How to Manage Multiple Credit Cards in 2023

How to Manage Multiple Credit Cards in 2024

Having multiple credit cards brings certain benefits. On average, Americans use two to three credit cards at a time, often to take advantage of various perks and rewards programs. Another reason to own multiple credit cards is they can boost your credit score when managed sensibly.

That said, juggling credit lines can get out of hand, and it’s easy to fall behind with payments and face hefty interest charges. Here’s a guide to managing multiple credit cards: when to use certain cards, how to know if you have too many, and more.

Steps for Managing Multiple Credit Cards

Here’s how to manage your credit cards wisely and the steps to take to avoid unnecessary interest charges and fees.

Keep Track of Terms

Know what you are signing up for when you apply for a credit card. While a card may offer perks like sign-up bonuses, free vacations, and 0% interest rates initially, it may also charge high fees and exorbitant interest rates later on. Every credit card has different terms and conditions that are often buried in the small print.

Before applying for a new credit card, check the interest rate, or APR. Also look for penalty APRs, purchase APRs, and cash advance APRs. A penalty APR is charged if you don’t comply with the card’s terms and conditions. A purchase APR is the interest rate charged for purchases or carrying the balance over to the next month. A cash advance APR applies if you use your credit card to borrow cash.

A card may also offer an introductory 0% APR, for a limited period. However, once that period is over — or if you miss a payment — the interest rate can skyrocket. Many cards also charge an annual fee for card ownership, a maintenance fee, cash advance fees, foreign transaction fees, returned payment fees, and late payment fees.

If a card offers cash back, find out how much you need to spend to accumulate points or cash back. Check the fine print to find out what types of purchases are qualified and if there are any caps on earning cash and points. Also, read the rules on redeeming rewards, such as when they might expire or be forfeited.

For a sign-up bonus, you might be ineligible if you have owned the same card previously or another family member has the same card.


💡 Quick Tip: Check your credit report at least once a year to ensure there are no errors that can damage your credit score.

Pay on Time and in Full

You will likely incur fees if you miss payments due on your credit card. Also, if you make only the minimum payment on your credit card, you will increase your debt and pay unnecessary interest. But if you pay off your balance in full each month, you are in effect getting a free loan.

If you have multiple credit cards to juggle, it will take dedication to monitor the balances and due dates to avoid late payments, interest charges, and fees. However, managing credit cards responsibly can build your credit history.

Set Up Autopay

Once you understand the terms, conditions, and payment due dates of your various credit cards, set up automatic payments to avoid missing a payment. Missing a payment will mean that you are charged interest, and depending on the balance on the card, the interest payments can be steep.

Set Reminders

Managing multiple credit cards may require setting reminders. For example, if you signed up for a card with an initial period of 0%, you should know when that period ends. Also, keep track of when rewards expire, and when you should redeem points or rewards.

Recommended: What Is a FICO Score?

Simplify Your Payment Due Dates

You may want to change the payment due dates for your cards to make budgeting easier. For example, if the payments for multiple cards all fall on the same day or week, it can be difficult keeping enough cash on hand.

Consider scheduling due dates close to a payday or soon after a direct deposit. It might take one or two billing cycles for your request to take effect.

Know When to Use Each Card

There’s little point juggling multiple credit cards if you don’t use the right card for the right purpose. That’s why studying each card’s terms and conditions is crucial to optimizing the benefits of your cards. For example, some travel cards come with travel protections that will reimburse you if a trip has to be canceled, and co-branded airline cards may offer free checked bags or upgrades.

Keep a Record of Your Credit Card Features

Organization is the key to managing multiple credit cards. You can use a notebook, spreadsheet, or a personal finance app — whatever it takes for you to be able to access the information you need easily.

Some key data to have at your fingertips are the interest rate, credit limit, issue date, annual fees, and payment due dates, the balance from month to month, and the key facts about the rewards program (minimum spending limits, expiration dates, qualified items).

Give Each Card a Purpose

Allocating a purpose for each card will tell you what type of card you might want to get next. For example, you might have a card that offers travel rewards, another card for cash back on groceries, but you might want to also get a card that offers rewards for buying gas. Keep a record of which card serves what purpose.

Carry Only the Cards You Use

Don’t carry all your cards with you all the time. You risk losing them, plus it will make your wallet uncomfortable to carry! There’s no need to carry an airline card that you only use to book flights. Make sure you know which cards charge an inactivity fee, and set up reminders to use the card to avoid such penalties.

Recommended: Find Out Your Credit Score for Free

Use an App to Track Your Card Balances

It’s a good idea to use an app to track your card balances. Apps are particularly useful because they alert you when a payment is due or delinquent. Some apps perform free credit monitoring, help you find a credit card for a specific merchant, and track your loyalty programs.

Signs You Have Too Many Cards

How many cards is too many? That depends on how well you manage them. Here are some indicators that you should consider closing some accounts.

