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Getting a credit card with no deposit can be easy if you have an established credit history with a good or excellent credit score. But if you’re just establishing your credit history or are trying to build your credit score, it can be much more challenging to apply for a credit card with no deposit.

For some, a secured credit card (one requiring a security deposit) might seem like the only option, but there are other paths to building your credit history. In this guide, we’ll cover how to find and apply for credit cards with no deposit — and what steps you can take to get closer to approval if you’re being denied.

What Is a Credit Card Security Deposit?

Because of their established credit history and decent credit scores, many borrowers can open credit cards with no money down (nor any other kind of collateral). This is called an unsecured credit card. However, if you don’t have any credit history or have a low credit score, you might find that credit card issuers will only offer you a secured credit card — meaning it requires a security deposit.

A credit card security deposit is refundable and often equal to the value of the credit limit on the card. Typically, the deposit amount ranges from $50 to $300.

While going this route can’t help you with unexpected expenses (as with a debit card, you are technically only able to spend money you already have), it can be a good way to build credit. However, you’ll want to ask the card issuer if the company reports to the credit bureaus, just to ensure it does.

Eventually, you may be able to graduate to an unsecured card if you consistently make on-time payments — one of the cardinal credit card rules.

Applying for a Credit Card With No Security Deposit

Applying for a secured credit card requiring a deposit might not be appealing to every potential borrower, especially because you need the money for the deposit upfront. These cards also typically have higher interest rates and fees. Fortunately, you have other options when shopping for a credit card.

Checking Your Approval for a Card

There’s no such thing as guaranteed credit card approval with no deposit. However, if you’re receiving emails or snail mail with credit card offers saying you’re preapproved, you might find success when you apply. You’ll still have to go through the formal application process and could ultimately get rejected, but getting a preapproved offer is a helpful step toward getting a credit card.

You can also proactively check your approval for a credit card online. Take a look at your credit score and then search online for offers for credit cards with no deposit that include your credit score in their target range. Studying this credit card guide can help ensure you understand all the finer points of credit cards before you apply.

Becoming an Authorized User

If you aren’t having success getting approved for a credit card on your own, ask a parent, family member, or trusted friend about being an authorized user on their credit card. As an authorized user, you’ll receive a credit card with your name on it and can use it like a traditional credit card, but you will not be the primary account holder.

The primary account holder is the one responsible for making on-time payments and monitoring credit usage. As an authorized user, you won’t have control over things like credit limit, and the primary cardholder can even set spending limits on your card.

However, if the primary cardholder uses the credit card responsibly — making regular, on-time payments and keeping credit utilization low — you will likely see a positive impact on your own credit score. Eventually, your score might be positively impacted enough for you to try applying for your own card again.

If someone makes you an authorized user on their card, however, it’s important to pay them what you owe each month. Never rack up credit card charges beyond what you’ve discussed with the cardholder. If you abuse your card privileges, it could affect your credit score and the score of the account holder — and the friend or family member will be solely liable for paying off your debts.

Getting a Student Credit Card or a Subprime Card

If the thought of affecting someone else’s credit score as an authorized user makes you uncomfortable, you aren’t out of options. You might be eligible to apply for a student card or a subprime card.

•   Student credit card: Most student cards do not require a security deposit and are designed for students who have no credit history. Some cards might even offer cash-back rewards and no annual fees. However, as the name implies, you must be able to prove you are a student as part of the application process.

•   Subprime credit card: A subprime card is an unsecured card (i.e., no-deposit card) designed for borrowers with bad credit (generally a score below 580 in the FICO^® score model). While subprime credit cards provide a way for bad-credit borrowers to get a credit card with no deposit, they often come with their own drawbacks. Typically, subprime cards charge an application fee; some might have annual or even monthly fees. Credit limits tend to be low.

Transitioning to an Unsecured Card

If you have no luck with a student or subprime card and can’t become an authorized user, you may need to consider applying for a secured credit with a deposit after all. Although it might not be ideal, it can be a good first step toward building your credit history.

