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If you’ve used your credit card outside of the U.S. — or simply made a purchase online through a merchant that wasn’t U.S.-based — you may have noticed an extra cost added to your purchase. Called a foreign transaction fee, these charges can add up quickly.

Luckily, it is possible to steer clear of credit card fees for international transactions. Let’s take a closer look at what a foreign transaction fee on a credit card is, how much they typically run, and how you can avoid them.

What Is a Credit Card Foreign Transaction Fee?

A credit card foreign transaction fee is a surcharge, or an additional charge, that some credit cards add to transactions that are processed outside of the U.S. Put another way, it’s a cost that applies for credit card processing when certain conditions are met.

Credit card foreign transaction fees may apply when you make an online purchase from a merchant that’s located outside of the U.S. Additionally, they may apply when you’re using a credit card in another country.

While broadly referred to as a foreign transaction fee, this fee is actually composed of two different charges. One part comes from the credit card issuers and the other is from the credit card network (think Visa or Mastercard, for example).

Recommended: What is a Charge Card?

How Are Credit Card Foreign Transaction Fees Calculated?

To find out how international credit card fees are calculated for your particular credit card, check your card’s terms and conditions. You’ll likely find information on foreign transaction fees in a section titled “Rates and Fees” or “Pricing and Terms.”

In general, however, the amount of your credit card’s international fees is calculated based on a set percentage of the transaction amount.

For example, say your credit card charges a 3% foreign transaction fee, and you’re paying about $50 for souvenirs you bought at a merchant abroad. In this instance, the credit card network may take 1.5% of the transaction, while the credit card issuer would deduct 1.5%. That would result in a total foreign transaction fee of $1.50 for that particular purchase.

Recommended: How to Avoid Interest on a Credit Card

How Much Do Credit Card Foreign Transaction Fees Cost?

Some cards don’t come with credit card international fees, meaning you don’t have to worry about this credit card cost. For cards that do charge foreign transaction fees, this fee can range from 1% to 3% per transaction, with 3% being the average rate.

When this credit card fee for international transactions is charged once, it may not seem like a big deal. But if you make a lot of overseas purchases, it can really add up. If you have a 3% foreign fee credit card, for example, that will tack on $3 for every $100 you put on the card.

Recommended: Tips for Using a Credit Card Responsibly

Foreign Transaction Fees vs Currency Conversion Fees

A foreign transaction fee isn’t the same thing as a currency conversion fee. Rather, a currency conversion fee is generally one portion of the overall foreign transaction fee you may be charged.

A currency conversion fee is the cost charged by the credit card network to cover the cost of converting funds into the currency of the merchant. So, if you were making a purchase in Spain, the currency would get converted from U.S. dollars to the euro.

Visa and Mastercard charge a 1% currency conversion fee to card issuers. It’s up to the card issuer whether to pass along that fee to the cardholder as part of the overall foreign transaction fee charged — an example of how credit card companies make money.

Spotting Credit Card Foreign Transaction Fees

Aside from looking at the terms and conditions you were provided when you received your credit card, you can look at your card issuer’s website to learn more about any foreign transaction fees. Information is typically listed in the “fees” section. You also could use the search function on that webpage to find any mentions of foreign transaction fees.

Another option is to look at your credit card statement, as issuers must list fees separately on your monthly bill. By reviewing this section of your statement, you’ll see what you’re actually being charged for purchases you’ve made that trigger this fee. Besides, routinely reviewing your credit card statement is a good credit card rule to follow anyways, as it can help you track your spending and notice any potentially fraudulent activity.

When Are Credit Card Foreign Transaction Fees Charged?

Just like every credit card doesn’t charge a credit card annual fee, not all credit cards charge a foreign transaction fee. If yours does, then the credit card issuer will charge them when you’re using your card for purchases made outside of the U.S. This can include when you’re traveling in a foreign country and buying goods and services, or if you shop online with a merchant located abroad.

Tips for Avoiding Credit Card Foreign Transaction Fees

Hoping to steer clear of a foreign fee on credit cards? Here are some ways you may be able to do so.

Find a Card With No Foreign Transaction Fees

The most straightforward way to avoid foreign transaction fees is to simply choose a credit card that doesn’t charge them. Some travel reward cards, for example, list zero foreign transaction fees as a benefit for card holders.

This isn’t limited to travel reward cards, however, and it doesn’t apply to all of them. In other words, you’ll want to make sure to shop around before committing to a card.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Consider an International Credit Card

If you’re a frequent traveler or have a big trip coming up, you may decide to get an international credit card. This will allow you to make purchases and use ATMs in many (but not all) countries around the world. An international credit card also can be helpful if you don’t want to convert U.S. dollars to that country’s currency or use traveler’s checks for your expenditures.

