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Emergencies happen. Even with the most carefully planned budget, you can run up against unexpected costs, fees, or expenses you didn’t anticipate. You might have to pay off unexpected medical expenses or cover moving costs. Sometimes it’s not even necessarily an emergency, but you need money and you need it as quickly as possible.

The thing is, most of us don’t have it—only 40% of Americans are able to cover an unexpected $1,000 expense without resorting to credit. In some cases, a personal loan can provide an alternate strategy for filling in financial gaps. Credit cards often carry high interest rates, the average annual percentage rate (APR) on existing credit card accounts is around 14.14% , according to WalletHub. For some borrowers, a personal loan can offer a lower interest option for filling in financial gaps or paying for a large expense.

While personal loans can help someone get funds, the loan would still accrue interest. Relying on an emergency fund as a first option for unexpected expenses might be a more responsible alternative. But in cases where an emergency fund or long-term savings plan aren’t enough to help make ends meet, a personal loan could provide a lower interest option than credit cards.

There are plenty of other reasons to consider a personal loan. Maybe you want to lock down a home remodel or consolidate high-interest credit card debt. If you’re looking to speed up the approval process for a personal loan there are a few tips that could help you qualify more quickly.

If you’re hoping for swift approval on your personal loan application, there are at least two stages of the process to consider:

•   How you stack up as an applicant

•   The lender you’re borrowing from

If you want to get approved quickly for a personal loan, you’ll first want to get your finances organized and then you’ll want to compare various lenders’ approval times.

Setting Yourself Up as a Better Personal Loan Candidate

There are specific qualifying criteria most lenders, including SoFi, look at when considering approving a personal loan application. Lenders typically review at least some of the following borrower information when reviewing an application for a personal loan:

•   Credit history, score and debt

•   Proof of ongoing stable income

In order to increase their chances of getting approved quickly, borrowers typically want to put their best financial foot forward. That means showing that they have steady income, an unblemished financial history, and a solid credit score.

It’s worth noting that there are a variety of different scoring models and each lender might have their own criteria for reviewing a potential borrowers credit. With that in mind, Experian does offer some insight into interpreting credit scores—generally a score FICO® Score above 670 can be considered “good,” above 740 as “very good,” and above 800 as “exceptional.”

But credit score is just a portion of the information a lender will need. While it is usually a primary factor, it’s likely not the only factor that will determine if your application is approved or not.

To make the application process a little easier, you can assemble the financial information that might be requested. It can save time during the application process if you’ve already gotten together all the information you need to apply for a loan. To apply for an unsecured personal loan, you may need items like:

•   Proof of Identity: The exact documents requested may vary, but you might need to submit a government-issued ID such as a driver’s license, proof of your Social Security number

•   Proof of Address: Certain laws are influenced by your state of residence. Some lenders may also want to know if you rent or own a home.

•   Proof of income: Lenders want to know you can pay back your debt. Some may request your W-2 tax forms, recent pay stubs, or bank statements. Some may require verification from your employer of stated income and to confirm current employment.

Most lenders look at your credit history, credit score, income, and debt-to-income (DTI) ratio when considering your personal loan application (among other factors). Lenders use DTI ratios to get an idea of a borrower’s ability to repay a loan based on how much money a person is making compared to how much money they already owe. The ratio can be calculated by adding up the total monthly debt a person owes and then dividing that total by the individual’s gross monthly income.

The exact criteria used to determine a borrower’s creditworthiness may vary by lender. Compiling commonly reviewed information, like your credit score and DTI, ahead of actually applying, can sometimes shed light on whether you’ll be approved for a personal loan or not. Some things a lender might see as problematic include:

•   A short work or credit history

•   Low, unstable, or no income

•   High debt-to-income ratio (varies by lender)

•   Too many credit inquiries in the recent past

In addition to having all your information ready, you’ll also want to consider how much money you need to borrow. Too small, and you might not fully cover your expenses.

Too large, and you’ll have to pay interest on money you don’t even need. Knowing that magic number before you apply for a loan can save you the back and forth that could be required if you’ve been approved.

If you’re in need of money quickly, but have a less-than-strong credit history, another option may be to apply for a personal loan with a co-borrower. A co-borrower takes out a loan with you, so you’re essentially borrowing the loan together. The co-borrower is equally responsible for loan payments, and if either of you miss any payments on the loan, both of your credit scores could be impacted.