If you make regular on-time payments, the credit card issuer might eventually transition you to an unsecured card. Alternatively, you can be proactive: After building your credit history and score over several months with a secured credit card, you can apply for a credit card with no deposit through another issuer. You might find that you’re more successful this time around.

Recommended: When Are Credit Card Payments Due

What to Know About the Effects of Your Credit Score

An unsecured credit card can potentially affect your credit score if the credit card issuer reports to the credit bureaus. Before opening a credit card with a security deposit, ask the issuer if it reports to the bureaus.

If the card issuer does report, regular on-time payment could build your score over time. On the flipside, late or missed payments could adversely affect your score.

Getting a No-Deposit Credit Card: What You Should Know

So, should you get a no-deposit credit card? In general, these unsecured cards offer greater flexibility at the start because you aren’t required to pay a security deposit.

However, opening a credit card of any type is a big decision — and not one to be taken lightly. It’s important to consider the potential effects of opening a credit card and to be aware of how much a credit card costs. For example, if you max out a credit card with a high interest rate, you might find yourself drowning in the fast-growing debt it creates.

Before opening a no-deposit credit card (or any credit card), think about the implications it can have on your finances. You might consider alternate ways of establishing credit, like credit-builder loans or even small personal loans.

However, these options don’t offer some of the same perks and protections that a credit card does, such as credit card chargebacks. If a credit card feels like the right step for you, begin your research process online.

Recommended: What is a Charge Card

The Takeaway

Credit cards without a security deposit, called unsecured credit cards, can be appealing because they require no money down. However, borrowers without a credit history and those who are struggling with bad credit may find it challenging to get approved for a no-deposit credit card. If applying for a secured credit card (i.e., one with a security deposit) is not ideal for your financial situation, you can ask to become an authorized user on someone else’s card or apply for a student or subprime credit card.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

Enjoy unlimited cash back rewards with fewer restrictions.

FAQ

Do all credit cards require a deposit?

Only secured credit cards require a security deposit. Those with no credit history or bad credit scores might only be eligible for secured credit cards. If you have a good credit score, you can apply for a credit card without a deposit.

Can I get a credit card if I have no credit history?

It is possible to get a credit card with no credit history. A secured credit card requires a security deposit but makes it easier for borrowers with no credit history to get approved. Students can also consider student credit cards, which are often issued to student borrowers without any credit history.

What credit score is required for approval?

While having a good to excellent credit score (typically 670+) is ideal for getting the best credit cards with the lowest rates, some credit card issuers do offer cards for borrowers with fair or even poor credit (meaning scores between 580 and 669). These cards might have higher fees and fewer perks and may require a security deposit.

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Photo credit: iStock/Prostock-Studio

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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

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A credit card limit is the maximum you can spend before a repayment is required. For those who pay their balance on time to avoid interest and fees, a high limit provides valuable spending power. However, for those who view it as permission to overspend, it can lead to financial trouble.

While you can request an increase, issuers often grant them automatically to cardholders who manage credit well. But is a higher spending limit always a good thing? It depends on your financial situation. Here’s how to know if your credit card spending limit is too high.

How Does My Credit Card Spending Limit Work?

Credit cards are a form of revolving debt, which means that there is an upper spending limit. However, the credit can be repaid and used again. It revolves between being available to use, being unavailable because it’s being used, and being available to use again after it’s been repaid.

A credit card issuer typically bases the credit limit on factors such as the applicant’s credit score, income, credit history, and debt-to-income ratio. However, every credit card company differs in which factors it considers and how much emphasis it places on each component. The current average credit card limit is around $30,000.

It’s important to keep in mind that a credit limit represents the maximum you can spend, not a recommendation for spending. In fact, a good rule of thumb is to spend no more than 30% of your available credit to maintain healthy credit. Many financial experts suggest aiming even lower — closer to 10%. “Generally, the further away a person is from hitting their credit limit, the healthier their credit score will be,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi.

Why Your Credit Card Issuer Increased Your Spending Limit

Your spending limit isn’t set in stone, though. Even if you haven’t specifically requested a credit limit increase, your credit card issuer may automatically increase the credit limit on your card.