However, some international credit cards do have foreign transaction fees, so check carefully before signing up for one.

Exchange Your Money Before Traveling

You can also avoid foreign transaction fees by exchanging U.S. currency into the native currency for the place(s) you plan to travel. Then, you can simply pay cash for purchases.

Most major banks in the United States will exchange U.S. dollars for the appropriate foreign currency before you travel. They may not have less commonly used currencies available though, so double check before you head to the bank.

You may be able to directly exchange cash at a local bank, or you may need to place an order with a bank online or over the phone. Exchanges may occur the same day, or they may take a couple of days to complete.

If you run out of time, airports will likely have currency exchange services available, either in-person or through a kiosk. Although convenient, the exchange rates are usually less favorable to you than what your bank can offer.

Also keep in mind that carrying cash while traveling can involve risk of loss or theft.

Open a Bank Account With No Foreign Transaction Fees

Another possibility is to open a bank account that allows you to use ATMs without foreign transaction fees or out-of-network fees. Or, you might check to see if your local bank already offers this feature. Some banks have partnerships with financial institutions abroad that can allow you to withdraw funds without paying fees, while others simply reimburse any incurred costs.

Before taking out too much cash, however, keep in mind the potential safety risks of carrying around a large amount of money.

Recommended: When Are Credit Card Payments Due?

The Takeaway

Once you know what a foreign transaction fee on a credit card is, you can figure out how to avoid them. At its simplest, a foreign transaction fee is an expense charged by many credit card companies when transactions are made with a merchant outside of the U.S. Not all credit cards charge this fee, so it can make sense to shop around for one that doesn’t if you know you’ll be making these kinds of purchases.

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

Are credit card foreign transaction fees tax-deductible?

In general, businesses (but not individuals) can deduct credit card fees as long as the business can demonstrate that the card was used for business expenses. Check with your accountant for any specific questions.

Do foreign transaction fees apply to online purchases?

Yes, they may. If you’re using a credit card that charges foreign transaction fees, then those fees will apply to online purchases if the merchant is not located in the United States.

Do all credit cards have foreign transaction fees?

No, they don’t. A number of travel cards don’t charge foreign transaction fees, though they’re not necessarily the only type of credit card that doesn’t levy this fee.

Are foreign transaction fees affected by exchange rates?

Typically, foreign transaction fees are based on a predetermined percentage of each transaction. That percentage doesn’t fluctuate when the exchange rate changes.

Photo credit: iStock/Vera Shestak

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.

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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In general, you cannot build credit with a debit card. That’s because debit cards typically draw funds directly from your checking account, and those transactions are not reported to the credit bureaus.

Finding other ways to establish and build your credit is, however, a good idea. Having a solid credit history provides greater access to competitive financing offers. Additionally, your creditworthiness may be reviewed, say, when renting an apartment unit or applying for a job.

Read on to learn more about debit cards, your credit profile, and how to build credit.

How Does Building Credit Work?

Purchasing goods or services on credit means you’re borrowing money that you don’t already have to make the purchase now. When you enter into this agreement with a lender, you’re accepting the responsibility of repaying the balance — typically, plus interest — over time.

The lender reports the new credit account under your identity to the credit bureaus, which are Experian®, Equifax®, and TransUnion®. As you make payments toward the debt, your lender will send routine updates to the bureaus about the account’s status and repayment activity.

Your borrowing and repayment data is what creates your credit profile and what’s used to determine your credit score. Keep in mind that all data is reported by your lender, whether positive or negative. For example, if you’re chronically late on your loan payments but make on-time payments toward a credit card, all of this information is reflected on your credit report.

Recommended: When Are Credit Card Payments Due?

Can You Build Credit With a Traditional Debit Card?

Although they’re a helpful financial tool, when your goal is building your credit from scratch, the pros and cons of debit cards should be closely considered. One major downside is that you generally can’t build credit with a debit card.

That being said, some financial tech companies do offer debit cards with a credit-builder feature that can help you build your credit. This feature is not typical of most debit cards though.

Still, debit cards are convenient in that they let you spend your money without carrying physical cash. They can also help you avoid racking up debt for purchases, and in some cases, it’s even possible to pay a credit card with a debit card.

Recommended: Does Applying for a Credit Card Hurt Your Credit Score?

Can You Use a Credit Card to Build Credit?

A credit card is a common financial tool that’s used to build credit. That’s because card issuers send credit card activity data to the credit bureaus.

