin credit history. They can be risky for the lender, because there is a fair chance the borrower might default. They can also be risky for the person borrowing the money because the interest rate, fees, and other terms may prove to be very high and/or involve potentially losing the collateral that is put up.

If you’re a high-risk borrower, it’s important to fully understand what these loans involve and the consequences if you cannot repay them on time. It may also be wise to review your options before you decide to apply for a high-risk personal loan.

If you’re seeking a standard personal loan, see what SoFi offers.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What is considered a high-risk loan?

High-risk loans are funds offered to individuals who may have bad or no credit. In exchange for accepting a higher-risk applicant, lenders typically charge higher APRs and fees and/or may require the borrower to put up collateral.

What type of bank offers high-risk loans?

Banks typically don’t offer loans to high-risk borrowers, though it may be worth checking with them before moving on to another type of lender. Those who do offer high-risk personal loans could be online lenders or a retail payday loan provider, for example.

What two types of loans should you avoid?

There are several types of loans you may want to avoid if possible, including car title and payday loans. Why? You’ll end up paying high interest rates, which can trap you in a cycle of debt. Also, with a car title loan, you’re using your vehicle as collateral, so you could risk losing it if you can’t repay the loan on time.

About the author

Melissa Brock

Melissa Brock is a higher education and personal finance expert with more than a decade of experience writing online content. She spent 12 years in college admission prior to switching to full-time freelance writing and editing. Read full bio.

Photo credit: iStock/Eleganza

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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Credit reports contain financial records of debts you owe and ones you’ve paid off. Positive information can remain on your credit reports indefinitely. Most negative information falls off your credit report after seven years, though certain types of bankruptcy filings can remain longer.

Here’s a closer look at how financial records impact your credit reports.

Key Points

How Long Do Inquiries Stay on a Credit Report?

When you apply for a loan, credit card, or line of credit, the lender can perform what’s called a hard inquiry. This simply means that they pull copies of your credit reports, which they’ll use to make an approval decision.

Hard inquiries show up on a credit report, and they’re included in your FICO® credit score calculations. Each new inquiry remains on your credit report for two years, according to FICO. However, they’re only considered in credit score calculations for the first 12 months.

Soft inquiries occur when you check your credit reports yourself or a company pulls your credit for the purposes of prequalifying or preapproving you for a loan. These inquiries won’t show up on a credit report, and they don’t have any impact on your credit score.

That distinction is important if you’re learning how to build credit.

Recommended: How Long Does It Take to Build Credit?

How Long Does Negative Information Remain on Your Credit Report?

Negative information on a credit report is any information that’s harmful to your credit score. What affects your credit score negatively? The list includes:

•   Late or missed payments

•   Collection accounts

•   Charge-offs

•   Judgments

•   Foreclosures

•   Bankruptcies

Generally, negative information can stay on your credit report for up to seven years. Bankruptcies, however, can stick around on your credit report for 10 years.

In terms of how negative items impact your credit score, time matters, according to FICO. Newer negative items, such as collections or late payments, have a more immediate impact on your scores than negative items that are several years old. A money tracker app makes it easy to track your credit and your money in real time so you can get ahead financially.

How Long Does Positive Information Remain on Your Credit Report?

Positive information can remain on credit reports indefinitely. Credit bureaus do not have to remove this information, though they may do so at the seven-year mark. Examples of positive information that can stay on a credit report indefinitely include:

•   On-time payments

•   Open accounts that have a $0 balance or a low balance, relative to your credit limit

•   Closed accounts that you’ve paid in full

Positive items on a credit report are a good thing, since they help your credit score. On-time payments and low balances on credit accounts have the biggest impact overall. Making biweekly payments or increasing your credit limits are two helpful ideas for how to lower credit utilization. Using a spending app to manage your budget and expenses can also help keep credit card balances low.

How to Remove Negative Information From Your Credit Report

Credit bureaus cannot remove accurate negative information from a credit report. For example, if you miss several payments on a loan but get caught up later, those late payments will stay on your credit reports until you hit the seven-year mark.