There are various reasons this might happen.

•   Your credit has improved, resulting in a higher credit score.

•   Your income has increased.

•   Your card offers a built-in pathway to a higher credit limit.

•   The card issuer wants to retain you as a customer by offering a higher credit limit.

Credit card issuers may also increase customer credit limits to encourage responsible borrowers to spend more on their credit cards. Generally, the more cardholders spend on their cards, the better it is for the issuer’s bottom line.

Pros of a High Credit Card Spending Limit

Having a high spending limit on your credit card comes with a number of benefits:

•   Emergency safety net. A higher limit provides a larger financial cushion for unexpected expenses, such as urgent home repairs, medical bills, or car maintenance, without needing to apply for a new loan.

•   Lower credit utilization. Your credit utilization rate is the relationship between your spending limit and your balance at any given time. If your limit is $10,000, and your balance is $1,500, your credit utilization is 15%. Generally, the lower your credit utilization rate, the better (below 30% or closer to 10% is generally best).

•   Better rewards. If you have a rewards credit card, having a higher spending limit enables you to put more of your monthly expenses on a single card, helping you accumulate cash back, points, or miles faster.

Cons of a High Credit Card Spending Limit

As attractive as the benefits might sound, there can be drawbacks to having a high credit card spending limit. Here are some to consider:

•   Risk of overspending. The most significant drawback is the temptation to spend more than you can comfortably afford just because the credit is available.

•   Potential for high-interest debt: If overspending leads to a high balance, the high limit can result in substantial debt and steep interest charges.

•   Future borrowing risks: Some lenders may view a very high total credit limit as a risk when you apply for a loan (such as a mortgage), as it represents a large amount of potential debt you could incur at any time.

What Happens if You Go Over Your Spending Limit

Unless you’ve opted into over-limit coverage, you generally can’t go over your spending limit on a credit card. Any transaction that pushes you beyond your credit limit will simply be denied.

If you have opted into over-limit coverage, however, the issuer will allow you to spend beyond your limit but will typically charge you a fee. These fees generally run between $25 and $35 but, by law, can’t exceed the amount of the overage. So if you went over your credit limit by $18, the issuer can’t charge you more than $18.

Before you opt in to an agreement like this, the credit card issuer must tell you what the potential fees will be. They must also provide you with confirmation that you opted in.

If you opted in to an over-the-limit agreement, but no longer want it, you can opt out at any time by contacting your credit card issuer’s customer service department.

Recommended: Maxed-Out Credit Card: Consequences and Steps to Bounce Back

Taking Control of Credit Card Debt

A higher spending limit can be a good thing if it’s used responsibly. If it leads to over spending, on the other hand, you may find yourself carrying a high balance from month to month and racking up interest. If that happens, here are some strategies that can get you back on track:

•   Pay more than the minimum: Look for ways to temporarily reduce or eliminate unnecessary expenses (like dining out or subscriptions) and put any savings you uncover towards paying down your balance.

•   Look for a balance transfer card: If you can qualify for a 0% interest balance transfer credit card, you can avoid paying interest on your balance for a period of time (typically for 12 to 21 months), making it easier to pay off. Just watch for transfer fees, which often run from 3% to 5%.

•   Consider a credit card consolidation loan: Taking out a fixed-rate personal loan with a lower interest rate than the card(s) you’re paying to pay off can help you save on interest and potentially pay off your debt faster. If you have multiple debts, a consolidation loan can also simplify repayment by rolling multiple monthly bills into one.

The Takeaway

A high credit card spending limit can be a beneficial tool, offering a financial safety net and helping to keep your credit utilization low, which can positively impact your credit. However, it only serves as an asset if you use it responsibly and avoid the temptation to overspend. If a high limit encourages you to take on excessive, high-interest debt, it may be too high for your current financial situation.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

Enjoy unlimited cash back rewards with fewer restrictions.

FAQ

What’s the average credit card limit?