You Can’t Pay the Balance Off Each Month

If you can’t pay off all the balances on your cards each month, you are in danger of falling deeper into debt and having to pay interest. You also risk increasing your credit utilization ratio. When your ratio gets too high, credit card companies may turn you down and credit checks for future employment may be affected..

You’re Missing Payments

If you find it hard to keep track of your credit cards, miss payments, or lose rewards, it’s a sign you might have bitten off more than you can chew. Simplify your financial management by choosing three or four of the most advantageous cards for your lifestyle and cancel the rest.

You’re Earning Too Few Rewards

If you rarely redeem rewards, it might not be worth keeping the card. Not only are you paying a fee for a card that gives you little benefit, but you also have the hassle of keeping track of the card’s features and balance. It might be best to nix these credit cards.

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Which Cards Should You Stop Using?

When deciding which credit cards to stop using, list out the benefits of each card. Look at your spending history with that card over the past year and look at what you have gained. If you have spent little and gained little, it’s time to lose the card.

Similarly, if a card charges high annual fees and provides few benefits, don’t keep the card. Also look at the interest rate. If you have a balance on a high-interest card, pay off that debt and close down the card.

When Does It Make Sense to Close a Card?

It makes sense to close a card when you only use it to avoid an inactivity fee, if it provides few benefits, if the fees and interest rate are high, or if you are having trouble paying off the balance each month.


💡 Quick Tip: One way to raise your credit score? Pay your bills on time. Setting up autopay can help you keep your account in good standing.

The Takeaway

Having various cards can be advantageous because you can benefit from rewards and loyalty programs, build your credit history, and take advantage of interest-free credit if you pay off the balance each month. However, each credit card charges various fees, and managing multiple credit cards can be a headache.

When opening a new credit card, make sure the fees, rewards, limitations, and penalties that come with the card make sense for you. Also consider if you can manage the card and pay off the balance each month on time. Lastly, review your portfolio of cards regularly in case it makes sense to close down an account.

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.


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FAQ

How do I manage multiple credit cards?

Managing multiple credit cards comes down to organization. Keep track of all your cards and their various features, including due dates, what you should use them for, the rewards they offer, balances, interest rate, and penalties and fees. There are apps and online tools that help you to manage cards and monitor your credit score.

What is the 15/3 credit card rule?

The 15/3 credit card rule is a strategy to lower your credit utilization ratio. A credit utilization ratio of 30% or below makes you more attractive to lenders. Most people make one credit card payment a month by the due date, but with this strategy, a cardholder makes two payments each month, which reduces your credit utilization ratio significantly. Even if you regularly pay your credit card balance in full each and every month, you may still be carrying a large balance throughout the month, and your credit score may be affected.

How many credit cards is too many?

How many credit cards you should have depends on your lifestyle and how well you manage them. Feeling overwhelmed and making mistakes like not paying off balances on time are indicators that you cannot keep track of your cards. Other indicators that you may have too many credit cards are that you are not seeing much benefit in the way of rewards but are paying high fees, or you have a significant balance on a card with a high interest rate.


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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.

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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How to Transfer Money From One Bank to Another

If you want to transfer money from one bank to another, you have a variety of options, including online transfers, third-party services, wire transfers, and more. Which one is right for you will depend on such variables as how quickly you want to make the transfer, whether you are willing to pay a fee, and how large an amount you are moving. Your personal preference and what you find most convenient matters as well. Here, you’ll learn more about the different ways to transfer funds from one bank to another.

Key Points

•   Bank transfers move money from one bank account to another.

•   These can be done by online transfers, checks, peer-to-peer services, wire transfers, third-party companies, or bank-to-bank money transfer services.

•   There may be limits on how many bank transfers you can do in a specific time period and the dollar amount.

•   The time it takes to complete a bank transfer may vary with the method.

What Is a Bank Transfer?

Simply put, a bank transfer is a way of moving money into a bank account. If you want to pay for a purchase, for a service you are using, or simply repay a friend for brunch over the weekend, a bank transfer can make that happen.

💡 Quick Tip: Tired of paying pointless bank fees? When you open a bank account online you often avoid excess charges.

What Factors Should I Consider Before Transferring Money?

Typically, when making a bank transfer, you will want to consider these factors:

•   Timing: How quickly do you need to move the funds? This can have implications on the method you choose.

•   Cost: Some methods for bank transfers may be free; others may involve a fee.

•   Limits: Depending on the amount of money you are seeking to transfer, some methods may be more suitable than others.

There May be Limits on How Many Transfers You Can Make

You can typically make as many transfers into a savings account as you would like, but there may be some limitations when it comes to taking money out of a savings account.