However, you can have inaccurate information removed through the dispute process. Examples of inaccurate items you could dispute on a credit report include:

•   On-time payments that were not properly attributed to your account

•   Credit accounts that don’t belong to you

•   Paid-in-full accounts that still show a balance on your credit reports

•   Account activity relating to fraudulent activity or identity theft

You’ll need to dispute the inaccurate information with the credit bureau that reports it. All three credit bureaus — Equifax, Experian, and TransUnion — allow you to initiate credit report disputes online. You’ll need to fill out a dispute form and provide some details about the dispute.

Once the credit bureau receives the dispute, it’s required to investigate your claim and return a decision to you promptly. If the credit bureau finds an error on your reports, it is legally required to remove or update the information.

Your credit score updates monthly for the most part. Enrolling in credit score monitoring can make it easier to track changes, including changes to your score following a dispute.

Recommended: Why Did My Credit Score Drop After a Dispute?

Do You Still Have to Pay a Debt if It Fell Off Your Credit Report?

A debt can fall off your credit report if enough time passes. However, the amount owed doesn’t go away. Creditors and debt collectors could still attempt to get you to pay if the statute of limitations hasn’t passed.

The statute of limitations on debt allows creditors and debt collectors a set window of time in which to sue you for an unpaid balance. Each state determines how long the statute of limitations applies, but, in all states, its expiration doesn’t remove your legal obligation to pay what you owe.

Should you pay old debts? Ethically, yes. But if a debt falls off your credit report and the statute of limitations has expired, it would be very difficult for a creditor to force you to pay via a lawsuit.

The Takeaway

Reviewing your credit reports regularly is a good way to see what’s helping or hurting your score at any given time. If you have negative items on your credit report, you might see your score drop, but you can rebuild your credit score over time.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What stays on a credit report forever?

Positive information can stay on a credit report indefinitely, as credit bureaus do not have to remove any items that help your credit score. However, credit bureaus can decide to remove positive information after seven years.

Can credit information stay on my credit report for over seven years?

Credit information can stay on your credit report for over seven years if it’s positive. Generally, negative information cannot stay on your report for more than seven years, unless you file for Chapter 7 or Chapter 11 bankruptcy. In that case, the bankruptcy filing could stay on your report for up to 10 years.

Do old accounts fall off a credit report?

Old accounts can fall off your credit report after seven years if they have negative information. Positive information from old or new accounts can stay on your credit reports indefinitely.

Can I remove negative items from my credit report early?

Credit bureaus usually cannot remove accurate negative information before the reporting period ends, but you can dispute errors with them. If you successfully dispute the information, the credit bureau will correct or delete the item.

How long do late payments stay on a credit report?

Late payments generally remain on your credit report for seven years from the date of the first missed payment that led to the delinquency. Their impact on your credit score typically decreases over time, especially if you build a positive payment history afterward.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

Photo credit: iStock/PeopleImages

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you’re considering a new credit card, frequent travelers may benefit from choosing one that includes Priority Pass^™ membership. Depending on the airport you’re traveling through, this perk could unlock access to lounges and travel experiences that make waiting for a flight far more comfortable. Instead of sitting at the gate, you may be able to relax, work, game, eat, or even sleep in a dedicated space.

Because credit cards offer different levels of Priority Pass^™ access, it’s important to understand exactly what the benefit includes and whether it fits your travel habits. Choosing the right credit card involves weighing annual fees, perks, and travel frequently — so it pays to know what you’re getting.

What Is Priority Pass^™?

Priority Pass^™ is a global airport lounge membership that offers access to over 1,800 lounges and travel experiences worldwide. Amenities vary by location but often include complimentary food and drinks, wifi, quiet seating or sleeping areas, and even spa services.

Travelers can purchase a Priority Pass^™ membership directly, but many premium travel credit cards include membership as a built-in perk. When bundled with a credit card, the value can be significant — especially for people who travel frequently.

Benefits of Priority Pass^™

Priority Pass^™ membership is popular because it provides lounge access regardless of which airline you fly, the class of your ticket, or your frequent-flyer status. Here’s a closer look at what you can expect.