A traditional credit card is a revolving credit line in which the issuer sets a maximum borrowing limit on the card. When using a credit card like a debit card, you can swipe your card to cover everyday purchases, like groceries or your cell phone bill. However, instead of those funds coming out of an attached bank account, you’re borrowing them — meaning you can spend with a credit card up to your credit limit, regardless of whether you actually have the money on hand at the moment.

At the end of each billing cycle, you’ll need to repay at least the minimum amount due, which is typically a portion of the total balance. Paying the minimum amount by the due date is sufficient to maintain positive payment data on your credit file.

However, this means you’ll accrue interest for rolling over a balance into the next billing cycle. When building your credit with a credit card, make sure you can afford to repay the full statement balance each month to avoid costly fees and deeper debt.

Recommended: What Is the Average Credit Card Limit?

When to Use a Credit Card vs. Debit Card

The differences between credit cards and debit cards when it comes to establishing your credit are stark.

When you’re first starting out with credit, consider using a credit card for a few smaller purchases, like your next cup of coffee, or a recurring expense, like a streaming subscription. Keeping your purchases small and manageable adds bulk to your credit history while allowing you to better track your spending. That way, you don’t end up with overwhelming debt.

Your debit card, on the other hand, can be useful to pay for bills that only accept payment from a checking account, or if you’d like to access your cash at an ATM. You’ll need to ensure you have the funds in your account before you swipe, but you don’t run the same risk of racking up debt that you do with a credit card.

Other Ways to Build Credit

Since building credit with a debit card isn’t effective, you can start building your credit using one or more of the strategies below. Although these are all viable approaches to establishing credit, be aware that the process takes time.

Become an Authorized User

Ask a family member or trusted friend who has good credit if they’re willing to add you as an authorized user on their credit card. As an authorized user, a credit check isn’t required, and you’re ultimately not responsible for making the payments on the account.

If the card issuer reports data for both the primary cardholder and authorized users on the account, this strategy can help with establishing credit.

Recommended: Tips for Using a Credit Card Responsibly

Report Your Rent Payments

An unconventional way to build credit without a debit card is reporting payment data, such as rent payments or utility bills. Ask your landlord and service providers if they’re willing to report your rent payment history to the credit bureaus.

Your rent payment data is then included in your consumer credit report so you can establish your credit with your on-time rent payments.

Use a Credit Card Responsibly

As mentioned, credit cards do help when it comes to building credit. You might consider applying for a secured credit card or a more basic card with lower eligibility requirements as you get started establishing your credit profile. This will require consistently making on-time payments and keeping your spending in check.

Once you’ve started to build up your credit through responsible behavior, you might even have the opportunity to earn rewards as an added bonus alongside building your credit. Some of the different types of credit cards offer rewards points, miles, or cash back for each dollar you spend on the card.

The Takeaway

Debit cards can offer a number of advantages, but building credit with a debit card is not typically among them. Although you can’t usually build your credit with a debit card, there are many other ways to get your credit profile started. This can include becoming an authorized user on someone else’s credit account, getting your on-time rent or other bill payments reported to the credit bureaus, or opening a credit card account and using it responsibly.

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

Does debit card usage get reported to credit bureaus?

No, your debit card usage is not typically reported to the three credit reporting bureaus. Debit card transactions are linked to a bank deposit account in which you’re drawing funds from your own pool of money.

Why can’t you build credit with a traditional debit card?

You can’t build credit with a traditional debit card because while a debit card offers the convenience of cashless purchases, you’re not actually borrowing money. Instead, you’re pulling funds from a personal checking account that’s tied to the debit card.

Does a debit card affect your credit score?

No, using a debit card typically doesn’t affect your credit score. However, carrying a debit card can be a useful part of managing your finances.

Photo credit: iStock/Drazen Zigic

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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If you need quick access to cash, you may be able to get a short-term loan in the form of a money transfer or cash advance from a credit card. Using a fairly simple process, you can transfer money from a credit card to a debit card. However, you can probably expect to get hit with a fee and interest charges. Plus, you’ll need to pay back the transferred amount.

What Is a Money Transfer Credit Card?

As the name implies, a money transfer credit card is a card that allows you to move money from your credit card to a debit card or to your bank account.

Many credit card issuers allow you to make a credit card advance. As a cardholder, you can take out a certain amount of cash against your line of credit, which is what a credit card is. These cash advances usually come with fees and higher interest rates.

Can You Transfer Money From a Credit Card to a Debit Card?

While it’s typically more common to transfer a cash advance from a credit card to a bank account, you can usually send money from a credit card to a debit card. You can make a money transfer to a debit card in your own name, or to another account holder, effectively allowing you to send money with a credit card to, say, a friend and family.