Finding a Faster Lender

The other half of the personal loan equation is determining which type of lender works best for your needs. Not all lenders work on the same timeline, some will grant approval faster than others. But, speed can sometimes come at a premium.

Traditional banks and credit unions typically take a few days or a few weeks to review and approve applications before disbursing funds. If you have less than ideal credit and are looking for a smaller loan, you might consider shopping rates and terms at a few local lending institutions. However, if speed is required, you may be able to find faster alternatives.

There are a handful of traditional bank lenders who can approve a personal loan for well-qualified applicants in less than a week. Many quick-approval personal loan lenders, however, are online or non-traditional lenders.

With online lenders, like SoFi, funds should generally be available within a few days of approval. One of the major benefits of the online route is the fast application time. If you have all your information ready, it can be quick and easy to apply using an online form.

Since it can be easier and faster to apply for personal loans online, you might take some time to compare rates against different lenders. Another benefit of online lenders is that you can pre-qualify and see your rate before you fill out a full application.

At the pre-qualification stage, you’d usually provide some basic personal information and the lender typically performs a soft credit check to determine the amount of money you could be approved for and at what interest rate and loan term.

A soft credit check shouldn’t impact your credit score (but make sure that’s what the lender is doing during their pre-qualification check—they should make that clear).

After you have gotten quotes from a few different lenders, it’s typically easier to determine which loan meets your needs. Once you have a few different quotes, take time to compare:

•   Each lender’s terms. This includes loan terms, late fees, insufficient funds (NSF) fees, etc.

•   Repayment periods—a typical repayment term can range from 12 to 60 months depending on the lender.

•   Origination fees—some lenders may charge a one time fee up front for processing your loan application and closing the loan. Origination fees on personal loans can range from 1% to 8% of the loan amount in some instances and can typically be rolled back into the loan or paid for through the loan proceeds.

•   Any additional fees or premiums

Once you feel comfortable with the lender and their terms, then you’re probably ready to formalize the loan. As you explore personal loan options, consider a loan with SoFi where there are absolutely no fees — including no prepayment penalties or origination fees required.

Looking for a personal loan? Consider SoFi where the application process can be completed easily online. 

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Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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.

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

PL18205

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If you’re currently in the process of planning a wedding, you’re likely enjoying the endless cake samples and making difficult decisions, like whether to have a donut bar or a candy station at the reception.

Unfortunately, wedding planning isn’t just about delicious dessert samples and seating arrangement logistics.

It can be stressful, especially when it comes to figuring out how you’ll pay for all those savory and sweet treats and gift bags for your guests—let alone the rest of it like, you know, a dress, the actual reception hall, a minister, food, and an open bar if you’re lucky.

According to The Knot’s 2018 Real Weddings Survey, the costs of planning a couple’s special day now averages $33,931, though this number can vary greatly depending on where you live.

Expensive, densely populated cities like New York and Chicago will likely be more expensive than hosting a wedding in a more rural locale.

While there are ways to save on wedding costs—like cutting back on pricey place settings, keeping the wedding parties smaller, opting for a cash bar, and doing a bit of do-it-yourself craft work on flower arrangements—more couples are finding that they need a little bit of extra cash to get them through the wedding planning process. This is especially true when every vendor seems to require an immediate deposit.

That’s why some turn to wedding loans as an alternative to funding their weddings upfront.

Find a venue right out of a Pinterest post, but need a $10,000 deposit by next week to secure it?

Try on the dress of your dreams, then discover it’s $2,500 more than you have in your checking account?

Want the band of your dreams to play but need to plunk down cash to get them?

If your savings are coming up short, an unsecured loan could be just what you need to keep your dream wedding from being derailed. Here’s some more information about the ins and outs of wedding loans to help you decide if it is the right choice for your big day.

What Is a Wedding Loan?

A wedding loan doesn’t come from a wedding fairy godmother with a wave of her wand—although that would make for a better story. Instead, a wedding loan is simply a personal loan that you use to pay for wedding expenses.

So, what’s a personal loan then? A personal loan is just as the name implies—a loan you take out for (almost) any personal reason at all. You could use a personal loan for everything from renovating your home, to consolidating high-interest credit debt, to paying for a vacation or a wedding.

Personal loans are typically given out as one lump sum. For example, a person could take out a $10,000 personal loan for their wedding. They’d receive this payment upfront and could use the cash immediately.

The lender and the recipient would agree upon a repayment plan as part of the terms of the loan. These specific terms will vary by lender but, typically unsecured personal loans are paid back within one to five years.