Airport Lounges

Priority Pass^™ grants access to a large international network of airport lounges and, in some airports, restaurants or rest spaces. These lounges typically provide complimentary snacks and drinks, comfortable seating, free wifi, and sometimes showers. For travelers facing long layovers or delays, a lounge can offer a calm and productive alternative to a crowded terminal.

Some lounges even allow advance reservations so you can guarantee entry before you arrive.

Recommended: Guide to Choosing a Rewards Credit Card

Private Suites

Select airports offer Minute Suites or similar private rooms where travelers can nap, work, or relax between flights. These suites typically include a daybed sofa, white noise machine, and smart TV. Priority Pass^™ members may recessive a complimentary hour and discounted rates on additional time.

Game Lounges

Certain airports now feature gaming lounges. Members can usually access a gaming station equipped with an Xbox Series X, PlayStation 5, or a high-end gaming PC, along with noise-canceling headphones and a specialized gaming chair. Many locations include one snack and one non-alcoholic drink (or one alcoholic drink for those 21+ without a snack).

Spa Treatments

At participating airports, Priority Pass^™ partners with Be Relax spas to offer eligible members complimentary, pre-flight wellness services. Options may include oxygen aromatherapy, back or foot massages, manicures, and mini facials — which can be a welcome perk before a long flight.

Free Guests

Many Priority Pass^™ memberships through credit cards allow you to bring guests into lounges. The number of free guests depends on the card. Many premium cards include free access for immediate family or up to two guests, while others charge fees for guests.

Examples of Credit Cards that Offer Priority Pass^™ Membership

Credit card perks change frequently, but cards that commonly include Priority Pass^™ membership include:

•   Capital One Venture X Rewards Credit Card

•   Chase Sapphire Reserve Reserve®

•   The Platinum Card® from American Express

•   Bank of America® Premium Rewards® Elite credit card

•   U.S. Bank Altitude® Connect Visa Signature® Card

•   Marriott Bonvoy Brilliant® American Express® Card

•   Citi Strata Elite℠ Card

Is It Better to Just Pay for Priority Pass^™

Priority Pass^™ can be purchased directly, but the math doesn’t always favor buying it outright. Here’s a look at the costs:

•   A Standard membership is $99, entitling you to a $35 per visit fee and a $35 guest fee.

•   A Standard Plus membership is $329 per year with 10 free visits, then $35 per visit; guests cost $35 each.

•   A Prestige membership is $469 per year with unlimited visits; guests cost $35 each.

If a credit card offers complementary membership at a similar annual fee, the card may provide value because it often includes additional travel benefits, such as annual statement credits, free checked bags, insurance protections, and no foreign transaction fees.

Pros and Cons of a Credit Card With Priority Pass^™

Credit cards with Priority Pass^™ have both benefits and drawbacks. Here are some to consider:

Pros

•   Enhanced airport comfort: Lounge access can make travel significantly more enjoyable. Complimentary food, quiet seating, and reliable wifi can transform long layovers or delays into productive or relaxing time.

•   Potential long-term savings: Food and drinks at airports can be expensive. Regular lounge visits can offset a credit card’s annual fee over time.

•   Extra travel perks: Cards offering Priority Pass^™ often include travel credits, trip insurance, TSA PreCheck or Global Entry credits, and strong travel rewards programs.

Cons

•   High annual fees: Previum travel cards often have annual charge fees of $395 to $895. If you don’t travel frequently, the value may not outweigh the cost.

•   Lounge access limitations: Some lounges restrict entry during peak times, and not all airports have participating locations.

•   Guest fees may apply: Not all cards include free guest access, so bringing family or travel companions may cost extra.

Priority Pass Tips

If you decide to get a credit card with Priority Pass^™, here are some steps that can help you get the most out of your membership:

•   Check the app: Download the Priority Pass^™ app to easily locate participating lounges, restaurants, and other experiences in the airport you’re traveling through. The app also gives you a digital membership card.