The credit card process for how to transfer credit card money to a debit card is fairly similar to moving money from a credit card to a bank account. Usually, you’ll need to provide the following information:

•   Name on the card

•   Card number

•   Expiration date

•   Bank account number (in some cases)

Recommended: What Is the Average Credit Card Limit?

Factors to Consider Before Transferring Money From a Credit Card

Before you transfer money from a credit card to a debit card, here are a few thing to mull over:

•   There are caps on a cash advance. Credit cards usually have a cap on a cash advance. The exact limit depends on the rules for a credit card set by the credit card issuer. For instance, it might be a set amount, such as $5,000, or it might be a percentage of your personal credit limit, such as 15%.

•   You might have to step foot inside a bank. If your credit card has a PIN, similar to a debit card, then you’ll be able to get a cash advance from an ATM. But if you want to do a money transfer from a credit card to your bank account or debit card, you might need to go to a brick-and-mortar location of a physical bank.

•   Cash advances could have an impact on your credit score. The good news is that cash advances don’t require a hard pull of your credit, which could hurt your score. However, taking out a cash advance can impact your credit by increasing your credit utilization ratio. That’s because carrying a higher balance ups your credit usage, which in turn can bring down your score.

•   You won’t earn rewards. The good news is that cash advances don’t require a hard pull of your credit, which could hurt your score. However, taking out a cash advance can impact your credit by increasing your credit utilization ratio. That’s because carrying a higher balance ups your credit usage, which in turn can bring down your score.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

How Much Does Transferring Money From a Credit Card Cost?

Nothing in life is free, and this includes money transfers from a credit card. Here are some costs that go into a credit card money transfer:

•   Cash advance fee: Just like with balance transfer credit cards, you’ll typically owe a fee to do a money transfer from a credit card to either your debit card or bank account. The fee varies depending on the card, and it might be a flat fee or a percentage of the amount of the advance. For instance, the fee might be $10 or 5% of the cash advance amount, whichever is greater.

•   Cash advance APR: The annual percentage rate (APR) for a cash advance is usually higher (sometimes significantly so) than the standard APR that comes with your card. Additionally, with standard purchases on a credit card, you have a grace period between the end of the billing period and the date your payment is due. During that time, you won’t be charged interest. When you transfer money from a credit card to a debit card, however, there’s no grace period. That means you’ll be charged interest from the time you take a cash advance.

•   Late charges, if applicable: If you’re late on a payment, you’ll most likely get hit with a late fee.

Recommended: What Is a Charge Card?

Is It Safe to Transfer Money From a Credit Card to a Debit Card?

For the most part, transferring money from a credit card to a debit card is pretty secure. Banks have built-in security features, so moving money between cards or to a bank account is generally considered safe.

Once you’ve sent your payment, you may want to check in with the intended recipient to ensure they received the funds in the credit card to debit card transfer.

Recommended: When Are Credit Card Payments Due?

Alternatives to Transferring Money From a Credit Card to a Debit Card

Moving money from a credit card to a debit card is just one method of sending money. There are other ways you can tap into your credit card limit in the form of cash, including:

•   Writing a check: In lieu of getting that money transferred to your debit card, the credit card company might mail you a check. You can either use it as a personal check or to make a deposit into your bank account.

•   Pulling money from an ATM: If your credit card comes with a PIN, you can withdraw money via a cash advance.

•   Using a payment app: You can also likely use popular payment apps like PayPal or Square’s Cash App to send money to someone else with your credit. Once you’ve linked your card, you may have the option to send money to someone else. Keep in mind that you or the recipient will likely incur fees.

And, of course, you might avoid taking out a cash advance entirely. If you’re in a pinch, you could also explore options like borrowing money from a friend or family member, taking out a personal loan with a competitive interest rate, or possibly dipping into your emergency fund. All of these alternatives will allow you to avoid the fees and interest charges that can accompany the transfer money from a credit card to a debit card.

Recommended: How to Avoid Interest on a Credit Card

The Takeaway

A cash advance by way of transferring money from a credit card to a debit card could be a quick, easy way to access money. The trade-off is that you’ll likely be paying high interest charges and a fee. Before proceeding, make sure it’s the right choice for you and your needs. Also, be careful not to take more cash than you need, as this will have an effect on your credit utilization.

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

Can I transfer money from my credit card to my debit card without paying interest?

No, transferring money from your credit card to debit card comes with interest charges. The APR for a cash advance is typically higher than the standard APR on the card. Plus, you won’t get a grace period, so interest will begin accruing immediately.

Is it better to get a personal loan or transfer money from my credit card?

