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Identity theft can happen in many forms: bank or credit card fraud, tax-related fraud, government benefits fraud, or phone or utilities fraud, among others. Identity theft can also occur through email or social media, medical services, or online shopping.

And it can happen to anyone, regardless of how old — or young — they are, where they live, or what their occupation or salary is. There are steps that can be taken to reduce the risk of identity theft. Here’s how to report identity theft if you suspect there has been a breach.

Reporting Identity Fraud to the FTC

One facet of the Federal Trade Commission’s (FTC) mission is to protect consumers. The agency is tasked with stopping deceptive or fraudulent practices in the marketplace and developing rules to make the marketplace a safe place in which to do business. There is also an education component to what the FTC does, so that consumers and businesses have the information they need when they think they may have been wronged.

Reporting fraud to the FTC can be done online or by telephone. The official government website for reporting fraud is IdentityTheft.gov . A telephone complaint can be made by calling 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. On the website, the first step to reporting identity theft is choosing the situation that led to the suspected identity theft. From there, the consumer goes through a range of prompts related to the specific situation.

For example, one situation that can be chosen is “Someone has my information or tried to use it, and I’m worried about identity theft.” Then there are questions that follow, narrowing down the specific type of suspected identity theft and creating an FTC Identity Theft Report and a recovery plan, which is a step-by-step list of what to do based on the information that was entered.

Contacting Your Creditors

Quick action when suspected fraud occurs is key to limiting liability for unauthorized charges on a credit account. Calling the credit card issuer as soon as the fraudulent transactions are noticed is a good first step to take. There may be a phone number printed on the back of the card for this purpose. Reviewing several past card statements carefully, identifying all that are suspected fraud, and then writing a follow-up letter to the credit card issuer with these details can also be helpful.

There are federal protections provided to consumers in the case of credit card fraud. A consumer’s liability is limited to the lesser of $50 or the amount of the theft if the actual credit card was used fraudulently. If only the credit card number was used fraudulently, there is no consumer liability.

For debit card or ATM card fraud, the quicker the consumer reports the card loss, the less they are potentially liable for. A consumer is not liable for any amount if they report a missing debit or ATM card before any unauthorized charges are made. The amounts increase the longer the missing card goes unreported.

•   Maximum loss is $50 if the card is reported within two business days of the loss or theft.

•   Maximum loss is $500 if the loss or theft is reported more than two business days, but less than 60 calendar days after the account statement is sent to the account holder.

•   If the loss is reported more than 60 calendar days after the statement is sent, the account holder can be responsible for all the money taken from their account. The maximum loss can be more than the account balance, if money from linked accounts was also stolen.

If the debit or ATM card number, but not the physical card, was used to make unauthorized charges, the account holder is not liable for those charges if the fraud is reported within 60 days of the account statement being sent.

Consider Filing a Police Report

There are some circumstances in which knowing how to file a police report for identity theft might be useful. If the victim of identity theft knows who was responsible for the fraudulent activity, or they can provide evidence for an investigation, a police report might be warranted. Filing a police report might be necessary if a creditor requires the report as part of its investigation.

Disputing Errors Caused by Identity Theft

Sending a follow-up letter to a credit card issuer after a phone call reporting suspected fraudulent activity is a good way to make a formal dispute of any charges that were unauthorized. Include copies of any receipts that will back up the claim of fraudulent use of the account, keeping original receipts and a copy of the dispute letter.

This letter should be sent to the address provided for billing inquiries, which is usually different from the address payments are sent to, and should be sent so that the creditor receives it within 60 days after the first bill with the error reached the account holder. It’s a good idea to send such a letter by certified mail, asking for a return receipt providing proof of what the creditor received. The FTC provides a sample dispute letter on its website.

Notifying Credit Bureaus

Each of the three credit bureaus, Experian, TransUnion, and Equifax, can place a fraud alert on a consumer’s credit report if they are notified of the suspected fraud or identity theft. Contacting just one of the credit bureaus is fine — that bureau will contact the other two automatically.