A personal loan can be either secured or unsecured. With an unsecured personal loan, a lender won’t require a collateral asset. With a secured loan, the lender could require collateral or could require a co-signer on the loan—like a house or other asset of value.

Most lenders also allow borrowers to pay off the loan early, regardless of the loan term. That means if you happen to get a lot of cash as a wedding gift, you could use it to pay on your loan in part or in full.

Consider reviewing the terms and conditions completely before borrowing any loan, while not all lenders do, some may charge a prepayment penalty.

Variable-rate loans may also help save money on interest in the short-term, but it could rise in the long run. Fixed-rate loans mean the interest will remain the same as when the borrower signed on the dotted line, even if other interest rates shoot up faster than the price of a good DJ on a Saturday in the summer.

Considering a Personal Loan for a Wedding?

Personal loans can be a good option for those who have budgeted to pay for their wedding expenses, but just don’t have the cash on hand to cover immediate deposits or a slew of bills at once.

Maybe your parents committed to helping out with wedding costs and promised to send a cash infusion next month, but the florist whose work looks like a living Instagram photo will go with another couple if you don’t book now.

Or maybe you and your betrothed are putting aside a certain amount each month for wedding expenses, but you don’t want to put the catering deposit on your credit card because all the travel rewards points in the world will not outweigh the interest you’ll be charged.

In other words, if you have a good plan for paying your personal loan back and you just need it to bridge the gap, then a personal loan for your wedding might be perfect for you.

However, if you don’t know how you will pay off your loan but you really want a little extra room in your budget to buy that Vera Wang dress, you might want to think twice before signing on the dotted line for a personal loan.

The last thing you want to do is start your marriage off knee-deep in debt you can’t pay back, even if the pictures look amazing.

Pros and Cons of Wedding Loans

Need a little help weighing your options? Here are a few pros to getting an unsecured personal loan to help pay for your big day.

•   Personal loans are typically fast, easy ways to get some extra cash when you have to pay for deposits or cover expenses quickly for a wedding.

•   Many lenders allow you to apply for a personal loan online, making it easy and efficient to secure funding if you qualify.

•   Funds may be available in as little as one business day, depending on the lender. That way you won’t have to wait around to start putting down deposits and checking things off your wedding to-do list.

•   Personal loan lenders typically charge less interest than credit cards. This could make it a more financially viable option for those looking to pay off their vendors without paying extra in interest.

•   Personal loans are one way that could help build your credit over the long-term, if you pay them back on time, which is an excellent gift to give both you and your spouse on your wedding day. But, like all good things in life, personal loans have many downsides. Here are a few cons to be wary of before signing on the dotted line.

•   Personal loans can tempt people to spend more than they can afford. If you take one out, remember you have to pay it all back—plus interest.

•   Some personal loan lenders have prepayment or origination fees. Make sure to check the fine print before agreeing to anything.

•   It’s always a better bet to save up for anticipated expenses rather than financing them. Try to budget and save first, see if your vendors are willing to work out a payment plan, and think about what you really need versus what you want at your wedding.

•   You might be paying off your party years later, with interest. If you still feel like you need extra cash to fund your big day, check to ensure your personal loan has a lower interest rate than credit cards before taking one out.

How Much Can You Borrow for Your Wedding?

To qualify for a personal loan with a competitive rate, you’ll likely need a good credit score and a well-paying job, among other important financial factors, or potentially a co-borrower who has both of those things. Many lenders consider a good credit score to be anything above 700 , though this may vary depending on the scoring model used by the lender.

You might be able to get a loan if your score is below that, though it’s possible you’ll have to pay more in interest or you might qualify to borrow less money.

Things like how much debt you currently have, including student loans or a mortgage, can also impact how much you can borrow. At SoFi, we offer personal loans up to $100,000.

But unless you’re planning a wedding at the Plaza Hotel in Manhattan complete with champagne towers and children dressed as cherubs, it’s unlikely you’ll need that much.

Getting the Funds You Need for Your Wedding Day

Just like any loan, you need to have all your financial information and documents in order before you apply. Be sure to have things like proof of income, bank statements, information about your other debt, your Social Security number, and your identification ready.

With most online lenders, you can get pre-qualified and then decide whether to move forward with the online application. From there, you typically choose your rate, answer any additional questions, send copies of the necessary documentation, and sign the loan agreement all within a day or two.

