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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.

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.

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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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.

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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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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.

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

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

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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.

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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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Credit card fraud added up to $246 million last year, rising 12% from the prior year. As scammers come up with new ways to get sensitive credit card information and prey upon consumers, it can be a smart move to acquaint yourself with tactics they commonly use, from phishing scams to credit card reader scams to threats of arrest.

Read on to learn about 10 of the most popular techniques and find out what to do if you do end up getting scammed.

What Are Credit Card Scams?

A credit card scam is when an unauthorized individual uses your credit card to make fraudulent purchases or steal money from the account. While some credit card scams will take your credit card information right out from under you, others use strategies to entice you to hand over your information.

Given what a credit card is and how easy they are to use, it can be easy for a scammer to rack up debt under the cardholder’s name.

Common Scams and How to Avoid Them

Becoming familiar with the top credit card scams can increase your awareness and help you better protect your identity from fraud. Here are some of the most common credit card scams to look out for. (As you’ll see, some can involve debit cards as well.)

1. Overcharge Scams

With an overcharge scam, you’ll receive an email, call, or text stating that a retailer or merchant overcharged your card. The scammer will request your personal information to complete a refund for the overcharge. They will then use this information to gain access to your credit card.

Here’s how these scams can work:

•   Usually, the scammer identifies a product or service that you already use, so it may not seem as suspicious when they request this information. But, the fraudster may also use a standard service that many people use, such as Netflix or Spotify, so that it won’t raise red flags.

•   While it’s always good to scrutinize your incoming calls, it’s especially important to do so when you receive a call from an unidentified number, though scammers are getting more sophisticated at spoofing phone numbers and making it seem as if they are calling from legitimate businesses.

•   If you answer, the caller may tell you that you must take immediate action to get a refund, or that it’s your last chance to do so. The urgency should be an immediate sign something is amiss; that’s a common scam warning sign.

•   Also, if you do get a call from, say, Netflix saying your account is suspended, it can be wise to hang up and contact the business directly to see if there’s an issue with your account.

•   If you receive a suspicious email, compare the email to past emails from the merchant or retailer. Scammers are often good at disguising a false email address, so look carefully for differences in the sender’s address. They may add “pay” or “support” to make the address look legitimate.

•   You may also find subtle or major misspellings and incorrect grammar in the email.

The best way to avoid this potential credit card scam is to either hang up the call or exit the email. Again, if the call says it’s from your credit card issuer, you can call them directly to see if this request was legitimate or a scam. You can find your creditor’s number on the back of your credit card or credit card statement.

2. Interest Rate Scams

One of the most common credit card scams that occurs over the phone is a fraudster calling to tell you that they can reduce your credit card interest rate and potentially save you significant money on interest payments. They will typically state that their company has a relationship with your credit card company; therefore, they can negotiate reduced interest payments.

However, to entice you to act now, they’ll say the offer is only available for a limited time. Then, the scammer will request your credit card information, such as your account number and CVV number on a credit card, for the alleged service.

Legitimate debt relief companies seldomly cold call consumers to get their business. Also, they cannot charge a fee upfront until they reduce your interest rate or settle a portion of your debt. Therefore, this kind of call should set off alarm bells.

If you want to reduce your interest rate, contact your credit company directly. As the cardholder, you have a better chance of reducing your rate than a third-party company with no relationship with the creditor. If you do receive this call, simply ignore it like you would other credit card scams.

3. Gas Station Credit Card Scams

Scammers can use credit card skimmers to lift your credit card information at gas stations. They do so by attaching an external device to the credit card machine at a pump. When you swipe your card, the device can save your information instantly.

So, before you swipe your card, check to see if the credit card reader you’re using at the pump looks the same as all the other ones. If it doesn’t, that can be a tipoff. You also can tug at the reader to see if it easily detaches. Since skimmers are temporary, they’re usually only attached with double-sided tape, making them easy to remove. Don’t insert your card if you can remove the skimmer with little effort. Instead, go to another gas station to get your gas.

Make sure to inform authorities about the skimmers so they can handle it accordingly.