Requesting to freeze or lock a credit report can be done by contacting each credit bureau and putting in a request. Putting a freeze on a credit report blocks all access to the report, making it more difficult for a bad actor to use information fraudulently. Credit freezes are regulated by state laws, and credit bureaus are required to offer credit freezes at no charge. A credit lock also acts to protect a consumer’s financial information from potential identity thieves, but is a program offered by an individual company, which may charge a monthly fee for the service. Credit locks are not regulated by state laws.

If errors show up on a credit report, the consumer can contact that credit bureau to file a dispute to their credit report. All three major credit bureaus provide information on their websites for filing a dispute. It can take up to 30 days for the results of any investigation to be available to the account holder.

Federal law allows consumers to request a credit report at no charge from each of the three credit bureaus annually. A helpful way to check a credit report more than just once a year is to request a free report every four months, alternating credit bureaus each time.

The Takeaway

Keeping credit accounts secure is a recommended practice. And using two-factor or multi-factor authentication can keep an account more secure by requiring two pieces of information that only the account holder should know. If you receive a notification from a creditor of a failed login attempt, it’s a good idea to change your password.

If you’re looking for a personal loan, but are hesitant to share your information, know that SoFi takes the privacy and security of its members’ financial and personal information very seriously. SoFi personal loans are handled with the same security measures as all other SoFi products. And checking your rate won’t affect your credit.^*

Find your rate for a SoFi Personal Loan.

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^*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. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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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.
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.
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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What are the main differences between personal loans and credit cards?

For a lot of people, using credit cards is the go-to method to build their credit history or when paying for just about anything. From groceries and gas to plane tickets and large electronics, using a credit card can be a hassle-free way to manage expenses. Plus, many cards offer rewards and perks. As long as the borrower is able to pay the balance in full each month to avoid paying high interest rates, credit cards can be convenient.

Personal loans can be another option for acquiring cash up front for big purchases that a person may not have the cash on hand to pay for. Personal loans are closed-end installment loans, versus the revolving, open-end nature of credit card debt, and repaying them is a different process.

Here’s a closer look at personal loans and credit cards.

Personal Loans, Defined

Personal loans are, generally, unsecured loans that can be used for nearly any purpose. The borrower receives the loan amount in a lump sum and is then required to make fixed monthly payments, typically for a term of two to five years — sometimes longer.

Whatever length the loan term is, the borrower makes regular monthly payments on the loan with the intent of paying it off by the end of the loan term. However, the balance may be paid off early, hopefully without paying a penalty. It’s a good idea to check with the lender to make sure the loan doesn’t have a prepayment penalty.

Unsecured personal loans often offer fixed interest rates over the life of the loan. Variable rate personal loans are also an option, their interest rates changing based on market fluctuations. People paying off a personal loan over a longer term may not want to risk a variable rate loan because it’s hard to predict whether or not the interest rate will rise.

Reputable lenders can be found online or in person. The applicant will likely have to provide personal and employment information, possibly including proof of income such as a Form W-2 from an employer, among other requirements that will vary from lender to lender.

After the application is complete, the lender reviews the application and decides whether or not to grant the loan.

If the applicant is approved and agrees to the terms of the loan, they may sign a promissory note, and receive the lump sum loan amount. After that point, they’ll be required to make payments on the loan.

Recommended: Secured vs. Unsecured Loans: How Do They Differ?

Key Differences: Credit Card vs Personal Loan

While both credit cards and personal loans offer a borrower access to funds that they promise to pay back later, there are some key differences that may have major financial ramifications for borrowers down the line.

A borrower requests a set amount of money with an unsecured personal loan, and chooses a set term to pay it back, whereas a credit card gives borrowers access to a line of credit that can be borrowed from as needed (up to the credit limit). This may seem like a positive, flexible benefit, but it can lead to a debt spiral if not managed responsibly.