The current average credit card limit is around $30,000. However, credit limits can vary significantly based on factors like your credit score, income, and credit history. It’s important to remember that your credit limit is the maximum you can spend, not a suggested spending goal. Financial experts typically recommend keeping your spending, and thus your credit utilization rate, below 30% of your limit — and ideally closer to 10% — to maintain healthy credit.

Can a spending limit be too high?

Yes, a spending limit can definitely be too high for certain individuals. While a high limit is beneficial for maintaining a low credit utilization rate and offers an emergency cushion, it can also tempt people to overspend. If a high limit encourages you to carry a large, revolving balance and incur high interest charges that you struggle to pay off, then it is likely too high for your current financial habits and situation.

Is it bad to use 50% of your credit limit?

Using 50% of your credit limit is generally considered too high and can negatively impact your credit. This high usage translates to a 50% credit utilization rate, which is well above the recommended maximum of 30%, and far from the ideal 10%. A high credit utilization rate signals to lenders that you may be over-reliant on credit, financially overextended, and a higher risk of default.

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Photo credit: iStock/mixetto

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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 Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Whether you’re renting a car for a vacation or because your own vehicle is in the shop, the representative at the counter will likely ask, “Would you like to buy additional insurance protection?” The answer isn’t always a simple yes.

In many cases, this extra cost is unnecessary. Not only does your personal auto insurance often cover rentals, but many credit cards provide built-in protection — sometimes even primary coverage — that makes expensive agency waivers redundant.

Below, we take a closer look at credit card rental insurance, including how it works and what steps you need to take to ensure your rental is covered.

What Is Credit Card Rental Car Insurance?

Rental car insurance through a credit card is also called an “Auto Rental Collision Damage Waiver.” This type of rental car insurance essentially offers protection against damage or theft of your rental vehicle when you pay for it using your credit card and decline the rental company’s collision damage waiver.

Credit card rental car insurance is most commonly secondary insurance, which means it kicks in after your personal auto insurance pays. It typically covers damage to or theft of the rental vehicle itself, but not injuries, liability to others, or personal belongings in the car.

Understanding Your Credit Card’s Coverage for Rentals

When offered, credit card car rental insurance generally falls into one of two categories: primary or secondary coverage.

Primary Coverage

Though not common, some issuers offer credit card rental car insurance as primary coverage. Primary coverage means that, in the event of damage or theft, you can file a claim directly through the card issuer for reimbursement. You’re not required to file a claim through other insurance sources, like your personal auto insurance company, before the primary credit card car rental insurance benefit applies.

Secondary Coverage

More commonly, credit cards provide secondary rental car insurance protection, which kicks in after your personal auto insurance policy pays for damages. However, this coverage can be highly valuable, as it typically reimburses deductibles and other costs not covered by your primary insurance.

Recommended: How Much Auto Insurance Do You Need?

How Does Credit Card Rental Insurance Work?

Most major credit card networks (including Visa, Mastercard, and American Express) offer some form of rental car coverage. However, the extent of the coverage can vary depending on the type of card and the bank that issued it.

When a credit card offers car rental insurance, it typically covers:

•   Collision/damage: Physical damage to the rental car resulting from accidents.

•   Theft: Costs associated with the vehicle being stolen.

•   Loss of use fees: Administrative fees and revenue lost by the rental company while the car is being repaired.

•   Towing: Reasonable expenses related to towing the damaged vehicle.

However, credit card rental insurance does not replace full auto insurance. It generally does not cover:

•   Liability: Damage to other people’s property or vehicles, or medical expenses for you, your passengers, or other people.

•   Certain car types: Exclusions may include high-value, exotic, or antique cars, motorcycles, RVs, and trucks.

•   Personal property: Items stolen from the car (this is often already covered by homeowners or renters insurance).

•   Extended car rentals: Policies often cap coverage at 30 days.

Questions to Ask Your Credit Card Issuer

You can find out the details of your credit card’s coverage for rental cars by checking your “Guide to Benefits” (if you didn’t save this, you can often find it online). If you’re unclear about how your card can protect you while using a rental car, contact your issuer’s customer support number. Here are some important questions to ask:

•   Does the rental car insurance benefit offer primary or secondary coverage? The answer to this question can help you choose the best payment option to use for your next rental car. It will also give you a sense of what to expect if you need to file a claim.