4. Prepaid Credit Card Scams

Prepaid credit cards, also known as prepaid debit cards, allow you to load money onto them and make purchases. When prepaid credit card funds are depleted, you can no longer use them (unlike credit cards, there is no credit card limit for prepaid cards). You can usually purchase prepaid credit cards at retail stores or online.

Scammers use prepaid credit cards in many different ways to take your money. For example, a scammer may call and say you won the lottery. However, to get your winnings, you must pay the taxes. They may tell you that you can do so by loading a prepaid credit card with a certain amount of funds and sending the card number to the caller. After this is done, they promise to send you your winnings — but, in this case, the scammer may take the card money and never be seen again.

If someone is requesting a prepaid credit card, that’s a red flag. It’s best not to proceed with this transaction as it may be a prepaid credit card scam.

5. Hotel Front-Desk Credit Card Scams

This scam takes place in a hotel room, where the scammer will call up stating they are a hotel employee. They will inform you that there is an issue with your credit card, and you must verify your credit card information. Usually, these calls take place early in the morning or late at night so that you will be thrown off guard.

If this happens to you, it’s best to handle the matter in person. You can hang up and then visit the front desk to ensure your credit information isn’t exposed to the wrong person.

6. Arrest Phone Call Scams

The objective of this scam is to convince you to give out your personal credit card information to pay off a debt, fine, penalty, or ticket. While arrest scams may seem unrealistic, the scammer relies on scare tactics to try to get the target to hand over their credit card information. They may target seniors with this scam.

Some points to know:

•   Usually, the scammer claims they are from a federal agency like the IRS, FBI, or other government agency that suggests there’s a connection to law enforcement.

•   Then, they threaten that if this bill, fee, or ticket goes unpaid, you will be arrested, or other legal action will be taken immediately.

•   It’s doubtful that actual law enforcement or federal agencies would request sensitive information during a phone call, especially an abrupt one.

•   Another sign that this is a scam is that the call may sound like a robot or like it’s pre-recorded.

•   The caller may also have a sense of urgency, claiming authorities are on their way to arrest you.

•   Even if you do owe outstanding fees, have a ticket, or were a part of some similar activity recently, authorities or federal agencies wouldn’t request payment information over the phone in this manner.

Don’t share any personal information with the caller. Just like with other scams, the best way to address your concerns is to hang up and call the alleged agency directly to get any information straight from the source.

Charity Scams

When nonprofit organizations ask for donations, it may pull at your heartstrings. But scammers can use this strategy to swipe your credit card information right out from under you.

Scammers who use this strategy usually call you pretending to be a part of a nonprofit or other charitable organization. They will then request donations using everyday anecdotes or narratives designed to influence their targets. It’s also common for scammers to use this tactic when a natural disaster strikes or another current event requires aid.

Although it’s common for nonprofits to solicit donations over the phone, you should still be wary when receiving one of these calls. If you want to donate to the organization, jot down information from the caller, such as their phone number and the name of the charity. Then, you can look up the phone number online to determine if it’s already identified as a scam.

If it isn’t, you can visit the IRS’s Tax Exempt Organization Search and CharityNavigator.org to research the organization to determine its legitimacy.

Overall, it’s wise to avoid donating to unsolicited callers. Instead, consider visiting an organization’s actual website to determine the best way to donate.

8. Hotspot Scams

Whether you’re connecting to a public WiFi hotspot via your phone or on your computer, scammers can try to access your credit card information when you sign on. In fact, they may prompt you to enter your credit card information to access a particular hotspot. Given how credit cards work, this is very risky. This can mean the scammer gets access to your card’s credentials.

So, when attempting to access the internet in public, be wary if you’re asked to enter your credit card information. Instead, if you’re at a restaurant or retail location, ask an employee to share the establishment’s hotspot or wifi information. Check that the connection is secure. This way, you’ll know you’re not exposing yourself to credit card fraud. But remember, it’s always wise to avoid conducting financial business on public WiFi.

9. Skimming Scams

Like gas pump skimmers, scammers can also use skimmers at ATMs to obtain credit card information.

The only way to identify a skimmer is by checking the scanning device. For example, if the card reader easily detaches, it’s likely a card skimmer. In addition, you can spot other things to identify a skimmer, such as graphics that don’t align or colors on the machine that don’t match the reader. Another clue is if the keypad seems cheap or too thick.