A personal loan is generally preferable to transferring money from a credit card. That’s because it’s possible to find no-fee personal loans, whereas cash advances generally carry fees. Plus, the interest rate on a personal loan is likely lower than the APR you’d be charged on a cash advance. Explore your options to find the right financial moves to suit your needs and situation.

Can I withdraw cash using a credit card?

Yes, you can take out cash using a credit card as a cash advance. Be aware of (and wary of) the fees, rates, and fact that there’s no grace period on accruing interest before proceeding.

Photo credit: iStock/Prostock-Studio

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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When you get preapproved for a credit card, you’ve met initial criteria to receive an offer to get a credit card. In other words, you’ve popped up on a list of consumers who satisfy a credit card company’s requirements and are being invited to apply for a card.

Here, you’ll learn the details of how preapproved credit card offers work, the difference between preapproved vs. prequalified offers, and the pros and cons of preapproved offers.

What Is a Preapproved Credit Card Offer?

A preapproved credit card offer, as noted above, is an invitation from a credit card company to apply for a credit card because you seem to meet some of the conditions for approval.

Credit card issuers usually use criteria pulled from credit reporting agencies to extend these offers. If you fall within the parameters of the credit card requirements set by the card issuer, then you may receive an offer — either via email, snail mail, or over the phone — to formally apply for approval for the card.

How Do Preapproved Credit Card Offers Work?

While it sounds promising, getting a preapproved credit card offer doesn’t necessarily mean you’re guaranteed to get approved for a credit card. Even if you’re preapproved, you’ll need to properly apply.

When you do, the credit card issuer will look over your application and usually request additional financial and personal information. The credit card company will also check your updated credit report to figure out if your credit still meets its criteria (after all, credit scores do change over time).

Preapproved vs Prequalified Credit Card Offers

The terms “preapproved” and “prequalified” often are used interchangeably when it comes to prescreened credit card offers. And within the realm of credit cards, they often are one and the same. But in other types of lending, they mean different things.

•  Preapproval means you’ve been prescreened for offers by the credit card company. These credit companies work with the three major credit reporting agencies — Equifax®, Experian®, and TransUnion® — to come up with a list of consumers that meet their lending criteria.

•  Prequalified offers are usually requested by you, the consumer. To get prequalified, you typically need to provide basic personal and financial information. During the screening process, the credit card issuer will check your credit. However, it will only conduct a soft pull, which won’t impact your credit score. After reviewing the info you submitted, the credit card company will let you know if you’re likely to get approved.

With both preapproval and prequalification, you’ll still have to submit to a hard credit inquiry and potentially provide additional financial information to actually get approved for the loan product. Keep in mind that with a hard vs. soft credit inquiry, a hard pull will usually temporarily lower your score.

Benefits of a Preapproved Credit Card

Now that you know what preapproved means for a credit card, you may be wondering what the benefits are. In general, these are the upsides of preapproval, whether for a rewards card or a virtual credit card.

Indicates Your Odds of Approval

Perhaps the most obvious benefit of getting preapproved for a credit card is that you’ll have a better sense of how likely you are to ultimately get approved for the card. Although preapproval is not a guarantee of eventual approval, if a credit card issuer has already selected you to apply and neither your financial situation nor credit hasn’t drastically changed, you’re likely within the required parameters to get the card.

Won’t Impact Your Credit Score

One of the major benefits of getting preapproved for a credit card is that it won’t impact your credit score. To get preapproved, the card issuer does a soft pull of your credit. Only if you decide to formally apply for the card will the credit card company do a hard pull of your credit.

Could Allow You To Secure More Competitive Terms

Getting preapproved for a credit card may allow you to secure a lower interest rate than you’d otherwise be able to get. This is because the lender is effectively advertising the card to you in order to get you to apply. Keep in mind, however, that your rates aren’t set until after you formally apply.

Recommended: How to Avoid Interest on a Credit Card

May Provide Access to Better Intro Offers

Another advantage of a preapproved credit card is that it might come with more lucrative perks than what’s more widely advertised to the public. You might be privy to cards with more attractive sign-up bonuses or introductory earnings opportunities. For instance, a cash-back credit card might offer a higher initial earnings rate through preapproval offers.

Could Get a Longer Intro APR for Balance Transfers Cards

For balance transfer credit cards that allow you to transfer your existing debt over to the new card, you might be able to get a lower introductory credit card annual percentage rate (APR) for longer through preapproved offers. This could make it easier to pay off your balance in full before the regular interest rate kicks in.