•   What is included and not included in the coverage? In addition to reimbursements for damage, you’ll want to know if the card’s rental car insurance covers loss-of-use charges from the rental company, for example. Be clear on what isn’t eligible for reimbursement, too.

•   What are the coverage timelines? Depending on your credit card issuer, the number of days when your rental coverage is in effect might be limited.

•   Are there any countries in which the coverage is ineligible? Rental car insurance coverage might not be offered if the incident occurred in certain countries.

•   What do I need to do to ensure I’m covered? Ask what you can do on your end to ensure your rental car is covered by the credit card’s insurance benefit. This may include putting the entire purchase on the card, declining supplemental rental insurance coverage from the rental company, or other requirements stipulated by your insurer.

•   What’s the process for filing a claim? Knowing how to swiftly file a claim after an incident can offer some peace of mind during an already stressful situation.

Recommended: When Are Credit Card Payments Due?

Guide to Choosing the Right Credit Card for Car Rental Insurance

If you have multiple credit cards in your rotation that offer differing levels of credit card car insurance protection, see if one happens to offer primary coverage. This helps you avoid the added step of going through your own auto insurance company before being able to successfully file a claim through the card issuer.

The next factor for consideration is coverage amounts. Your maximum reimbursement amount may vary from one card to another, so be mindful about how high or low this limit is. Also, pay attention to the exclusions for coverage, including ineligible countries, activities (e.g. off-roading in the rental vehicle), and restrictions on vehicle type.

Other Ways Your Card Can Protect You When You Travel

When a credit card is used responsibly, it can offer many travel-related benefits. In addition to rental car insurance coverage, some credit cards provide protection for lost luggage expenses and trip interruptions.

Credit card travel insurance is especially useful if your travel plans are canceled due to reasons like severe weather or illness.

Keep in mind that many premium travel credit cards come with substantial annual fees. They typically also have higher credit score requirements.

The Takeaway

If your credit card covers rental car insurance, in many cases you can decline the duplicative car rental company’s offer for collision coverage. However, it’s worth learning whether your credit card car rental insurance coverage is primary or secondary and what its coverage limits are in case you need to file a claim.

While SoFi does not currently offer credit cards with rental car insurance, we do offer other credit cards that may suit your needs.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

Enjoy unlimited cash back rewards with fewer restrictions.

FAQ

Do you need a credit card to rent a car?

You do not always need a credit card to rent a car, but it is highly common. Rental car companies generally require a form of payment and a hold for a security deposit. While a credit card is the most accepted method, some agencies may allow you to use a debit card, though this often comes with more restrictions, such as a credit check, a higher deposit hold, or proof of a return flight. It is best to check the specific rental company’s policy before booking.

Do all credit cards have car rental insurance?

Not all credit cards include rental car insurance and while it is a common feature of travel rewards cards, the specific level of coverage varies significantly between different cards and issuers. You can check your credit card’s benefits guide to see if you’re eligible for rental car insurance.

How do I know if my card comes with primary or secondary insurance?

You can refer to your credit card’s “Guide to Benefits” to learn whether your credit card offers car rental insurance protection and, if it does, whether it’s primary or secondary coverage. You can also contact the customer support phone number listed on the back of your credit card to speak to a representative about your specific card’s car rental insurance benefits.

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Photo credit: iStock/g-stockstudio

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

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A credit card number — that long string of digits on the front or back of every credit card — contains more information than you might think. Though credit card numbers may seem rambling and random, each digit actually has a specific purpose and place. The number you see on a credit card provides information about the individual account holder, the payment network, and the card issuer. It also uses a special formula to help prevent transaction errors and fraud.

Here, gain a deeper understanding of the significance of each digit.

What Is a Credit Card Number?

A credit card number is a set of digits — usually 16 — that’s printed on the front or back of a credit card.