Credit card debt is revolving debt, meaning the borrower can continuously borrow up to their credit limit without paying the full balance back before borrowing again. When carrying a balance on a credit card each month, a borrower could become stuck paying a high interest rate on the revolving debt.

Personal loans, on the other hand, offer the borrower a lump sum amount and they agree to make regular installment payments of the same amount each month over a set period of time. That means the borrower knows exactly how much they owe — both on a monthly basis and in total—when the loan is signed. The loan principal can’t be increased by swiping a card; a second loan would need to be taken out to have additional funds. For this reason, a personal loan debt may be easier to manage than credit card debt for some people.

One of the ways in which personal loans and credit cards are similar is that both financing options are actually unsecured, and as such tend to come with higher interest rates than secured loans, like a HELOC.

Like mortgages, home equity lines of credit (HELOC), or auto loans, secured personal loans tend to have a lower interest rate because they’re tied to an asset that the lender can repossess should the borrower be unable to repay the loan. Still, depending on their financial profile, a prospective borrower may be able to find an unsecured personal loan with a lower interest rate than a credit card.

Line of Credit vs Loan

There are also differences between a line of credit and a loan.

A line of credit is an ongoing agreement with a bank allowing a borrower to access funds up to a certain dollar limit at any time during a draw period. A personal line of credit is similar to a credit card, though it’s usually not attached to a little piece of plastic. The borrower can use the funds, repay the amount used, and then borrow them again. Typically, the borrower writes checks directly from the line of credit or has the funds transferred to another account, rather than swiping a card.

This differs from a loan in both amount borrowed and the loan term. While funds accessible via a line of credit can essentially be borrowed up to the credit limit, paid down, and borrowed again back up to the credit limit, the funds available through a loan are only available one time, as a lump sum. The term of a personal loan is also different from that of a line of credit in that it has a definite end date. The term of a personal line of credit is open-ended, but can be closed by the lender or at the request of the borrower.

Consolidating Debt? Personal Loan vs Credit Card

Although it may seem counterintuitive to take on additional debt when already contending with existing debt, sometimes it can actually be a smart money move. Debt consolidation is a common reason borrowers take out personal loans, and it’s also possible to consolidate debt with a credit card balance transfer.

Again, these two approaches have some basic commonalities, but work pretty differently when looked at closely — and those differences can have a major impact on a person’s financial wellness over time.

Using a Credit Card to Consolidate Debt

Credit card refinancing generally works by opening a new credit card with a high enough limit to cover whatever balance you already have. Some credit cards offer a 0% interest rate on a temporary, promotional basis — perhaps for the first year or two of holding the card.

This can be a great opportunity to save money on interest by paying off the debt before the promotional time period ends. However, if the balance is not paid in full before the promotional period ends, the borrower will be charged the card’s set interest rate for regular purchases, which is currently averaging more than 16% APR, on any remaining balance.

Additionally, these types of balance transfers often come with an associated balance transfer fee that could be up to 5% of the total being transferred, which could lower the total potential savings.

Using a Personal Loan to Consolidate Debt

Taking out a debt consolidation loan works a little differently. A loan is taken out for an amount that will cover the borrower’s existing debts, likely simplifying their repayment strategy (repaying just one debt instead of multiple credit card balances) while also potentially costing less in interest, depending on the borrower’s existing credit card rates and the rate of the new loan.

When consolidating debt with a fixed-rate personal loan, the borrower will know exactly how much they’ll owe each month, which can make it much easier to keep up with their monthly payments. Instead of keeping track of multiple due dates, multiple monthly amounts due, and multiple total balances due, there is just one monthly due date, one fixed monthly payment, and one total balance to keep track of.

Both of these approaches have benefits and drawbacks, though credit cards can be riskier than personal loans over the long term — even when they have a 0% promotional interest rate.