Easier for You

Because credit card companies have vetted you and know that you’ve passed at least some of its criteria, you don’t have to spend time researching cards. Instead, these offers are coming to you. Still, when choosing a credit card, it doesn’t hurt to take a look around to make sure this is truly the right fit for you.

Drawbacks of a Preapproved Credit Card

While there are benefits of preapproved credit card offers, there are drawbacks to them as well.

Might Not Be the Best Card for You

While you don’t have to jump through the same hoops as you would looking for a credit card on your own, the credit card you’re preapproved for may not be the right one for you. It might be a good idea to spend some time doing your own research and understanding differences in how credit cards work even if you do get preapproved.

Could Get Flooded With Unwanted Offers

Preapproval offers mean you receive a lot of unsolicited emails, mail, or phone calls. Especially if you’re not in the market for a new credit card, you could feel inundated with offers you don’t necessarily want or need.

Potential for Theft of Personal Information

There’s a chance that a would-be criminal hoping to commit identity theft could intercept your prescreened offer and get hold of your name and mailing address. The good news is that a fraudster would likely need information beyond what’s included in a preapproval offer.

Temptation to Open More Cards

Receiving preapproved offers for credit cards may tempt you to open a new credit card you don’t necessarily need, especially if the preapproval offer includes a lucrative sign-up bonus or an extended introductory APR offer. Especially if you’re already set with your lineup of credit cards, this might entice you to take on more cards and debt than you can comfortably manage.

When You May Need Credit Card Preapproval

You might want to receive a preapproved credit card offer if you’re in the market for a new credit card and would rather not go through the full process of researching credit cards. As you know you already meet certain lending criteria, the odds of getting approved for a card can be improved.

Keep in mind, however, that you don’t need to get credit card preapproval in order to apply for a credit card. If you’re getting a credit card for the first time and have a limited credit history, for instance, you’re likely not going to get so many preapproval offers — but that doesn’t mean you can’t still try applying.

Recommended: What Is the Average Credit Card Limit?

Tips for Getting a Preapproved Credit Card Offer

If you’d like to get preapproved offers, you’ll want to opt in by visiting OptOutPrescreen.com . From there, you can choose to get these offers through the mail, email, or via phone.

Instead of waiting for offers to come to you, you can also get preapproved by visiting a credit card issuer’s website and applying for prequalification. This typically requires providing basic personal and financial information.

Recommended: How Long It Takes to Get a Credit Card

Tips for Improving Your Chances of Preapproval

While you can still get preapproved for offers with not-so-great credit, you’ll get offers with the most favorable terms and rates with a strong credit score. To maintain or build your credit score and thus improve your chances of approval, make sure to do the following:

•   Avoid late payments

•   Keep your credit utilization rate low

•   Aim to keep cards open

•   Don’t apply for too many new accounts

•   Maintain a diverse mix of different forms of credit

Recommended: When Are Credit Card Payments Due?

How Does a Preapproved Credit Card Impact Your Credit Score?

A preapproved offer for a credit card doesn’t impact your credit score. As we talked about, lenders will do a soft pull of your score, which doesn’t affect your score.

But if you decide to apply for a card, the credit card issuer will do a hard pull of your credit. This will most likely ding your score, though generally only temporarily.

Opting Out of Preapproved Credit Cards

If you don’t want to get flooded by preapproval offers, you can decide to opt out. Visit the website OptOutPrescreen.com and follow the simple steps outlined on the website to do so. You then won’t be included on lists to get considered for preapproval for five years.

Recommended: Does Applying for a Credit Card Hurt Your Credit Score?

The Takeaway

A preapproved offer for a credit card means you’ve met certain lending criteria to most likely get approved for a specific card. You’ll still need to officially apply to secure approval though. But if your credit score and financial history are the same as when you initially received the offer, there’s a high likelihood you’ll get approved.

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 long does it take to get a credit card if you are preapproved?

It depends on the credit card and credit card company. If you’re preapproved for a card, you’ll still need to officially apply. If you do get approved for a card, it could take anywhere from five business days to two weeks for your card to arrive in the mail.

Can you get denied after preapproval?

In some cases, yes. For instance, if your credit or financial situation changed between the time you received a preapproved offer and when you applied, you might get denied.

Can I get a credit card if I am not preapproved or I don’t qualify for a credit card?

You don’t need to get preapproved for a credit card; it simply skips a few steps and can boosts your odds of getting a card. However, you will need to qualify for a credit card to get it. This happens if you meet the credit card company’s lending criteria. If you do, you’ll have a chance of getting a particular credit card. If you don’t qualify, you might consider applying for a secured card, which uses your cash deposit as your spending limit.

Should I still apply if I am not preapproved for a credit card?