Again, while saving up for your wedding is probably preferable to taking on debt before you say “I do,” expenses can arise that you may not expect, so knowing what your options are for personal loans can be helpful.

Don’t forget to do your research and understand everything you should be looking for in a lender so that you don’t get stuck with a loan that’s about as appealing as that ugly set of grey serving platters your Aunt Ina bought you for your wedding shower.

Ready to say “I do” to a wedding loan? Check out your options with SoFi now.

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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.

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

PL17107

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Credit card debt is an increasingly severe problem in the U.S. As Americans become more dependent on their small plastic cards, the amount of debt seems to just get bigger. And bigger.

According to Experian , the average American has a credit card balance is almost $6,200. Along with individual and household debt, the total amount of credit card debt in the U.S. has reached its highest level ever.

Whether debt has got you down, or you’re wanting to consolidate your existing credit cards and opt for ones that have the best perks and benefits for your circumstances, the question of canceling a credit card can be an extremely sticky one.

Many of us find ourselves wondering the best course of action to reduce credit card debt without affecting credit score, and the concern is valid.

While closing an account may play a role in getting a better handle on any existing debt, it’s important to understand ways to cancel a credit card in a way that doesn’t end up setting you back even more.

Ahead are some common steps that are typically needed to be taken in order to fully cancel a card, including sending a written confirmation and keeping a watchful eye on your credit report after you’ve put through a cancelation request.

Do You Really Need to Cancel?

It can be tempting to cancel cards or close accounts when things get overwhelming. But sometimes this may not be the best option.

In many cases, canceling a credit card can actually damage one’s credit score. In fact, canceled accounts may remain on a credit history for several years after the date they are closed. (With a card in negative standing, it will remain on your credit history for up to seven years, and a cancelled card in positive standing typically remains for 10 years.)

It’s important to take the time and analyze your motivations behind canceling an account before you actually do. After all, it may be smarter to simply cut up or hide a credit card rather than officially canceling.

As always, the decision is up to you, but it’s helpful to take these considerations into account before finalizing a decision that may have a long-lasting impact on your credit health and your long-term financial future.

Closing One Account at a Time

If you’ve decided that canceling your card is the best way to go for you, there are some things you may want to keep in mind before getting started.

First of all, when it comes to canceling credit cards, it’s important to remember that not all of them are created equal.

Depending on the exact reasons that led you to wanting or needing to cancel a card, you may want to consider a few things before pulling the trigger.

For example, if you’re thinking of canceling a card, you may want to consider canceling new ones instead of old ones to avoid impacting your credit score.

In the world of credit, older, more established credit in good standing is looked upon more favorably than new, and so you may want to keep this in mind when choosing which card you would like to cut.

On top of this, some credit cards may offer more appealing rewards programs for your lifestyle than others, so you may want to take stock of the perks that come with each card before deciding which one you want to stop using.

Paying Off or Transferring Your Balance

Depending on the total amount of credit you have available, closing a card account with a high credit limit could run the risk of damaging one’s credit score.

If you are carrying high balances on other cards or have active loans, this damage could be especially noticeable, since your debt-to-credit ratio (also called your credit utilization ratio) may affect your credit score. (Typically, you’d want to stay at 30% or below.)

If you’re planning on canceling a credit card, you will likely want to ensure that you’ve paid off any remaining balances on that account. If you fail to do so, you may end up having to pay interest charges on any remaining balance.

If you normally carry a balance from one month to another, you may need to take extra care to pay the full statement balance before canceling a card in order to make sure there is no money left in your balance and avoid future interest charges.

You may also want to take some time to brush up on your knowledge of credit card utilization, as it can be important to understand when it comes to canceling your credit cards smartly.

In order to lessen the negative impact of closing one of your credit card accounts, you may want to pay off all of the balances you carry on all of your cards first.

If you cancel a card while carrying zero balances on all your cards, your credit utilization rate should stay at zero, so even if you cancel a card and remove its balance, your rate shouldn’t be impacted.

Contacting a Credit Card Company

Once you’ve paid off your credit card balance, you will want to contact your credit card company to put through your request to close your account.

Sometimes, you will be able to cancel a credit card without making a phone call. It may be helpful to look up how to cancel a particular credit card online to see if your credit card company offers this option.

In most cases, you will want to contact your credit card company by phone. Usually, your customer service number will be printed on your credit card.