Recommended: See how much extra you may be paying with our Credit Card Interest Rate Calculator

Is a Credit Card Ever a Good Option?

If someone only needs access to a few hundred or a few thousand dollars, and if they plan to be able to pay down the balance of the debt completely over the course of just a few months, a credit card might be a good choice.

Personal loans may charge an origination fee which is a one-time fee due at closing (or when you receive the lump sum). The origination fee can be anywhere from 1% to 8% of the total amount of the loan, which can really add up with large amounts borrowed.

In the end, it comes down to a borrower’s personal preferences and diligence. So long as a credit card is used responsibly — paying the balance off in full each and every month — credit cards are a common way to build credit history and have a resource for funds should an urgent need arise (plus, some like that they can get perks like cash-back rewards, too).

When is a Personal Loan a Good Option?

Since personal loans can take a little bit more paperwork and sometimes include an origination fee, they may be a more suitable option for when a borrower needs access to a larger amount of money — several thousand dollars or more. If expenses will put the borrower near the top of their credit card limit, for instance, a personal loan might be worth considering.

Personal loans also may be a more cost-effective option if it will take over a year to repay the amount needed to borrow. Lenders typically offer personal loans at a minimum of $1,000 and up to a maximum of $100,000, depending on a borrower’s credit and financial profile.

Another benefit of a personal loan is fixed terms. When there are concerns about over-spending on a credit card, a personal loan may offer the structure of fixed limits, both on the amount borrowed and repayment time. This can be particularly useful when borrowing money for a project in which there’s a risk of easy over-spending such as furnishing a new house or remodeling.

The Takeaway

Different options work for different people and different financial situations. When deciding whether to use a credit card or personal loan, learning the differences between the two is a good place to start.

SoFi Personal Loans are unsecured, have no fees required, and offer fixed rates with terms to fit a variety of budgets.

Thinking about taking out a personal loan? SoFi personal loans can help you get out of debt sooner — and potentially save you money along the way compared to high-interest credit card debt.

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For many loans, including mortgages and credit cards, you at least need a credit history to prove to the lender that you are a reliable borrower. So, if you just graduated high school and are looking into borrowing student loans, you may be wondering if it’s possible to borrow one without credit history.

It is possible to borrow a student loan with no credit history. Federal student loans (outside of PLUS Loans) do not require a credit check. Private lenders do review an applicant’s credit history during the application process, among other personal financial factors. Potential borrowers who do not have a strong credit history may be able to add a cosigner to strengthen their application, but there are no guarantees.

Federal vs. Private Student Loans

First things first: there are various types of student loans available to student borrowers. They fall into two general categories, federal (offered by the government) and private (offered by banks and other lenders), but there are more options under each umbrella that range from differing eligibility requirements to fixed vs. variable interest rates.

Types of Federal Student Loans

Federal student loans are funded by the U.S. Department of Education and are based on education costs and your current financial situation, not your credit history.

The most desirable type of federal loan (because interest doesn’t accrue while you’re in school, like some federal student loans), the Direct Subsidized Loan, has relatively low fixed interest rates that are set each year by the government.

Subsidization means that the government will pay for any interest that accrues while you’re in school at least half-time as well as during your grace period and some deferral periods. Direct Subsidized Loans are awarded based on financial need and are only available to undergraduate students, but for those that qualify, they are a solid loan option.

The other type of no-credit-required federal loan is the Direct Unsubsidized Loan. It also typically has low interest rates, but no subsidy means the interest starts to accrue as soon as the money is loaned and borrowers are required to pay all the interest that accrues at all times. Unsubsidized loans are available to students at all levels of higher education and are therefore one of the most accessible types of student loans.

Recommended: Comparing Subsidized vs. Unsubsidized Student Loans

One advantage with both types of federal student loan is repayment flexibility, including deferment, income-driven repayment plans, or even forgiveness programs like Public Service Loan Forgiveness. If you’re trying to build or improve your credit score—more on that later—repayment options that can help keep you out of default are key.