Just because you aren’t preapproved doesn’t mean you won’t be able to get a particular credit card. Spend some time doing your homework to figure out which cards are a good fit for your needs and financial situation. When choosing a credit card, it’s important to check the rates, credit limits, and fees.

Photo credit: iStock/akinbostanci

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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There is no minimum credit score needed for a credit card. Even borrowers with poor credit (a score of 300 to 579) or no credit card at all can qualify for some credit cards. However, options for bad-credit borrowers are limited and usually come with a high annual percentage rate (APR) and fees. Borrowers with no credit or poor credit may also only qualify for secured credit cards.

By building your credit score, you’ll have more options for credit cards with better rates, fees, and even rewards, bonuses, and perks. Read on for details on this important financial topic.

How Your Credit Score Affects Your Odds of Credit Card Approval

A good or excellent credit score typically increases your odds of credit card approval. But if you have a bad credit score, you’re not out of luck. Some credit card issuers have options for borrowers with no credit history or extremely low credit scores.

Before applying for a credit card, it’s a good idea to read the fine print for that specific card. Often, credit card companies will list their minimum credit score requirements for the card. If you’re at the bottom of the stated range or below it, you may have a harder time qualifying.

To avoid getting declined (and having an unnecessary hard inquiry on your credit report), you may want to consider a less competitive credit card that you’re more likely to be approved for based on your credit score.

What Credit Score Do You Need to Get a Credit Card?

While there is no minimum credit score to get a credit card, you’ll need a higher credit score to qualify for the best credit cards available. Typically, travel credit cards and cash-back credit cards are reserved for borrowers with good to excellent credit (690 and above on the FICO® scale).

If you have a fair credit score, you might be able to qualify for a decent credit card with a higher annual percentage rate (APR) and limited perks. Experts recommend having a credit score at least in the low 600s to apply for a standard credit card.

Borrowers with bad credit or no credit at all may be limited to secured credit cards (cards that require a security deposit as collateral), credit-building cards, or high-interest credit cards with high annual fees.

Recommended: How to Avoid Interest on a Credit Card

Tips for Estimating the Credit Score You Need

How can you determine a credit card’s credit score requirements? Here are a few ways to estimate the minimum score you’ll need:

•   Checking the website: Often, the credit card issuer will clearly state what credit score is required for each of its credit cards.

•   Reading reviews: If the issuer’s website isn’t clear, you may want to check third-party review websites, which often print the recommended credit scores needed for credit cards.

•   Using third-party services. Platforms like Credit Sesame and Credit Karma can help you gauge which credit cards you’ll qualify for with your current credit score — but it’s never guaranteed.

•   Getting preapproved. Many credit card issuers offer preapproval for their cards. This means they only initiate a soft pull on your credit report (with no effect on your credit score). A preapproval is not a guaranteed yes; you still have to go through the process, but it can instill more confidence if you’re worried about your chances.

Recommended: Does Checking Your Credit Score Lower Your Rating?

Factors Affecting Your Credit Score

Building your credit score is a great way to qualify for more (and better) credit cards. But knowing how to positively impact your credit score requires that you know what affects your credit score in the first place.

FICO and VantageScore both constantly monitor consumers’ credit and assign them different credit scores based on a consumer’s activity. While the models are similar, each company uses its own proprietary scoring method to calculate credit scores. Both scores range from 300 to 850.

FICO Scoring Method

Your FICO credit score depends on five key factors:

•   Payment history (35%): The largest factor impacting your credit score is your payment history. Making on-time payments not just for loans but for things like rent and utilities will build your score. Late payments can stay on your credit report for up to seven years.

•   Credit utilization (30%): How much of your available credit you are using is expressed as your credit utilization ratio. Using less of the credit available to you can positively impact your score, while using more can negatively impact your credit score. Ideally, your utilization rate will be 30% or lower.

•   Credit history (15%): The length of your credit history plays an important part in your credit score. Responsible credit users should see their scores increase over time, meaning the longer you keep accounts open, the more you can positively impact your three-digit credit score.

•   Credit mix (10%): Having a healthy mix of loan types (both installment credit and revolving credit) can build your score — if managed properly. That means a combination of mortgages, auto loans, student loans, personal loans, and credit cards can positively impact your credit score.

•   New credit applications (10%): When you apply for new credit, lenders will make a hard inquiry on your credit report. Even if you are denied the credit, this inquiry will temporarily lower your credit score, which is how applying for a credit card affects your credit score.

Recommended: When Are Credit Card Payments Due?

VantageScore’s Scoring Method

VantageScore, on the other hand, assigns different factors a value of influence:

•   The most influential factor affecting your VantageScore is payment history, as it is with FICO.