Online withdrawals from savings accounts have been governed by the Federal Reserve’s Regulation D. Some banks are still enforcing the legacy limit of six withdrawals per month and will charge a withdrawal fee for each transaction over the limit. Or they might convert your savings account to a checking account. This guideline was largely suspended during the pandemic, but that’s not necessarily a universal decision.

It can be a good idea to check your financial institution’s rules before you try to transfer money from a savings account into a different account. Transfers count as one of the kinds of withdrawals that may be limited. See if your financial institution has limits on the quantity you can make in a given time period.

How to Transfer Money Between Banks

Here’s a look at different ways to transfer money to someone else or to another account that you own. You’ll also learn which method is best for each situation.

1. Directly Making an Online Transfer From One Bank Account to Another

If you have accounts at two different banks and want to transfer money from your account at Bank A to your account at Bank B, follow these steps:

•   Log into Bank A’s account, then choose the option to “add an account,” “link account,” or “add external account.” You can often find these options, or something similar, in your bank’s “customer service” or “transfers” menu.

•   Bank A will likely ask for the routing number (a nine-digit number) and account number (eight to 12 digits) for bank B. You can find these numbers on a check, typically along the bottom (the routing number comes first, followed by the account number, then the check number). If you don’t have checks, you can also find the bank’s routing number on their website and your account number on your monthly statement.

•   To prove that the account at Bank B belongs to you, Bank A may ask you to input the username and password you use for Bank B. Another way Bank A may verify the account is to make a small deposit (maybe a few cents) and ask you to confirm the amounts, a process that might take a day or two to complete.

•   Once the account is confirmed, you can choose an amount you want to transfer from Bank A to Bank B and the date on which you want it to occur. You can also choose to make it a one-time transfer or a recurring transfer (such as once a month). You can then select the option to submit your request.

These steps will work whether you are transferring funds to a brick-and-mortar bank or to an online-only financial institution.

Transferred funds typically arrive at their destination in two or three business days. The timing will depend on which banks you use and whether you are moving money internationally or domestically.

While transferring money between linked bank accounts at different institutions is often free, there might be transfer limits in the amount you can move each time or within a certain time period. It can be a good idea to check your financial institution’s rules for bank-to-bank transfer limits.

2. Writing a Check

If you want to transfer money from your bank account to someone else’s bank account, you will likely need to find an alternative bank transfer solution.

You may be asking yourself if checks are useful. Perhaps you don’t have any checks on hand and are wondering if you should order a checkbook. That may be wise; here are some ways you can use checks to move money around:

•   Writing a check is still a good way to make a bank-to-bank funds transfer. When you write a check, you are authorizing your bank to transfer funds to the recipient.

•   You can also make a check out to yourself by entering your own name as the payee. This can be a good option if you are closing out a checking account and want to transfer the remaining funds into a new account.

•   If you take advantage of mobile deposit, you can write a check from one account and deposit it into a different account without ever leaving home. That little rectangle of paper’s job is to transfer money from one bank to another, and it will get it done.

You may want to keep in mind, however, that writing a check is not an instant money transfer. It can take a few business days for a check to clear and be available in the new account.

Also, if there aren’t sufficient funds in the account to cover the amount, your check will bounce, and the payment won’t go through. You may also be charged a fee. To avoid this glitch, you’ll want to make sure you have sufficient money in your account before writing a check.

3. Peer-to-Peer Transfer

Whether you’re reimbursing your roommate for the monthly rent or splitting dinner with a friend, a peer-to-peer (P2P) money transfer service or app can be a good solution.

Services like Venmo and PayPal can offer some advantages:

•   They are easy to use, and once your bank account is linked in the app, you can quickly type in a dollar amount, select the recipient, and hit “Send.”

•   These services are typically free if you fund the payment from your bank account. There may be a fee, however, if you fund a transfer with a debit card or credit card. Many banks offer free or inexpensive P2P transfers through Zelle or a similar vendor.

Worth noting, however, is the fact that some payment apps may limit the amount you can transfer in a day or within a week, and some do not allow international transactions. Before using a P2P service, It can be a good idea to familiarize yourself with the company’s fees, timing, and limitations.

4. Wire Transfer

If you need to send a considerable amount of money to someone quickly and/or the recipient is located overseas, it’s useful to know how to wire money using a wire transfer. Here are some specifics:

•   A wire transfer is one of the fastest and most secure ways to transfer money electronically from one person to another. It can be done through a bank or a nonbank wire transfer company, such as Wise (formerly TransferWise) or Western Union.

•   Wire transfers are convenient because you can make them over the phone and online as well as in person.

•   Wire transfers can be extremely fast. If you are making a wire transfer to another bank in the US, the funds may be available within one business day or even a few hours. Sending money to a bank in another country may take more time to process.

•   There is usually a fee involved in making a wire transfer. For outgoing domestic transactions, the wire transfer fee could be as high as $25 or more; international transfers are often around $45.