Private Student Loans

Students also have the option of applying for private student loans, which are available through some banks, credit unions,or private lenders. The terms can be vastly different depending on the type of loan, whether you choose a fixed or variable interest rate, and for better or worse, your financial history—which includes things like your credit score.

If you’re facing less-than-stellar credit, or not much of a credit history and income, you’ll likely need to apply with a cosigner, typically a family member or a close, trusted friend who guarantees to repay the loan in the event that you can’t. It should be someone not just with a solid financial history, but also someone with whom you have mutual trust. (Here are our tips for choosing a co-signer wisely.)

Applying for Student Loans With FAFSA®

The federal student loan application process starts by filling out the FAFSA® (Free Application for Federal Student Aid). Filling out the FAFSA is completely free, and doesn’t commit you to accepting any type of loan. The FAFSA is also the tool used by many schools to determine a student’s full financial aid award, including scholarships, grants, work-study, and federal student loans.

Applying for Private Student Loans

To get a private student loan, potential borrowers will apply directly with the private lender of their choosing. Each loan application may vary slightly by lender as will the terms and interest rates. Private student loans do not have the same borrower protections that federal student loans offer, such as income-driven repayment plans or deferment or forbearance options. Therefore, they are generally considered as a last resort, after all other sources of aid have been exhausted.

Parent PLUS Loans

Students aren’t the only ones who can apply for federal financial aid. Parents of undergrad students that are enrolled at least half-time, can apply to receive aid on their behalf via the Parent PLUS Loan.

It’s another type of unsubsidized federal loan, but more restrictive in that both parents and children need to meet the minimum eligibility requirements . This type of federal student loan requires a credit check.

Like private loans, parents who don’t have optimal credit history may apply with a cosigner to guarantee the loan. And students are still able to seek additional unsubsidized loans for themselves to cover any gaps.

Tips for Building Credit

Entering college can be a smart time to start establishing credit. A borrower’s credit score can mean the difference between getting a good deal on a loan, or not getting a loan at all. Even a few points higher or lower can impact the interest rates a borrower may qualify for.

Thankfully, there are a number of sites that let you see your score for free and offer notifications if there are changes, so it’s easy to keep track of where you are.

Recommended: How to Build Credit Over Time

The number that signifies “good” credit is between between 670-739 , for FICO Scores®. These scores are determined by factors such as the number of credit accounts a person has and how they are managed. One way to start building credit is to open some kind of credit account, and then make regular payments.

Paying bills on time, credit mix, and credit utilization ratio may all play a role in determining a credit score. While everyone’s circumstances are unique, generally try to make payments on time and a rule of thumb to aim for is to keep the credit utilization ratio under 30%.

The Takeaway

Most federal student loans do not require a credit check and are available to borrowers with no credit history. Parent PLUS loans are one exception as they are federal student loans that do require a credit check. Private student loans do require a credit check. Students with a limited credit history may have the option to apply with a cosigner if they are interested in borrowing a private student loan, though as noted earlier, adding a cosigner does not necessarily guarantee approval for a loan.

As mentioned, private student loans do not have the same borrower protections as federal student loans. For this reason, they are generally considered after all other financing options have been reviewed. SoFi offers no-fee private student loans for undergraduate and graduate students, and their parents.

Learn more about private student loan options available at SoFi.

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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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Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
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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Getting most types of loans requires borrowers to prove their creditworthiness. To do this, many lenders review an applicant’s credit history and credit score.

Students who may have little or no credit, or even bad credit may be wondering if they’re able to get a student loan. It is possible to borrow a student loan with bad credit. Federal student loans, with the exception of Direct PLUS loans, do not require a credit check.

Private loans, on the other hand, generally do review a borrower’s credit history to inform their lending decisions.

Read on for some more information on the different types of student loans and information on how credit scores are used in a lender’s decision making process.