From there, you’d inform your credit card company that you are canceling your card. Keep in mind that some companies require you to speak to a customer service representative in order to complete this process, while others are more flexible.

It’s helpful to know that credit card representatives may be trained to try to convince you to keep your account open. Remember that you have the right to close your account at any time.

Before you hang up the phone, you may want to ask your representative for their name so that you can include it along with your written notice of cancelation.

Sending Written Confirmation

Once you’ve called and canceled your card, you may choose to mail a written confirmation letter to your credit card company. This can be a good option in order to protect yourself generally, but also in the event that the customer service representative made a mistake while putting through your card cancelation request.

In the letter, you would write things like your name, phone number, address, and account number as well as the details from the call you had with your credit card representative. If you got their name, you may want to also include it here.

You might choose to also state that you’d like your credit report to show that the account was closed at your request.

If you choose to mail a letter, consider sending it via certified mail so that you can ensure the company receives it, and make sure to keep a copy for your records.

Keeping an Eye on Your Credit Score

When canceling credit cards, patience is key. From the moment you begin the process to the moment your credit card is officially canceled, it may take one month or even longer, depending on the company.

After your account has officially been canceled, you may wish to keep tabs on your credit report to ensure that your credit card has in fact been listed as closed.

If, for some reason, the card is still marked as open, you may need to get back in touch with your credit card representatives and, possibly, repeat some or all steps in this process.

Know that it can sometimes take several weeks for changes to show up on your credit card report. For this reason, it’s good practice to get into the habit of checking your credit score regularly, whether or not you’ve recently closed a card.

Of course, if you did just cancel a card, you may want to wait a month or so to see whether or not closing your account impacted your credit score.

Keep in mind that, every twelve months, you can get one free copy of your credit report online through AnnualCreditReport.com . Some credit card companies may also offer apps that allow you to check your score for free.

Destroying Your Card

Once you’ve confirmed that your card is canceled, then you’re almost done with the process.

If you’ve ensured that the account is in fact closed, then you can officially destroy your card in the manner of your choosing.

Though cutting up a credit card may provide a feeling of freedom and catharsis, it’s important to be careful to choose a method that makes sure the information on your card is not recoverable.

If you have access to a shredder, shredding your card may be the most efficient and secure way of destroying it.

If you’re using scissors, make sure that you properly cut up all the identifying pieces of information on the card, including your signature, the expiration date, CVV number, and the credit card number itself.

From there, ensure you properly dispose of the shards. For an added layer of security, consider throwing them away in more than one garbage can.

Maintaining a Healthy Relationship with Credit

Despite the array of credit card-related woes many Americans experience, it is possible to leverage credit cards in a healthy and productive way.

Depending on your needs and financial circumstances, finding ways to use credit to your advantage is a great way to ensure that you don’t wind up with more debt than you can handle.

A credit card cancelation can often offer an opportunity to take stock of the way you’re using credit, and establish better practices moving forward.

Once you’ve familiarized yourself with your credit utilization, and taken a look at the rewards you are currently signed up for, you may choose to go about things differently in the future.

One of the best ways to help you keep tabs on your credit is to build a practice of checking your balance and your credit score regularly.

This may look like downloading an app that lets you see all of your savings, checking, and credit card accounts in one place, or just getting into the practice of logging into all of your account on a regular basis.

Whichever way you choose to go about it, there are several strategies you can try out that may help you to keep your credit in check.

From leveraging balance transfers to using the snowball method to help pay off any debt balances you currently have, there are ways to help you get your credit card debt and finances under control—regardless of whether or not you decide to get rid of some of that seemingly precious plastic.

Looking for a way to manage credit card debt? With SoFi Personal Loans, you can consolidate with a potentially lower interest rate.

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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.

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 .

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

SOPL19079

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You might have heard the phrase “there’s no such thing as free money.” You may also have heard that “money doesn’t grow on trees,” but we’re pretty sure money is still made of paper. While cash back from your credit card isn’t exactly free money, using credit wisely can be beneficial.

How Does a Cash Back Perk Work?

Cash back is the rebate of the credit card world. The money that you get back, depending on the card and the deal you’ve gotten, may come in the form of a check, statement credit, or deposit with your financial institution.

With points, you might end up with $10 off your next Starbucks purchase; but you might actually prefer The Coffee Bean and Tea Leaf, so a Starbucks card may hold no value for you. With a cash-back reward, you typically get to decide how you want to spend the money: your mortgage, your lunch, your boyfriend’s birthday present, or even your credit card debt.