•   Prebook when possible: Some locations allow you to reserve a spot at an airport lounge in advance. If it’s during peak travel season or you want to guarantee a place, prebooking can be a good way to skip the line and guarantee your seat.

•   Know the access rules: While some cards with Priority Pass^™ grant unlimited visits, others may limit the number of free visits per year or restrict access to certain partners. Always check your specific card’s benefits guide.

•   Verify your card’s guest policy: If you are traveling with family or friends, confirm how many guests, if any, are included for free with your credit card’s Priority Pass^™ benefit to avoid unexpected charges.

•   Use non-lounge experiences: Many members overlook spas, game rooms, work spaces, and sleep suites that participate in Priority Pass^™. If included in your membership, they can offer excellent value, especially during long layovers.

•   Track your visits: If your membership includes a limited number of visits, you’ll want to keep track so you don’t accidentally incur charges.

The Takeaway

A credit card with Priority Pass^™ can be a valuable perk for frequent travelers, offering comfort, convenience, and potential savings at airports worldwide. If you travel often and can offset the annual fee with lounge visits and other card perks, a premium travel credit card with Priority Pass^™ membership may be worth considering.

While SoFi does not currently offer credit cards with Priority Pass^™, we do offer other credit cards that may suit your needs.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

What is the advantage of having a Priority Pass^™?

The main advantage of having a Priority Pass^™ is gaining access to a global network of over 1,800 airport lounges and travel experiences, regardless of your airline, ticket class, or frequent-flyer status. This allows travelers to enjoy complimentary food and drinks, comfortable seating, free wifi, and a quiet, productive alternative to crowded airport terminals during layovers or delays.

Do you need your credit card with Priority Pass^™?

You can use your credit card to access Priority Pass^™ lounges or you can download the digital membership card via the Priority Pass^™ app. Most participating lounges will scan the physical or digital membership card for entry, along with your boarding pass. The credit card itself is generally only needed if you are using it to pay for additional guest fees or other purchases.

You generally do not need to carry the physical credit card that provides your Priority Pass^™ membership to access lounges. Instead, you can present your physical Priority Pass^™ card (if you have one) or the Digital Membership Card found within the Priority Pass^™ app. You typically must also present a valid same-day boarding pass.

Does Priority Pass^™ give you free lounge access?

Yes, for members with an unlimited-visit membership (like the Prestige tier or those provided by certain premium credit cards), lounge access is free for the member. However, guests may incur a fee of $35 per person, depending on the specific membership or credit card benefit.

For those with a limited number of visits (like the Standard Plus membership), a certain number of visits are included annually, after which a $35 fee applies per visit for the member and each guest. It’s a good idea to check the specific terms of your membership or credit card benefit to understand exactly what is included.

Photo credit: iStock/jacoblund

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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In our digital world, we like things to happen immediately. Unfortunately, it can take days, if not weeks, for a credit card refund to appear on a cardholder’s account.

Keep reading to find out how credit card refunds work, the types of refunds, and tips for getting your refund faster.

What Is a Credit Card Refund?

Before understanding what a credit card refund is, it’s helpful to know how credit card purchases work and who the main players are.

For every credit card transaction, two companies help facilitate the purchase: credit card issuers and credit card networks. The credit card issuer is the company that creates and manages the credit card, essentially lending money to the cardholder for them to make a purchase.

The credit card network is the business that processes the transaction electronically. It does this by transferring the money from the credit card issuer to the merchant. Whenever someone makes a purchase with a credit card, the credit card issuer is the one to pay the merchant. Later, the cardholder pays the credit card issuer back.

With credit card refunds, this entire process works the same way but in reverse. When a merchant refunds a purchase, the money goes to the credit card issuer. Then the credit card issuer returns that amount to the cardholder’s account.

Recommended: What Credit Score Is Needed to Buy a Car?

How Does a Credit Card Refund Work?

As noted above, when a consumer requests a credit card refund through a merchant, the merchant issues the refund directly to the credit card issuer, and the issuer then pays the account holder back. This is why merchants don’t typically refund credit card purchases in cash.