Since wire transfers are not reversible, you’ll want to make sure you are sending money to the correct recipient and not being lured into a money scam. To make a wire transfer, you’ll likely need to have the recipient’s bank name, routing number, and account number.

5. Third-party Companies

Another option to send money domestically and overseas is to use a third-party wiring service like MoneyGram or Western Union. Here’s how these work:

•   These companies do not require you to have a bank account to take advantage of services such as money transfers, money orders, and bill pay. You can fund your transaction using cash or perhaps a credit card.

•   Pricing varies widely depending on factors such as where money is sent from, where it is delivered, whether it’s paid in cash or wired to a bank account, and how fast the money is delivered. International transfers tend to be more expensive than domestic transfers.

Recommended: How to Send Money With A Credit Card

6. Online Bank-to-Bank Money Transfer Service

Some banks will allow you to use an online money-transfer service that allows you to send money between bank accounts using an email address or a US-based mobile phone number. A few details to consider:

•   Recipients are notified of the transfer via email, though the funds are actually sent through traditional bank transfer channels. Zelle is a popular choice for banks to partner with to provide this service.

•   You can usually make email money transfers directly from your bank’s app.

•   These transfers are typically free (although some banks may charge a fee) and can be instantaneous, though the speed is determined by the banks involved.

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How to Transfer Money from One Bank to Another at a Glance

Here’s a quick look at your options when you want to know how you can transfer money from one bank account to another. Included are such factors as cost and timing.

Online Transfer

Check

Peer-to-peer Transfer

Wire Transfer

Third-party Transfer

Bank-to-Bank Money Transfer Service

Cost Typically fee-free. Check with your bank Banks may charge for boxes of checks Free domestically Up to $30 for domestic transfers, and up to $50 for international transfers Fees vary. May range from $5 to $50 Usually free (though some banks may add a fee)
Timing Up to three days Usually take 1-2 days to clear May take a few minutes or a few days depending on the service Typically 24 hours for domestic transfers, up to 5 days for international Speed varies by fee, from immediate to multi-day transfers Varies by bank, but often immediate

The Takeaway

There are multiple ways to transfer money from one bank to another. The best option will depend on where you are sending the money, whether or not you own both accounts, how quickly you want the funds moved, and how much (if any) in fees you are willing to pay.

Options typically include online and bank-to-bank transfer services, wire transfers, third-party services, checks, and P2P apps like Venmo. Isn’t it nice to know that there are so many bank-to-bank transfer options to help you get funds where you want them to go, at the speed and price you want to pay?

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Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

What is the easiest way to transfer money from one bank to another?

Online transfers, bank-to-bank money transfer services, and P2P apps can all make moving money very convenient; no checking writing is required, nor do you need to fill out as many forms as you might have to for wire transfers or when using a third-party service.

What is the safest way to transfer money from one bank to another?

While all methods of moving money have security features, wire transfers are generally thought to be one of the safest ways to send money from one bank to another.

How do I transfer money from one bank to another bank manually?

If you are using a banking or P2P app, you typically will need to type in the details of the account you are sending money to, the amount, the date you want the transfer to occur, and then verify that the specifics are correct.

Is it free to transfer money from one bank to another?

Whether or not it’s free to transfer money from one bank to another depends on the method you select. An online, bank-to-bank money transfer service, or P2P transfer and writing a check (excluding the postage to mail it) can be free; check details with your particular provider.


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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.


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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Negative Balance on Credit Card Statement: What It Is, How It Happens, and What to Do

Negative Balance on Credit Card Statement: What It Is, How It Happens, and What to Do

It’s entirely possible to find, when looking at your credit card statement, that you don’t owe any money this month. In fact, you have a negative balance on your credit card. You may assume there is a glitch in the system, but there are several reasons this can happen.

Read on to learn what a negative balance means on a credit card, how it can occur, and what to do if you see a minus figure on your statement.

What Is a Negative Balance on a Credit Card?

A negative credit card balance is when the credit card issuer owes the cardholder money instead of the cardholder owing money to the credit company. If you have a negative balance on a credit card, your outstanding balance is below zero.

How Does a Negative Balance Happen?

A negative balance on a credit card usually occurs for one of several reasons, which include:

You Overpaid Your Credit Card Bill

The first reason you may have a negative credit card balance is that you may have overpaid. For example, say you entered a specific payment amount that exceeded the amount due. Or, perhaps if you used autopay to cover your credit card minimum payment but made a manual payment simultaneously, you could end up having a negative balance on a credit card.

You Returned Something You Bought With the Credit Card

If you return an item and the amount of the refund exceeds your current credit card balance, it could result in a credit card negative balance. For example, perhaps you bought a $50 frying pan from your local home supply store. If you paid off your credit card and then decided to return the frying pan, your credit issuer will refund the $50. This refund will now make your new balance -$50, meaning you have a credit card with a negative balance.