While some credit card companies offer a flat cash-back rate, other cards offer some combination of a flat cash back rate, and a specialized cash back rate for certain categories (often ones you can choose).

Card holders may be eligible to receive varying amounts—typically a percentage of spending in a certain category, e.g., dining, hospitality, airlines, or groceries.

But choosing a cash-back card with the best rewards isn’t so simple. There are many different kinds of cash-back rewards which may be available.

What’s Available

•   Cash back on a monthly, quarterly, or annual basis.

•   The cash back could be for any kind of purchase or for particular purchases in certain categories like dining, gas, groceries, etc. Sometimes it might be a combination of these two with higher rates of return on certain categories.

•   Timed spending bonuses: If you spend a certain amount within a certain prescribed time you may be eligible for even more cash back than the base amount.

•   Certain cards might also offer non-cash benefits like flight upgrades or extended warranties on purchases made with that card.

Why Do Cash Back Rewards Even Exist?

How is this even possible? Getting paid to spend money sounds like the kind of job you invented when you were twelve—it couldn’t possibly be real.

It turns out that the money you’re getting back comes from some very real places. Of course, credit card companies will try to get you sign up with them instead of their competitors. It’s dog-eat-dog out there. Credit card companies have since come up with a variety of tools to attract customers, and cash back is a common reward.

But where does the money come from? If you’ve ever been asked to fulfill a credit card minimum purchase amount you know where it comes from. The $10 minimum at the cafe is not there entirely to keep you adding extra shots to your morning latte (although you’re totally going to anyway).

The Pros

With so many kinds of credit cards out there, why would you consider a cash-back card?

•   Credit cards with cash-back rewards might actually help you earn more money than a low-interest-rate checking account with a debit card. Some checking account interest rates can often be less than 1% APY. Getting 5%—or more—cash back on your purchases is a lofty difference. Credit card spending, though, is still spending—not saving—an important difference to keep in mind when making purchases. Buying within a budget is still an important consideration.

•   Some cash-back cards offer sign-up bonuses or bonuses for spending over a certain amount or in a certain categories. When used responsibly, these types of bonuses could be used for special purchases a buyer might not have been able to afford otherwise. Two tickets to Paris please!

•   Consumers with credit scores of 740 and higher are typically the ones who qualify for cards with the highest cash-back rewards, which could be up to 6% when purchasing items from designated categories. Yet another reason to pat yourself on the back for your high credit score.

The Cons

Okay, so maybe some of the maxims are correct. Nothing in life is free and money doesn’t grow on trees. Like anything good in life, there can be a downside (we’re looking at you, cupcakes).

•   Many cash-back programs actually come with a maximum on rewards. While it seems that the more you spend the more you get, eventually you might just be spending more.

•   Some cash-back credit cards have annual fees. While this may seem small compared to the money you’ll be getting back, it might be worth it to do the math and make sure the pros outweigh the cons before you are convinced that this card is worth your spending power. Some cards with hefty fees reward the cardholders with perks beyond the cash-back bonus.

•   Like any other credit card, if the balance due is not paid on time, there are typically interest charges and fees added to the principal balance. That amount may negate any cash-back rewards you earned during that statement cycle.

•   Perhaps the biggest con: Choosing and managing a credit card can be complicated. Lots of homework, (i.e., research online, with your bank, has to go into this one before you may feel ready to commit to this endeavor. With occasional fees and sometimes hard-to-acquire gains, your research is key to making sure you find one that works for your spending habits. Cash-back credit cards can pay off, but it might take some digging to find the right one.

Unfortunately, at the end of the day, there’s no free lunch. Credit card companies are in the business of making money and they rely on your debt to fund their businesses.

Using credit wisely—and reaping all the rewards—typically means paying the balance due in full each billing cycle. Getting to that point can take some time, though.

See how using cash back from a SoFi Credit Card can help you pay off debt and boost your investments.

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New and existing Checking and Savings members who have not previously enrolled in direct deposit with SoFi are eligible to earn a cash bonus when they set up direct deposits of at least $1,000 over a consecutive 25-day period. Cash bonus will be based on the total amount of direct deposit. The Program will be available through 12/31/23. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC.

SoFi members with direct deposit can earn up to 4.00% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 3/17/2023. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet

¹See Rewards Details at SoFi.com/card/rewards.

SoFi cardholders earn 2% unlimited cash back rewards when redeemed to save, invest, a statement credit, or pay down eligible SoFi debt.