If the cardholder pays off their balance in full before a refund hits their account, they may end up with a negative balance. In this case, a negative is a good thing: It just means you have a credit on your account instead of the usual charges. You don’t need to do anything about a negative balance.

Types of Credit Card Refunds

There is only one type of credit card refund that consumers are involved in. Using a credit card network, the merchant and the credit card issuer work together to complete the refund and issue the money to the consumer.

Potential Delays for Credit Card Refunds to Appear

Exactly how long does it take for a refund to appear on a credit card? This can vary due to various reasons, and it can take time to process a refund. All the consumer can do is wait.

In general, the retailer’s return policy dictates how long a consumer will wait to get their refund. Retailers typically refund purchases within five to 14 business days. The return policy can usually be found on the retailer’s website.

Online returns can be particularly lengthy and usually take longer to process than in-store returns because shipping is involved. It can take over a week just for the returned package to arrive and be processed before the retailer initiates the refund process. The cardholder then has to wait for the refund to appear on their monthly statement.

Here are a few examples of common issues that cause refund delays.

Billing Disputes

Settling a billing dispute can take longer than a standard refund. In this case, the customer must file a dispute with the credit card company to receive a credit. Some examples of issues that may require a dispute are:

•   Being billed for a product you didn’t receive

•   Getting charged twice for the same purchase

•   Failing to receive credit for a payment

Mistakes happen, and billing disputes can take a while to resolve. In some cases, a credit card chargeback may be necessary.

Merchant Delays

All merchants have their own timeline for processing credit card returns. It can take a week or two.

Cases of Identity Theft

If someone needs a refund for a purchase on their account that is a result of identity theft, there are additional steps for reporting the incident and freezing their accounts. It can take quite a while to fully resolve fraudulent billing issues.

How Does a Credit Card Refund Affect Your Credit?

If a consumer doesn’t pay off their credit card balance while waiting for a return to process, they will carry the balance on their credit card. In addition to expensive interest charges, carrying a balance affects their credit utilization ratio, which can harm their credit score.

A credit utilization ratio compares how much available credit someone has to how much of it they’re using. Ideally, it’s best to keep the utilization ratio below 30%. SoFi offers free credit monitoring, a debt payoff planner, and other handy tools to make sure you aren’t taken by surprise.

Recommended: What Is the Difference Between TransUnion and Equifax

Tips to Get a Faster Credit Card Refund

The best chance at getting a quick refund is simply to make the return as soon as possible. If a consumer is in a rush to get their money back, they can request a store credit refund from the merchant, which will be issued immediately.

This means that the consumer must spend that money in the store, leaving the purchase amount on the credit card bill to be paid off. On the bright side, by doing this, the cardholder gets to keep any cash back or rewards points that the purchase earned.

The Takeaway

It can take anywhere from a few days to a few weeks for a refund to appear on a credit card. The exact timeline varies based on the merchant and credit card issuer involved, as well as other factors that can cause delays (such as slow shipping times). Patience is key, but it helps to be aware of the return policies and expected timelines of both the merchant and the credit card issuer.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

How long do refunds take to show up on credit cards?

It can take as little as three days for a refund to show up on a credit card, but it can also take longer depending on the merchant and credit card issuer involved. Returns that require shipping back merchandise can take the longest because the consumer has to wait for the merchandise to arrive and be processed before a refund can be initiated.

Why is my refund not showing up on my credit card?

A refund can take days, if not weeks, to show up on a credit card. Don’t be afraid to check in with the credit card issuer on the status of a refund. Remember that you can also review your online account statement instead of waiting for a new statement to come in the mail at the end of the month.

Why do card refunds take so long?

Credit card refunds can take a while for a few reasons, and all merchants and credit card issuers have different refund timelines. Slow shipping times for online purchases or issues related to identity theft can cause additional delays.

How does a refund appear on a credit card?

When a merchant issues a refund for a purchase, they don’t return the money to you directly. Instead, they ask the credit issuer to credit your account with the refund amount. This amount will appear on your credit card statement as credit.