You Cashed Out Too Many Rewards

Some credit cards let you redeem your rewards in the form of a statement credit. If you redeem your rewards and also pay off your revolving balance in full, for instance, you could end up with a negative credit card balance.

You Had a Charge Removed from Your Statement

Here’s another example of a scenario that could leave you with a negative balance on a credit card: Say you reported a fraudulent charge on your credit card. If you decide to repay the entire amount that’s due without accounting for the fraudulent charge, you could have a negative balance once the charge is reimbursed to your account.

Also, if you had a fee canceled or removed from your account, this could happen as well. This could also happen in the case of a credit card chargeback.

How to Get Your Money Back From a Negative Balance

If you see a negative credit card balance, it’s not something you necessarily need to worry about. However, if it’s bothering you, there are actions you can take to bring your balance out of the negative.

Here are your options if your credit card balance is negative:

Leave the Balance Alone and Decide Later

If you discover a negative balance on your credit card, you don’t need to take immediate action. Instead, you can just let it be and decide how to move forward at a later time. Because you’re owed money from the credit card issuer, you won’t need to worry about credit card interest accruing.

Use Your Credit Card for Additional Purchases

One of the easiest ways to resolve a negative balance is to make other purchases. Given how credit cards work, spending money on your card can help your balance get back to zero.

For example, if you have a -$100 balance and then make a $100 purchase, your credit card balance will even back out. Then, you don’t have to do anything until you receive another bill, nor will you have to worry about the APR on your credit card yet.

Get Your Money Back as a Credit Balance Refund

If your negative balance is an amount that’s more than you’re comfortable with or you need the money for other expenses, you can request a refund from the company. To comply with the Truth and Lending Act, credit issuers must refund negative credit card balances that exceed $1 within seven business days of receiving a written request from the cardholder.

You can expect the refund to come in the form of a check, money order, or direct deposit to your bank account. In some cases, you might be able to get a cash refund if the card issuer has physical locations.

Is a Negative Balance a Bad Thing?

A negative credit card balance isn’t a bad thing. However, if you need the funds for other bills, it’s wise to request a refund immediately.

And if you’re concerned, a credit card negative balance could impact your credit score, don’t fret — it won’t. Credit scoring models generally treat negative credit card balances as the equivalent of a $0 balance. In fact, if you have a negative balance, it likely means you’ve been staying on top of paying your balance off each month and are in good standing.

Also, keep in mind that although a negative balance may temporarily allow you to spend beyond your credit card limit due to the addition of the negative funds, it won’t actually increase your limit.

Recommended: How Many Credit Cards Should I Have?

The Takeaway

While a credit card negative balance isn’t a bad thing, it’s always wise to keep tabs on your credit card activity. Not only should you monitor what you owe, but you should identify credits or refunds you’re entitled to and factor those in when paying your balance each month. If your balance does end up in the negative, there are steps you can take to bring it back to zero, but you’re also fine to just leave it alone — unless, of course, you need the funds for other things.

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

Will a negative credit card balance affect my credit?

No, a negative credit card balance will not affect your credit score. This is because credit bureaus consider negative balances as equivalent to a $0 balance.

Can I close my account with a negative balance?

Yes, you can close an account with a negative balance. In most cases, your card issuer will process a refund automatically. If they don’t, you can request one when closing the account.

What do you do with a negative balance on a closed credit card account?

Usually a credit issuer will refund your negative balance before completely closing the account. However, if the credit card is canceled and you lose access to your credit card login, you’ll need to contact your credit issuer to process a refund.


Photo credit: iStock/filadendron

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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How to Get a Credit Card for the First Time

How to Get a Credit Card for the First Time: A Step-By-Step Guide

Getting a credit card for the first time comes with a unique set of challenges. A lack of a credit history can make it harder to qualify, and you’ll have a learning curve when it comes to how to choose and use your first credit card responsibly.

However, the actual process of applying for a credit card for the first time isn’t all that complex if you are armed with a bit of information. Read on to learn how to get your first credit card.

Qualifying for a Credit Card

When someone applies for a credit card, the credit card issuer will take a number of factors into consideration, including their credit score and income, when deciding whether to approve their application. It’s also necessary to make sure you’re old enough to get a credit card — you usually must be at least 18 years old.

Someone’s credit score can indicate how likely they are to pay back their credit card on time. The higher someone’s score is, the more creditworthy they appear. Income is also a major factor that’s considered, especially when figuring out someone’s credit card limit. Applicants under the age of 21 who can’t show independent income generally must get a cosigner.

Additionally, those applying for a certain type of credit card, such as a student credit card, will have to make sure they meet that card’s particular requirements. While a student credit card may be available to those with no or limited credit, the cardholder generally must be enrolled in a qualifying educational program.