Before entering your card into a reader, investigate for a skimmer. Familiar places skimmers hide are usually in high-traffic areas (a mall or a sports stadium, say) or tourist locations. Don’t use your credit card if you’re unsure whether a skimmer is present or have a feeling something may be off, potentially indicating a credit card reader scam.

10. Phishing Scams

Like the name suggests, a phishing scam involves fraudsters phishing for your personal information. Scammers contact their targets through the phone or over email, posing as an honest company. They then provide fraudulent links or instructions to help them access your personal credit card information.

For example:

•   The scammer may impersonate your credit card company (simply saying they are “calling from your bank and there’s a problem”) and state that your account details must be updated due to a compromised card.

•   They will request your card information (your credit card number, expiration date, and CVV code) over the phone or email to resolve this issue.

•   The scammer may request the answers to your security questions for protection purposes.

Don’t provide any of this information. Even if they suggest this is a sensitive matter and must be addressed immediately, it’s best to hang up, and call your credit card company right away.

Recommended: Common Reasons Why Credit Cards Get Declined

How to Protect Yourself From Credit Card Scams

To keep your credit card information safe, here are some steps you can take:

•   Select a credit card with 0% liability on unauthorized purchases. The Fair Credit Billing Act (FCBA) limits your financial responsibility for credit card fraud to up to $50. In other words, you will only have to pay $50 if you’re a victim of one of these credit card scams and request a credit card chargeback. However, some credit card companies offer 0% liability as a perk, which means you aren’t responsible for any fraud.

•   Keep tabs on your credit card activity. Regularly looking at your credit card activity and checking your credit card balance can help you spot any suspicious activity. If you do notice anything, contact your credit card company right away.

•   Request transaction alerts. Usually, credit card companies let you sign up for transaction alerts, such as for balance transfers, large purchases, and international purchases. Using alerts is a great way to monitor your card activity.

•   Ensure your information is secure. When making purchases online, over the phone, or in person, ensure your information is secure. For example, only use sites with “https” in the URL when shopping online. Also, avoid using public WiFi where your personal information may be in jeopardy.

What To Do If You’re a Victim of Credit Card Scam: Reporting Credit Card Scams

If you’re a victim of a credit card scam, follow these steps:

•   First contact your credit card company to let them know about the fraud. Per the Fair Credit Billing Act, you have 60 days after receiving your billing statement to report any fraudulent activity on your card.

•   After informing your creditor of the incident, make sure to change your password for your account.

•   You may also want to contact the three major credit bureaus: Equifax, Experian, and TransUnion. Request verification of your identity, and ask for a fraud alert to get linked to your report.

•   Additionally, if you’re a credit card scam victim, you can contact the Federal Trade Commission (FTC) to report the crime. You can report your incident online or over the phone at 1-877-382-4357 (FTC-HELP).

•   If you’ve discovered a fraudulent website, email or another internet scam, report it to the Internet Crime Complaint Center (IC3).

•   Unfortunately, not all scams originate in the US; if you believe you’re a victim of an international scam, report it through econsumer.gov.

All reports help consumer protection agencies pinpoint trends and prevent other consumers from falling victim to credit card scams.

The Takeaway

Unfortunately, it can be easy to become a victim of credit card scams. But, if you monitor your account, set fraud alerts, and keep your information confidential, you’ll have a better chance of avoiding getting duped. Pay attention to what kinds of protection your credit card issuer may offer, too.

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

Who is liable for a credit card scam?

Under the Fair Credit Billing Act (FCBA), you’re only liable for up to $50 of credit card fraud reported within 60 days. However, if your credit card has 0% fraud liability protection, you may not be liable for any fraudulent charges.

What counts as credit card fraud?

When an unauthorized person makes a charge with your credit card or steals your credit card information, this is considered credit card fraud.

How do I report credit card fraud?

Contact your credit card issuer ASAP. Then go to the Federal Trade Commission’s website to report the incident. Law enforcement agencies will then use these reports to investigate criminal activity to prevent future fraud. Once you submit a report, you can follow up with local law enforcement, if your creditors suggest it’s wise to do so.

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Photo credit: iStock/fizkes

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.

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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