Getting a Federal Student Loan

As mentioned, when applying for most federal student loans, the status of your credit is not usually a factor. One exception is if you are in default on an existing federal loan, that may hinder your ability to qualify for more federal funding.

In order to take out federal student loans, you first need to fill out the Free Application for Federal Student Aid (FAFSA®). If you are a dependent student, you will also need your parents to fill out their portion of the FAFSA.

Are you a Dependent Student?

Not sure if you’re a dependent student or not? You very likely are if you are under the age of 24, even if you are financially independent and even if your parents don’t claim you as a dependent on their tax forms any more.

If you’re under the age of 24, there are a few ways you wouldn’t be considered a dependent student including if you were legally emancipated, are an orphan, are married, are an armed services veteran, or currently serving active duty, are homeless, or if you have legal dependents other than a spouse.

Subsidized and Unsubsidized Student Loans

The FAFSA is used to determine your financial aid award, including both Direct Unsubsidized or Subsidized Loans.

Subsidized Federal Loans take financial need into account and the federal government will pay the interest that accrues on these types of loans while the borrower is attending college. So, the principal amount that is initially borrowers will remain the same until after graduation.

Recommended: Comparing Subsidized vs. Unsubsidized Student Loans

Unsubsidized Federal Loans don’t take credit history or your financial need into account, and you are responsible for paying any interest that accrues—including while you’re in school and during times of deferment or forbearance.

Another type of federal loan is called the PLUS Loan, and it’s available to parents of students if they want to help fund their children’s college education. It’s also available for graduate/professional students. According to the Department of Education, all Direct PLUS Loan applicants go through a credit check, because a qualification of the loan is that the borrower can’t have an “adverse credit history .”

Getting Private Student Loans

If you find that sources of funding like federal student loans, scholarships, grants, or earnings from work-study will not be enough to fund your education, then private student loans may be another option to consider. Note that private student loans do not come with the same borrower protections afforded to federal loans (such as income-driven repayments or deferment options) and are usually only considered after all other options have been reviewed.

Recommended: A Guide to Private Student Loans

Private lenders are more likely to rely on credit scores and credit history when determining their lending decisions. So if, for example, you currently have a lower credit score, or not enough credit history, you may want to consider applying with a cosigner who has solid credit history, which can help strengthen the loan application. And, if you haven’t really established your own credit history yet, a private lender will also likely want a cosigner for at least two reasons:

•  There is scant record to demonstrate how responsibly you would pay back a loan

•  About 15% of your FICO® Score is based on the length of your credit history (and 90% of lenders use FICO Score when making lending decisions)

Development of Credit Scores

Credit scores were first developed by the three major credit bureaus and the Fair Isaac Corporation (FICO) in the late 1980s and have now been widely adopted by the financial industry. Before the development of such scores, lenders needed to slog through credit reports that were sometimes pages long, and then make lending decisions that, at least in part, were based on these reports. Under that system, it was easier for the biases of lenders to play a role in lending decisions.

With credit scores, information is quickly summarized, and lenders can establish objective requirements about what type of credit is needed before a cosigner is required and/or a loan can be approved.

How Credit Scores Are Used

When applying for a loan, as mentioned previously, about 90% of lenders refer to your FICO Scores as a sort of risk “litmus test.”

Now, let’s say you apply for a private student loan. The lenders will review your application, including your credit score, and they can approve it, deny it, or offer you something different from what you requested.

Lenders will likely look at your credit score, as well as factors like how many loans you currently have, your inquiry history, your payment history, and the amount of time in which you’ve responsibly used credit.

Recommended: Can You Get a Student Loan With No Credit History?

Boosting Credit Scores

Thirty percent of your FICO Score is based upon how much money you owe. This means that reducing your debt may help improve creditworthiness. These tips may also help those who are interested in paying off debt on the way to potentially improving their credit scores:

•  Make monthly payments on-time.