Recommended: Charge Cards Advantages and Disadvantages

How to Apply for a Credit Card With No Credit History

It can be difficult to qualify for a credit card before you’ve built a credit history, given what a credit card is. The catch? It takes credit to build credit. Thankfully, there are a few credit card options that consumers can consider if they don’t yet have a credit history at all or only have a limited one.

Starter Credit Card

Starter credit cards are a type of credit card designed for consumers who have no credit history or a very limited credit history. Starter credit cards help cardholders build a credit history when they use the card responsibly. If they make on-time payments each month, they’ll see their credit score rise over time and will start to build a solid credit history.

Generally, starter credit cards don’t come with the best rates and terms, but when used to make purchases someone can afford to pay off each month, they can be a very helpful financial tool. Student credit cards are an example of starter cards that can help someone establish a credit history.

To apply for a starter credit card, you generally must provide the following:

•   Social Security number

•   Sources of income

•   Monthly housing or rent costs

Those under the age of 21 who do not have your own source of income will need to get an adult cosigner who’s over the age of 21. For those who are applying for a student credit card as their choice of starter credit card, the credit card issuer may request information such as the name of your school or program, your major, and your expected year of graduation.

Secured Credit Card

Another credit card option for those who are new to credit is a secured credit card. With a secured credit card, the cardholder must deposit money to use the card.

The amount they deposit will act as their credit limit, and they’ll then borrow against that deposit. For example, if they deposit $500, they can make up to $500 worth of purchases anywhere that accepts credit card payments. Once they pay off their card balance, they can spend up to $500 again.

When at least the credit card minimum payments are made on time, the cardholder will build a credit history. Functionally, a secured credit card works more similarly to a debit card but helps to build credit.

Applying for a secured credit card requires much of the same information as applying for an unsecured credit card. This includes your name, address, Social Security number, and income information. Additionally, it’s necessary to have the cash on hand to make the security deposit. Depending on the card, there may or may not be a credit check required.

Often, after using a secured credit card responsibly, the cardholder can graduate to a standard unsecured credit card.

How to Choose Your First Credit Card

When shopping around for a credit card, it’s a good idea to compare the fees, interest rates, and cardholder benefits of multiple credit cards. Here’s why these factors matter when choosing a first credit card:

•   Credit card fees. From annual fees to foreign transaction fees to late fees, all credit cards have some fees that cardholders need to be aware of. Certain transactions, such as buying a money order with a credit card, can also involve fees as well. Being aware of the fees a card may charge and finding a credit card with low fees can help save money.

•   Interest rates. If a cardholder carries a balance, they’ll need to make interest payments. Credit cards interest rates are displayed as annual percentage rates (APRs) and the higher someone’s APR is, the more they’ll pay in interest. What’s considered a good APR for a credit card will vary depending on someone’s credit profile as well as the type of card they’re applying for, but it’s generally below the average rate, which is around 24%.

Also pay attention to the different rates that may be charged. For example, if you take a cash advance on a credit card, the rate is typically higher than the standard rate.

•   Rewards. From cash back to travel points to discounts at major retailers, credit cards can come with some pretty cool rewards. It’s worth comparing the rewards offerings of multiple credit cards to see where it’s possible to benefit more from good credit habits. Keep in mind, however, that the top rewards cards are usually reserved for those with solid credit histories.

How to Apply for a Credit Card

The process of figuring out how to apply for a credit card online for the first time is usually pretty straightforward. When it’s time to apply for a credit card, the applicant generally needs to supply the following information as a part of the credit card issuer’s application process:

•   Identification (such as a Social Security number)

•   Source of income (such as pay stubs or W-2s)

•   Credit score (generally a score starting in the mid 600s is required, though you may find a number of options if your score is between 580 and 669, which is considered a fair score)

Further information may also be requested, as the process can vary somewhat from issuer to issuer.

Once you’ve submitted your credit card application, you’ll wait to get an approval or a denial. It may take just minutes to get a response, or it may be a few days or even a few weeks. The creditor must send a decision within 30 days at the most.

If you’re approved, you’ll then receive your new card in the mail. You won’t have to worry about replacing it until your credit card expiration date, at which point the issuer will send you a new card.

How to Use Your First Credit Card

Here are some pointers for using your credit card:

•   The key to using your first credit card is to limit charges to those that you can afford to pay off — and then making sure you do so in a timely manner. Doing so will ensure you never miss a payment, which will boost your credit score, and avoid late payment fees and interest payments.

•   Paying off your balance at the end of each month (or more often) will help keep credit utilization rate low. Credit utilization measures how much credit someone is using in comparison to how much they have available. The lower someone’s credit utilization, the more their credit score will benefit.

For instance, a potentially good way a student could use their first credit card is to limit their purchases to their textbooks for a semester. This will rein in their spending as they learn to budget and stay on top of their credit card statements.

•   Educate yourself on credit card safety best practices. For instance, be on the lookout for credit card skimmers, which are devices attached to credit card readers designed to steal your information.