Do credit card refunds take longer than debit card refunds?

Credit card refunds may take longer than debit card refunds because the transaction goes through the credit card processing service. The merchant must return the funds to the credit issuer, which then credits your account.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

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A joint credit card account allows two individuals to co-own a single line of credit, sharing equal responsibility for repayment, fees, and debt, while both having access to spending power.

Joint credit cards can make sharing household finances easier, but if you’re not on the same page about using the card and paying off debt, it could mean trouble for your credit score and your relationship.

While joint credit cards are getting harder to find these days, a number of smaller banks and credit unions still offer them. Here, learn the full story on joint credit cards and their pros and cons.

What Is a Joint Credit Card Account?

A joint credit card allows two people to fully share in the responsibility of spending with a credit card and paying it off. Each cardholder receives a physical card to use, and each also has full access to credit card statements and payments.

Otherwise, a joint credit card operates just like a traditional credit card — with a credit limit and interest rate on borrowed funds. If you carry over a balance month to month, that balance will accrue interest, and both joint account owners are equally on the hook for paying it back, even if one person is doing most of the spending.

Because a joint credit card is in both owners’ names, it impacts both users’ credit files. Making regular monthly payments in full and maintaining a low credit utilization could help both cardholders’ build credit. On the other hand, late payments and accumulated debt can negatively impact both users’ credit.

Recommended: When Are Credit Card Payments Due?

Ways You Can Share a Credit Card

Joint credit card accounts are just one type of shared credit card. Before deciding to apply for a joint credit card, consider whether adding someone as an authorized user on a credit card might be a better option for your situation.

Authorized User

Instead of applying for a credit card with a co-owner, you can make someone an authorized user on an existing credit card. Unlike a joint credit card, only one person serves as the cardholder and bears the full responsibility of the card.

The authorized user can get their own physical card and use it as they see fit. However, the authorized user cannot make global changes to the card, like requesting an increase in credit limit.

Some credit card issuers report credit activity to the credit bureaus for authorized users. Assuming the main cardholder uses the card responsibly (meaning they make on-time payments and keep credit utilization low), this can have a positive impact on the authorized user’s credit profile.

Adding an authorized user can be a good solution for spouses or domestic partners with shared expenses. If one partner has a strong credit score but the other is struggling, the struggling partner might benefit from becoming an authorized user on the other’s card. Additionally, parents who want their children to learn about using a credit card or find comfort knowing their teenage kids have a spending option in emergencies might also benefit from a card with an authorized user.

A caveat: If the main credit cardholder mismanages their credit card and the card issuer reports to the credit bureaus for authorized users, this could have a negative impact on the authorized user’s credit profile.

Joint Cardholder

Joint cardholders share equal responsibility for how the card is used and paid off. Just as there are pros and cons of joint bank accounts, this arrangement can have benefits and drawbacks. A joint credit card enables spouses and domestic partners to approach their finances on equal footing and consolidate household transactions. On the downside, it can lead to disagreements over spending habits and account management, since both users are equally responsible for the entire balance, even if one person makes all the purchases.

Sharing a joint credit card requires implicit trust between the co-owners. Partners who frequently disagree about money management might not find a joint credit card to be a good option.

Differences Between Authorized Users and Joint Accounts

Here’s a closer look at the differences between authorized users and joint accounts.

Privileges

Joint cardholders share the same level of privileges on a credit card. Authorized users, however, cannot increase the credit limit or add additional authorized users. On top of that, primary cardholders can sometimes impose spending limits on authorized users.

Number of Users

Two co-owners share a joint credit card account. With an authorized credit card, there is a single primary cardholder and one or more authorized users. The max number of permissible authorized users varies by card issuer. Some may let you add up to five.

Responsibility

Both co-owners share equal responsibility for a joint credit card account. Authorized users are not responsible for payments, though how the credit card is managed may affect the authorized user’s credit profile.

Impact on Credit Score

With both joint credit cards and cards with authorized users, the account’s history typically appears on the credit reports of everyone involved, which means the behavior associated with that card can influence everyone’s credit files — for better or worse.