It’s important to note that your credit card number is not the same thing as your account number. Your credit card number includes your account number, but it has additional digits (an account number typically has 12), and it provides more information. When you make a credit purchase online or on the phone, you can expect to be asked for your full card number to authenticate the transaction.

Though the information provided by every credit card number is basically the same, the physical format may differ a bit from card to card: Sometimes the numbers are raised; sometimes they’re flat. And generally, although not always, the digits are divided into four sets of four (xxxx xxxx xxxx xxxx).

The format for credit cards and debit cards is similar — which is why you might pull out the wrong card from time to time.

Who Decides What Your Credit Card Number Is?

Your credit account number is assigned by the financial institution that is your credit card issuer. But the structure and sequence of the digits in your credit card number must follow a rigid set of standards imposed by the International Organization of Standardization (ISO) and enforced by the American Network of Standards Institute (ANSI).

All card issuers follow these rules, so consumers can use their cards or card numbers no matter where they are in the world.

Credit Card Number Structure

Even if you know what a credit card is and how credit cards work, you may not be familiar with what the numbers on your card mean. Though most credit card numbers have 16 digits, the length may vary. Of the four major card networks, Visa, Mastercard, and Discover card numbers all have 16 digits, while American Express card numbers have only 15. Here’s what those digits actually mean.

The First Number: Industry Identifier

The first digit in a credit card number is known as the Major Industry Identifier (MII), and it can tell you both the industry associated with the card and the payment network.

Payment Network

Most credit cards start with a 3, 4, 5, or 6. These numbers represent the major payment networks, each of which has its own identifier:

•   American Express cards begin with a 3

•   Visa cards begin with a 4

•   Mastercard cards typically start with a 5, but may start with a 2

•   Discover cards start with a 6

Knowing your credit card’s payment network can be useful, because the network determines which merchants will accept the card. Your favorite local market or small boutique might accept credit card payments with one card but not another.

Recommended: When Are Credit Card Payments Due

Industry Association

There are many different types of credit cards. Some credit cards are meant for general use, while others may be geared to a more specific purpose. The MII can tell you which type of industry your card is most associated with. Here’s what some MIIs generally mean:

•   1: Airlines

•   2: Airlines and financial

•   3: Travel and entertainment

•   4: Banking and financial

•   5: Banking and financial

•   6: Merchandising and banking

•   7: Petroleum

•   8: Health care and communications

•   9: Government and other

The Next 5 Numbers: Identification Numbers

The next five digits complete the Bank Identification Number (BIN), or Issuer Identification Number (IIN). This can tell you who the card issuer is.

The credit card issuer is the financial institution that offers the card and manages your account. Some of the largest credit card issuers in the U.S. include American Express, Bank of America, Capital One, Chase, Citi, Wells Fargo, and Discover.

When you apply for a credit card, it’s the issuer that accepts or declines your application. When you make a purchase, you’re borrowing money from the credit card issuer, and when you pay your bill, you’re paying back that money. Any time you check your balance, request a higher credit limit or a lower interest rate, or obtain a replacement card, you’re doing it through your credit card issuer.

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

The Next 9-12 Numbers: Account Identifier

The remaining digits on the card — except for the very last one — identify the account and the cardholder.

Don’t worry, there isn’t a secret indicator in your card number that tells people how often you’re using your credit card or if you’re paying your bills on time. This part of your card number simply represents what account the card is connected to.

If your card is lost or stolen, or your card number is compromised in a credit card scam, you may notice that the number on your replacement card has changed, even if your account number hasn’t. So if you’re keeping a list of card numbers in a secure place, you may have to update that card number.

Recommended: Tips for Using a Credit Card Responsibly

The Last Number: Checksum

The last digit of a credit card number is referred to as the “checksum” or “check digit.” Card issuers and payment networks use it to catch errors and help protect against unauthorized card use. (Let’s face it: Even if you follow all the so-called credit card rules, things can happen.)

When a card is used for a purchase or payment, this digit is used as part of a mathematical formula called the Luhn algorithm to verify the card’s validity. If the checksum doesn’t work, the transaction is quickly rejected. (If you’ve ever mistyped your card number when shopping online, you’ve seen this algorithm in action.)