•   Three highly influential factors include the age of credit, type of credit, and credit utilization.

•   A moderately influential factor is the total debt balance you maintain across all loans.

•   The least influential factor is your recent credit activity (opening new accounts, recent hard inquiries, etc.).

Recommended: Understanding the Different Types of Credit Cards

Tips for Building Your Credit Score

Wondering how to build your credit score to increase your chances of credit card approval? Here are some tips:

•  Understand your credit score: The first step to building your credit score is knowing how it’s calculated — and knowing what your current credit score is.

•  Make on-time bill payments: Paying bills on time is good for more than just avoiding late fees. It’s also the top factor in determining your FICO score and VantageScore.

•  Decrease your credit utilization: By reducing the amount of purchases on your credit cards — and paying them off in full every month — you’ll decrease your credit utilization, which can positively impact your credit score.

•  Become an authorized user: If you have no credit history or are repairing bad credit, you may benefit from becoming an authorized user on a friend or family member’s credit card. If they are responsible with the card, it’s an easy way for you to build your score without applying for your own card.

•  Keep old cards open: Once you qualify for better credit cards, you may be tempted to close out old accounts. But each of those cards has a credit limit. By keeping the card open but not using it, you decrease your overall credit utilization and keep the average age of your credit higher. The exception: If the card has an annual fee and you’re not using it at all, it may not be worth keeping it open.

•  Only apply for credit cards when you need them: Each time you apply for a credit card, the issuer makes a hard inquiry on your credit report, which lowers your score. Because of this, it’s a good idea to wait at least six months between credit card applications — and only apply when you need to. Choose your credit card applications wisely.

Recommended: Tips for Using a Credit Card Responsiblya

Getting a Credit Card with Bad Credit

Bad credit doesn’t mean you can’t gett a credit card. In fact, you can find credit cards on the market designed specifically for people with bad credit. However, such cards typically have high fees and interest rates.

If you’re worried about high fees and rates, a secured credit card for bad credit may be the better option. Some secured credit cards even approve borrowers without conducting a credit check. The big difference between a secured vs. unsecured credit card is that secured credit cards require a security deposit, which acts as the card’s credit limit.

Alternatively, borrowers with bad credit may be able to qualify for a retail credit card. These cards can only be used at a specific store or chain of stores. While retail credit card credit score requirements vary, many are available to borrowers with limited or bad credit.

Recommended: What Is the Average Credit Card Limit?

Getting a Credit Card With Fair Credit

With a fair credit score (580 to 669 per FICO), you won’t qualify for the top rewards credit cards available. That being said, it’s still possible to get approved for an unsecured credit card with no annual fee and limited perks.

Interest rates tend to be higher for those within this credit score range, but if you can pay the card off in full every month, you won’t have to worry about racking up credit card debt. Eventually, you may even build your credit score enough to graduate to a rewards credit card with a better rate and terms.

Getting a Credit Card With No Credit

What if you have no credit history at all? Believe it or not, you can still qualify for a credit card with no credit history — though your options may be more limited.

Like borrowers with bad credit, you can likely qualify for no-frills secured credit cards if you can come up with the security deposit. Alternatively, borrowers without an established credit history can ask a close friend or family member to be added as an authorized user on their card. There are also credit cards designed for those who are currently enrolled in school and are just embarking on their credit journey.

The Takeaway

While there isn’t a minimum credit score for a credit card, having a good to excellent credit score improves your chances of approval for the top credit cards on the market (ones with robust rewards and lower interest rates). If you have a poor or fair credit score or no credit history at all, you may be able to qualify for secured credit cards or credit cards with higher APRs. By building your credit score, you may find you have more options.

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

Can you get a credit card with limited or no credit history?

Yes, you can get a credit card with limited or no credit history. Borrowers with no history can look for secured credit cards or consider becoming an authorized user on someone else’s credit account. Without credit history, however, you likely will not qualify for low-APR credit cards or rewards credit cards.

Can I get a credit card with a score of 600?

Yes, with a credit score of 600 (in the fair credit range), you may qualify for basic credit cards that offer limited perks, if any. You likely will not be able to qualify for a rewards credit card. However, credit card issuers may at least approve you for an unsecured credit card, though likely with a higher APR.

What is the easiest card to get approved for?

If you have no credit history (or a limited credit history) or a bad credit score, the easiest card to get approved for is typically a secured credit card. Secured credit cards present lower risk to credit card issuers because borrowers must make a security deposit that serves as collateral and their credit limit.

Photo credit: iStock/Antonio_Diaz

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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