Recommended: How to Avoid Interest On a Credit Card

Pros of a Joint Credit Card Account

What are the benefits of a joint credit card? Here are some potential perks of this setup:

•   Equal control: Spouses and domestic partners who want equal control of their finances can benefit from a joint credit card, which affords them equal access to spending, statements, and payments.

•   Convenience of one shared card: If you share finances with a partner, having one credit card with one payment date might be easier than juggling multiple cards and due dates.

•   Potential to get a better rate: If one cardholder has a limited or poor credit, they may be able to access more favorable credit card terms with a joint account owner, provided the co-owner has a positive credit history.

Cons of a Joint Credit Card Account

There are some drawbacks to joint credit cards, however:

•   Shared repercussions for mismanagement: If one co-owner maxes out the card or misses a payment they said they would make, both cardholders share the burden, which can include late fees, a credit score impact, and/or growing interest. And if your partner decides not to do anything about the growing credit card debt, you could be on your own in paying off their shopping spree.

•   Difficulty of removing someone: Removing someone from a joint credit card can be challenging. Your only option for getting out of a bad situation might be paying off and closing the card.

•   Possibility of damage to the relationship: If you and a partner do not share the same financial philosophy, entangling your debts might do more harm than good. Couples who already have conflict around financial issues may find that sharing a joint credit card is detrimental to their relationship.

Applying for a Joint Credit Card

Does a joint account sound right for your situation? Here’s how to apply for a joint credit card:

1.   Find a credit card issuer with a joint credit card option: Many major banks have eliminated joint credit cards (or never offered them in the first place), which means it may take some searching to find a bank that offers joint credit card applications.

2.   Understand the qualification requirements: Read the fine print to make sure you and your co-owner can qualify. It’s not just your own credit score and credit history you have to consider; credit card issuers will be reviewing both applicants to determine if you can get a joint credit card.

3.   Fill out the application: Have all of the necessary information for both applicants handy. It’s a good idea to apply together either in-person or online. Both applicants will undergo a hard credit inquiry.

4.   Set the ground rules: Make sure both of you are on the same page about how you will use the card and who is responsible for making on-time payments. If you’re not sure where to start, check out these basic credit card rules, which can promote healthy card usage.

The Takeaway

With a joint credit card, both account holders can make purchases, and both are fully responsible for paying the bill. This differs from an authorized user setup, where both users can make purchases with the credit card, but only the account owner is legally liable for paying the bills.

Many banks have moved away from joint credit cards and towards authorized user arrangements, which still allow families to consolidate spending onto a single account.

Whether you’re looking to build credit, apply for a new credit card, or save money with the cards you have, it’s important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Do joint credit cards affect both credit scores?

Yes, a joint credit card affects both credit scores equally. Because both individuals are co-owners and co-liable for the debt, the credit card issuer reports the account activity — including on-time payments, missed payments, and credit utilization — to the major credit bureaus for both cardholders. Responsible use can help both credit profiles, while mismanagement or late payments can harm both.

Can I add someone to my credit card as a joint account holder?

No, you typically cannot add someone as a joint account holder to an existing credit card account. However, you can usually add them as an authorized user. Alternatively, you can apply for a new joint account together. However, joint accounts (where both parties are equally responsible for debt) have become increasingly rare, making authorized user status the most common method to share access.

What requirements are needed to get a joint credit card account?

To qualify for a joint credit card account, both applicants typically need to meet the credit card issuer’s criteria. Since both individuals are equally responsible for the debt, the issuer will review the credit scores and credit histories of both people.

Qualifying for a joint credit card requires both applicants to undergo a credit review. Since both users are equally liable for any debt, issuers examine both credit scores and financial histories. While specific requirements like minimum scores or income levels vary by card, a history of responsible borrowing is typically required for competitive rates. Note that many major banks no longer offer joint accounts, so verify availability with your lender beforehand.

Photo credit: iStock/gorodenkoff

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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’s website .

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