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.

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

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There’s nothing quite like the feeling of having your credit card balance paid in full. It’s like a breath of fresh air, a surge of pride, and a huge sigh of relief all rolled into one. But Americans have an on-going love affair with plastic.

Collectively we hold more than $1 trillion in credit card debt. When it comes to getting rid of credit card debt, baby steps can lead to big victories—even the possibility of getting those credit cards paid off in 2020.

To be clear, we’re not talking about being completely debt-free in 2020. Depending on how much you owe on all your debt in total, that could be a longer journey. But targeting your credit card debt can be a smart first-step since credit card debt can sometimes come with a high interest rate.

We’ve put together eight common strategies for how to get rid of credit card debt. But first, you’ll need to get your head in the game. Unless you suddenly receive an inheritance or win the powerball, unloading debt can be challenging.

If you truly want to try and eliminate credit card debt in the new year, it’s going to require a lot of budgeting, discipline, and will-power. You’ll likely have to make sacrifices and compromises. But if you can keep your eye on the prize, next year you could be looking at a nice, round zero.

1. Limit Your Use of Credit

No strategy for how to crush credit card debt is going to work if you continue to rely heavily on your credit cards. Pick one card to keep—ideally, one with good terms, like a low interest rate or a great rewards program —and put the rest away.

You can store them in a safe place or even cut them up so you’re not tempted to use them. If the card doesn’t carry a large annual fee, consider not canceling your credit card account, since losing that cards credit history or percentage of credit utilization could possibly have an affect on your credit score.

2. Take a Hard Look at Your Spending

Go through last month’s bank and credit card statements and add up all the money you spent eating out, or shopping for non-essentials. You may be surprised at what you find.

Review your spending closely and see if there is any room for you to cut back on unnecessary expenses. Then, create a budget that’s completely within your means.

The goal is to cut back on your discretionary spending so you can focus additional funds on paying off your credit card debt. Take a look at our tips for creating a better budget. Building a workable budget is one of the first steps in tackling your debt.

3. Create a Debt-Repayment Strategy and Stick to It

There are a few different schools of thought when it comes to eliminating your credit card debt, especially if you have debt spread over multiple credit cards. Regardless of the strategy you choose, make the minimum monthly payments on all of your debts.

One strategy is called the debt avalanche method. Using this method you’ll organize your credit card debt from highest interest rate to lowest interest rate.

Focus your efforts on repaying the debt with the highest interest rate first. Then as you pay off each credit card, you can contribute the money you were contributing to the next debt.

On average, Americans will pay more than $1,000 in interest this year, so tackling the highest interest rate first could be appealing. You can use our credit card interest calculator to see an estimate of how much interest you’ll accrue on your current track.

The other approach suggests you focus on the credit card with the smallest balance first. This is called the debt snowball method. The goal of this strategy is to encourage you to continue your debt repayments. Since you start with the smallest balance, you’ll start seeing the impact of your payments faster.

6. Transfer to a Balance Transfer Credit Card

This could help you toward your goal of eliminating your credit card debt but in order to do so it will require diligence to avoid common pitfalls.

A balance transfer credit card allows you to open a new low-interest or interest-free credit card and transfer your existing balance from a high-interest credit card, so you can pay off the debt. In theory, paying off the debt should be easier without a high APR.

The introductory APR on low or 0% transfers generally lasts anywhere from six to 18-months, so be sure you understand the terms and conditions. These can be a useful tool if you can repay your debt during the introductory period.

7. Consolidate Your Debt with a Personal Loan

A personal loan won’t eliminate your debt, but it could help you get out of the high-interest credit card game. Instead of a revolving door of debt, you can opt to pay one monthly fixed payment, possibly at a lower interest rate.

8. Pay More than You Owe, More Often than You Owe It

As you work toward paying your credit card debt, consider making more than the monthly minimum payments. This can help you pay off your debt faster and in doing so, could help you reduce the amount of money you spend in interest over the life of the debt. This can be helpful in both the avalanche and snowball methods of debt repayment.

Ready to see how consolidating your credit card debt with a personal loan could help you take control of your finances? SoFi can help. Use our personal loan calculator to compare your current debts with a personal loan.

When you take out a loan with SoFi there are no prepayment penalties or origination fees. You’ll also gain access to a community of like-minded savers.

Check your rate in just a few minutes.

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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.

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 .

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.

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

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