Also be wary of sharing your credit card information, such as the CVV number on a credit card, with anyone.

What Should You Do if Your Application Is Denied?

If someone’s credit card application is denied, the best thing they can do to move forward is to work on building their credit score. This will improve their creditworthiness, and thus their odds of getting approved in the future. Here’s some advice:

•   Making on-time payments and keeping a low balance on an existing credit card are both ways to improve a credit score.

But if someone can’t qualify for any credit cards, how can they improve their credit score? In this scenario, one option is to become an authorized user on a family member’s credit card, such as a parent’s.

•   When someone is an authorized user, their score will improve as the main account holder makes on-time payments. However, both the account holder and authorized user’s credit scores are at risk if either party makes purchases they can’t afford, so it’s important that everyone has a plan for paying off the bill at the end of the month.

Recommended: When Are Credit Card Payments Due

Things You Need to Know as a First-Time Credit Card User

When someone is a first-time credit card user, it’s important that they understand the basics of how a credit card works. Specifically, they’ll need to know what interest rates and fees they may end up paying by using their credit card (especially if they plan to carry a balance).

Using a credit card can feel like shopping with free money, but at the end of the month, the cardholder needs to be prepared to pay their balance off in full. Otherwise, they risk paying more for the purchases they already made in the form of interest and fees. Once debt starts racking up, it can become hard to get rid of.

What If You Are Not Ready to Apply for a Credit Card?

Applying for a credit card for the first time is a big responsibility. If someone isn’t ready to take on the responsibility, they do have the option of using a debit card to gain some of the convenience that comes with a credit card.

A debit card is attached to a bank account and allows the account holder to make payments without keeping cash on hand. Debit cards don’t involve borrowing money, so interest rates aren’t a concern.

However, debit card holders will still need to look out for potential fees. Additionally, debit cards don’t have quite the level of protections that credit cards offer, such as the option to request a credit card chargeback.

The Takeaway

Applying for a credit card online is a relatively straightforward process, requiring some basic information about you and proper ID. The challenging part can be getting approved for the first time since you may have a thin or non-existent credit history. If you are approved, try to use your new card wisely by only making purchases you can afford and by paying off your balance in full each month. This can help you avoid high-interest payments and late fees and also may make it easier for you to get approved for other cards in the future.

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

What is a good credit limit for a starter credit card?

The credit limit for a starter credit card is usually low, perhaps $1,000. With a secured credit card, the limit is the amount of the security deposit that the cardholder makes.

What are the requirements to apply for a credit card?

To apply for a credit card, it’s usually required that the applicant provide proof of income and identifying information such as a Social Security number. They will also need to have an acceptable credit score to qualify.


Photo credit: iStock/Demkat

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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What Is a Credit Card Issuer? Everything You Need to Know

What Is a Credit Card Issuer? Everything You Need to Know

Credit cards are handy financial tools, thanks to the credit card issuers who offer, provide, and manage them. A credit card issuer is a type of financial institution that supplies credit cards to consumers.

Read on to learn more about how these businesses operate.

What Is a Credit Card Issuer?

Credit card issuers are financial institutions responsible for making credit cards, managing the application and approval process for credit cards, and keeping credit card accounts running smoothly. If you needed to check your credit card balance, pay your bill, or request a replacement credit card, you’d turn to your credit card issuer.

Recommended: Guide to Credit Card Purchase Protection

How Credit Card Issuers Work

The financial institutions that offer credit cards can be lending institutions, banks, credit unions, or fintech companies. The cardholder borrows money from the credit card issuer each time they make a purchase, and when they pay their credit card bill, they’re paying the credit card issuer back for some or all of the credit they have used. This makes credit card issuers integral to what a credit card is.

A credit card issuer is the one to determine an applicant’s credit card interest rate and limit, the type of cardholder benefits offered, and the fee structure for the credit card. Generally, credit card issuers aren’t the ones to process merchant transactions, but they do decide whether to approve or decline a charge.

When questions about their credit card arise, account holders can call the number on the back of their credit card to connect with their credit card issuer’s customer support line.

Why Are Credit Card Issuers Important?

Understanding why credit card issuers are so important can help consumers to better manage their relationship with their credit card issuer and choose the right credit card for their needs once they’re old enough to get a credit card.

The issuer is responsible for determining a credit card’s terms and features. All credit card issuers have different policies, customer support approaches, and types of rewards offerings. Before choosing a credit card, it’s helpful to carefully research not just how a credit card works but how the credit card issuer runs its operations, in terms of fees and rates you will be subject to.

Recommended: How Do Credit Cards Work?

Common Credit Card Issuer Fees

What the fees look like for a specific credit card will vary by credit card issuer, but the following credit card issuer fees are fairly common to come across.