•  Prioritize paying off credit card balance monthly.

•  Consider reducing the interest rate on debt by consolidating credit card debt into a personal loan.

•  Snowball down the debt! With this method, if you have debt spread across multiple credit cards, you’d start by paying off the account with the smallest balance while making minimum payments on the rest. Then move to the next smallest bill, paying as much as you can on that one until it’s paid off, and so forth.

•  Limit the amount of spending done with a credit card.

Another tip: Credit utilization accounts for 30% of your FICO Score. For those who are credit card debt-free, looking into raising credit card limits such that less of the credit available is being used could be another strategy that could potentially result in a bump in credit score.

The Takeaway

Credit scores and credit history can play a big role in a lender’s decisions. They are used to determine a borrower’s creditworthiness and can influence if an applicant is approved for a loan and the types of terms and rates they qualify for.

Aside from Direct PLUS Loans, federal student loans do not require a credit check. However, private student loans usually do require a credit check. As mentioned above, because private student loans lack the borrower protections afforded to federal student loans (like income-driven repayment plans), they are generally borrowed only after the student has exhausted all other options. Those who are interested in applying for a private student loan can consider SoFi, where student loans have no fees and a 0.25% rate discount when borrowers enroll in autopay.

Interested in borrowing a SoFi Private Student Loan? In just a few minutes, find out if you pre-qualify and at what rate.

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Your credit card payment is fast approaching, and you’re freaking out. The problem isn’t paying the total balance—it’s that you can’t even afford the minimum required payment. Can you pay a credit card with another credit card? Yes and no.

Most credit card rules won’t allow it—at least not directly. It’s simply too expensive for credit card companies to process these transactions.

There are a couple of indirect ways you can pay a credit card with a credit card: cash advances and balance transfers. Even better, there are longer-term solutions that don’t involve a second credit card.

Avoiding the Issue in the First Place

The best way to avoid a situation in which you are considering using one credit card to pay another is by paying your entire credit card statement balance every month.

Making credit card payments in full and on time will allow you to avoid paying interest.

Paying the statement balance in full each billing cycle also reduces the chance of accumulating debt that is hard to pay off.

At the very least it is important to make minimum payments to avoid negative effects on your credit score.

Recommended: Why is Credit Card Debt So Hard to Pay Off?

Paying a Credit Card With Another Credit Card

Taking a Cash Advance

You can’t pay one credit card with another directly, but you might be able to pay a credit card with a cash advance from another card.

Let’s say you have two credit cards: Card A and Card B. You can’t afford to make your minimum payment on Card A, so you’re looking to Card B for a little help. You have the option to take a cash advance from Card B.

You could use Card B to withdraw cash from your checking or savings account at an ATM. Then you’d deposit that money into your checking account and make an online payment from your bank account or with a debit card.

Pros of a Cash Advance

Taking out a cash advance may be the right option if your situation meets three criteria: You’re trying to pay a small amount on Card A, you already have a second credit card to use for this transaction, and Card B has a lower interest rate than Card A.

Most credit card companies limit how much cash you can withdraw with your credit card per month. If your withdrawal limit from Card B is $5,000, though, and you want to make a payment of $500 on Card A, things shouldn’t get too sticky.

Cons of a Cash Advance

Your credit card company might not allow you to withdraw enough money per month to pay off your other credit card. Your cash advance limit isn’t necessarily the same as your monthly spending limit. Before you take a cash advance, you may want to contact the company that issued your second card to inquire. Or check a statement.

Also, interest usually starts accruing on the amount you withdraw from the moment you take the cash advance. The annual percentage rate (APR) for a cash advance will typically be higher than the purchasing APR on the card. As a result, it’s possible to go even further into debt.

What’s more, you’ll likely pay a fee to take a cash advance. The amount will depend on the credit card company, but you can usually expect to pay the greater of $5 to $10 or 3% to 5% of the amount you withdraw.