Most major networks use the final digit as the checksum. However, if you have a Visa credit card, it may be the 13th digit.

What About the Other Numbers on the Card?

Besides the card number, there are two other sets of digits that also can play a critical role when you use your credit card.

Card Verification Value (CVV)

The Card Verification Value (or CVV number on a credit card) or Card Verification Code (CVC) is also used to protect the card owner. If you do a lot of online shopping, you’re probably very familiar with this three- or four-digit number, which usually is found on the back of a credit card near or inside the signature strip.

On some cards, there may be seven digits in this spot. If this is the case, the first four digits you see are the last four digits of your credit card number. The last three digits in the grouping represent the CVV.

If you have an American Express card, the CVV is a four-digit number located on the front of the card.

If you aren’t presenting your card in person during a transaction (because you’re using it online or over the phone), providing the CVV can help prove you’re in possession of the physical card.

The CVV is designed to help protect against identity theft. If you aren’t presenting your card in person during a transaction (because you’re using it online or over the phone), providing the CVV can help prove you’re in possession of the physical card. “No matter how you prefer to pay for purchases, checking your bank and credit card statements regularly for suspicious or erroneous charges can help you spot fraudulent activity right away. You may want to do this daily during periods of high usage, like around the holidays when it’s easier for fraudulent charges to slip through,” says Brian Walsh, CFP^® and Head of Advice & Planning at SoFi.

Expiration Date

The expiration date offers yet another layer of protection for the card holder. Most businesses require that you provide the credit card number, the CVV, and the card’s expiration date when you make an online purchase.

The credit card expiration date typically appears on the front of the card with two digits for the month and two digits for the year (xx/xx). But if the account number is printed on the back of the card, you’ll likely find the expiration date there.

Even if you never need to use your card to make a remote purchase or payment, it can be a good idea to glance at the expiration date from time to time. That way, you can ensure you always have a current card in your wallet.

You’ll also know when it’s time to watch for the arrival of a replacement card. If a new card doesn’t arrive in the month the old card expires, you can call the issuer and immediately take steps to protect yourself if it appears the card has been lost or stolen. (The phone number for customer service is also on your card.)

Learn more about credit cards by exploring this credit card guide.

The Takeaway

At first glance, the number on your credit card might look like a meaningless jumble. But if you take a closer look, you’ll find each digit has a purpose — to provide information, to help keep your account secure, and to make the card more user-friendly.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

Enjoy unlimited cash back rewards with fewer restrictions.

FAQ

Where do I find my credit card number?

Your credit card number may appear on the front or back of your credit card.

Is the credit card number the same as the account number?

No, the two numbers are linked, but they are not the same. Your credit card number may include your credit account number, but it has more digits, and those extra digits are important to how each transaction is processed.

How long is a credit card number?

A credit card number typically has 16 digits, but the number can vary. American Express uses a 15-digit format for its credit cards.

Can a credit card number be stolen?

Yes. A credit card number can be stolen in multiple ways: through the theft of a physical card; during a data breach; with a card skimmer; or if the cardholder uses an unsecured website or Wi-Fi network when making a credit transaction.

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Photo credit: iStock/max-kegfire

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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

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It may be possible to pay some or all of your bills with a credit card. Using a credit card in this way can help you earn rewards like cash back and travel points.

But it’s not always the right financial move. Keep reading to learn what bills you can pay with a credit card and how using a credit card to pay bills works.

Can You Pay Bills With a Credit Card?

Yes, it is possible to pay certain bills with a credit card. However, using a credit card responsibly is key.

When using a credit card to pay bills, it’s important to make sure doing so won’t cause you to rack up a high balance. Paying bills with a credit card makes the most sense when you can easily pay off your credit card balance in full right away.

If done responsibly, a card holder can earn credit card rewards — like cash back, travel points, and gift cards — for spending on purchases they have to make every month without paying interest. Plus, making regular, on-time payments can help build your credit profile.

When Should You Not Use a Credit Card to Pay Bills?