Annual Fees

An annual fee is a charge that’s paid once a year for having the credit card. These fees can often range from $95 to $500 or more per year. Not all cards charge this fee, but those that do tend to come with more valuable perks and rewards.

Before signing up for a credit card with an annual fee, it’s important to crunch the numbers to see if the rewards that come with using the credit card (like cash back or travel points) will outweigh the cost of the fee. Even if you get a good APR for a credit card, a high annual fee could make the offer less sweet.

Late Payment Fees

Late payment fees apply when someone is past due on paying their bill. Usually, these fees go up each time a payment is missed. The late fee won’t ever cost more than the minimum payment due on the payment the cardholder missed, but these fees can still add up. The current average fee is $32, but it may soon be lowered to $8, pending legislation.

Balance Transfer Fees

When someone transfers their credit card balance from one card to another (usually to a balance transfer card with a lower interest rate), they can potentially owe a balance transfer fee. This fee can be either a percentage of the transferred amount or a fixed fee.

While consolidating debt through a balance transfer can make it easier to pay off credit card debt, make sure to take into consideration any fees involved.

Foreign Transaction Fees

Making purchases when traveling abroad can lead to paying a foreign transaction fee, which is usually around 1% to 3% of the purchase.

However, there are plenty of credit cards — especially travel rewards credit cards — that don’t charge foreign transaction fees. If someone travels internationally often, they could save a lot by choosing a credit card with no foreign transaction fees, which is worth considering when applying for a credit card.

Credit Card Issuer vs Credit Card Payment Networks

It’s easy to confuse credit card issuers and credit card payment networks. While a credit card issuer creates and manages credit cards, a credit card payment network is the one that processes transactions between credit card companies and merchants.

Here are the key differences between credit card issuers and credit card payment networks:

Credit Card Issuer Credit Card Payment Network

•   Creates and manages credit cards

•   Accepts or declines credit card applicants

•   Determines fees, credit card APR, credit limits, and rewards

•   Approves and declines credit card transactions

•   Processes transactions between credit card companies and merchants

•   Creates the digital infrastructure that facilitates credit card transactions

•   Charges an interchange fee

•   Determines which credit cards can be used with which merchants

Differences Between Credit Card Issuers and Co-branded Partners

A co-branded partner is a merchant that works with a credit card issuer to create a co-branded credit card with their name on it. This is a common arrangement with store, airline, and hotel credit cards.

Here’s a breakdown of how credit card issuers and co-branded partners differ:

Credit Card Issuer Co-Branded Partner

•   Responsible for creating and managing credit cards

•   Decides whether to accept or decline credit card applicants

•   Determines card specifics, like fees, interest rates, and rewards

•   Approves and declines credit card transactions

•   Works with a a credit card issuer to create a co-branded card

•   Uses co-branded card created by issuer to increase sales and attract new customers

•   Can use co-branded card to deliver value to loyal customers

Finding the Credit Card Issuer Number

If someone looks closely at their credit card, they’ll be able to learn a lot about their credit card issuer, including what their credit card issuer number is and how to contact their issuer.

Credit Card Issuer Phone Number

It’s always possible to learn how to contact a credit card issuer by going to their website, but cardholders also can find their card issuer’s phone number on the back of their credit card or on their monthly statements.

Credit Card Issuer Identification Number

To find a credit card issuer number, all a cardholder has to do is look at the string of numbers on a credit card. The first six to eight digits on the card represent the Bank Identification Number (BIN), or the Issuer Identification Number (IIN). This number is what identifies the credit card issuer. The following digits on the card are what identify the cardholder.

Examples of Some Major Credit Card Issuers

There are many different credit card issuers, but these are some of the biggest ones in the U.S.:

•   American Express

•   Bank of America

•   Capital One

•   Chase

•   Citi

•   Discover

•   U.S. Bank

•   Wells Fargo

The Takeaway

When you’re choosing a credit card, looking at the credit card issuer matters. This is the financial institution that creates and manages credit cards, determines a card’s fees, interest rate, and rewards offerings, and also approves (or denies) credit card applicants. Knowing that you have a well regarded issuer with fair policies is an important step in securing a credit card that suits your needs.

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

How do I know my credit card issuer?

If someone is unsure of who their credit card issuer is, they can look at the credit card number on their card. The first six to eight digits on a credit card — called either the Bank Identification Number (BIN) or the Issuer Identification Number (IIN) — identify the card issuer.

What is the difference between a credit card issuer and a credit card network?

Credit card networks, unlike credit card issuers, are the party that processes the credit card transaction directly with merchants. Credit card networks have digital infrastructure that allow them to facilitate transactions between merchants and card issuers in exchange for an interchange fee.

What do credit card issuers do?

Credit card issuers create, distribute, and manage credit cards. They decide what the interest rates and fees of a credit card are, who is approved for one and how much they can spend, and how the card’s rewards structure works.


Photo credit: iStock/Luke Chan

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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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