Completing a Balance Transfer

If you don’t have another credit card, or your cash advance allowance is too low, you might consider a balance transfer, which would allow you to transfer the balance on Card A to Card B.

Ideally Card B would have a lower interest rate or none at all. You could potentially pay off the total balance more quickly because more of the money you used to pay in interest is going to pay off the principal, or you’re not accruing interest at all.

You may complete a balance transfer only by using a designated balance transfer credit card.

Pros of a Balance Transfer

Certain credit card companies offer balance transfer credit cards with no interest for the first six months or more. When you shop around for a new card, you’ll typically hear the grace period referred to as an “introductory balance transfer APR period” or “promotional period.”

During this period, you can work on paying off your debt without paying any interest.

Cons of a Balance Transfer

While balance transfers may be a godsend for paying off your balance in a set amount of time, what if you can’t nibble away at the total balance quickly?

Once the introductory balance transfer APR period ends, the interest rate will shoot up, and the balance transfer card won’t seem so magical anymore.

If you miss a payment, most companies will suspend the introductory APR period on Card B, and you’ll have to pay what’s known as a default rate, which could end up being even higher than the rate on Card A. Even if you consider yourself responsible enough to make all your payments on time, a financial emergency could throw you off track.

There are also generally fees associated with balance transfers, though they’re often lower than cash advance fees.

It’s worth mentioning that you can’t use balance transfers or cash advances to get credit card points or miles.

What If I Can’t Pay My Minimum?

If for whatever reason a cash advance or balance transfer isn’t available to you, you may still have trouble making your minimum payments. If this is the case, stay calm and assess your situation.

You may want to gather your credit card statements and put your debts in order, either from largest to smallest or from highest interest rate to lowest. This step can help you understand how much debt you’re in and how to prioritize your bills.

You may decide to tackle the largest debts first, or even your smallest to gain momentum. Or you may decide to save money on interest by focusing on credit cards with the highest interest rate first.

You may consider talking to your creditors to see if they can help. A credit hardship program could give you more time to pay off your balance or adjust your terms.

What About a Personal Loan?

Taking out a personal loan is an option for paying off a large credit card bill. A personal loan may come with a lower interest rate than a credit card, and may be more manageable in the long run.

Pros of a Personal Loan

Most credit cards come with variable interest rates, meaning the rate can change over time with shifts in the economy. An unsecured personal loan usually has a fixed rate. (Unsecured means the loan isn’t secured by collateral, like your home or car.)

If you have a good credit score, your rate for a personal loan could potentially be lower than your credit card rate.

If that is the case, you could take out a credit card consolidation loan, then make payments on the loan at the lower interest rate. You’d likely end up paying less in interest over time and might be able to pay back the loan more quickly than you’d be able to pay off the credit card.

Taking out a personal loan also could help your credit utilization ratio, the amount of available revolving credit you’re using. Credit utilization affects your credit score.

Your credit score also is favorably affected when you’re able to consistently pay bills on time.

Cons of a Personal Loan

Taking out a personal loan to pay off a credit card isn’t for everyone. Maybe you’ve realized you have trouble controlling your spending, and that’s why you have credit card debt to begin with. Having a personal loan to fall back on could tempt you to spend even more with your credit card.

Also, a lower interest rate isn’t guaranteed. If you discover that your loan rate could be higher than your card’s rate after inquiring with a lender, taking out a loan may not be the best choice.

No matter how low your personal loan interest rate is, it will still be higher than the rate during an introductory APR period for a balance transfer.

The Takeaway

Can you pay a credit card with another credit card? Indirectly, yes, with a balance transfer or cash advance. While those moves can work in a pinch, each has potential drawbacks.

Taking out a fixed-rate personal loan with a clearly defined payment schedule may be the better long-term option. SoFi offers personal loans with no fees required.

Looking to get on top of your debt? Check your rate on a SoFi Personal Loan.

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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.
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.

SOPL19078

Read more