As great as the potential to earn rewards is, if someone can’t afford to pay their credit card balance, charging their bills can lead to high interest charges and late fees (which are two ways credit card companies make money). High-interest credit cards have an average APR of about 20%–25%, and credit card interest typically compounds daily using a daily interest rate, all of which means debt can build up quickly when balances are carried.

It also might not make sense to pay bills with a credit card if it leads to paying an extra fee from the merchant.

💡 Quick Tip: Credit card interest caps have become a hot topic, as the total U.S. credit card balance continues to rise. Balances on high-interest credit cards can be carried for years with no principal reduction. A SoFi personal loan for credit card debt may significantly reduce your timeline, however, and could save you money in interest payments.

What Bills Can You Pay With a Credit Card?

There are limitations on which bills you can pay with a credit card. And, as mentioned, you may owe a fee for using a credit card to pay bills, which could outweigh the benefits earned.

Here are nine examples of bills you may be able to pay with a credit card, as well as explanations on how paying these bills with a credit card works.

1. Streaming Services

Streaming services typically accept credit card payments to cover the monthly cost of the subscription. Paying for a streaming service with a credit card typically involves logging into your account, navigating to the “Account” or “Billing” section, and selecting “Add/Update Credit Card” to input your card details. The card will then automatically get charged each month unless you cancel or suspend your membership.

Streaming services generally do not charge an extra fee if you choose to pay your bill by credit card.

2. Utilities

Some utilities providers allow credit card payments, so it’s worth investigating this option to determine if it’s accepted. If your utility provider will take a credit card payment, then setting it up is usually as simple as providing your credit card number when you pay your bill online, over the phone, or through the mail. You can often set up autopay as well.

However, watch out for the additional convenience and processing fees that some providers may charge. Higher bills are more likely to offset this fee given the greater earning potential for credit card points or other rewards.

3. Cable

Cable is another bill you can typically pay with a credit card. To determine how to do so, you’ll want to consult your cable provider. You may be able to enter your credit card number on the online payment portal or provide this information over the phone. Setting up autopay is also usually an option with a credit card.

There is typically no additional processing fee to pay cable bills.

4. Phone

Another bill you might be able to pay with your credit card is your cell phone bill. You can likely set this up online on your provider’s website or by giving them a call. If you’re unsure of how to pay bills with a credit card, simply consult your plan provider.

You’ll typically face no additional processing fees.

5. Internet

Your internet service is another bill that you can often cover using your credit card. As with other utilities and services, consult your internet provider if you need assistance getting this set up. In general, however, you can do so through your online payment portal. If you don’t want to go through the legwork each month, you can usually set up autopay with your credit card.

Internet providers typically won’t charge an additional processing fee to pay your bill with a credit card, meaning those costs won’t cut into any rewards you earn with a cash back credit card or other type of rewards credit card.

6. Rent

Landlords typically don’t allow credit card payments, but there are third-party solutions that allow you to pay your rent with a credit card. This includes services such as Plastiq and PlacePay, which act as intermediaries.

However, you’ll generally pay a convenience charge or other fees. You’ll want to assess whether the benefits of using your credit card to pay rent outweigh the costs.

7. Mortgage

Mortgage servicers generally don’t allow credit card payments. However, there are third-party payment processing services through which you could pay your mortgage. Still, some credit card issuers may prohibit you from paying your mortgage through these services.

In addition to restrictions, you’ll want to look out for processing fees. These could cancel out any rewards you could earn from covering your mortgage with a credit card.

8. Taxes

It is possible to pay some taxes with a credit card. The IRS allows you to pay on its website using a credit card. However, you’ll face a processing fee ranging from 1.75% to 1.85%, depending on which payment processor you select. If you opt to file and pay using third-party tax software, your fee could be even higher.

9. Medical Bills

While you can pay medical bills with a credit card, it might not be the most cost-effective option. Many medical providers may offer interest-free or low-interest payment plans, or a personal loan could offer a lower rate than a credit card.

If you do think the rewards and convenience of using a credit card is worth the risk, the process of paying bills with a credit card will vary by medical institution. Before charging your medical bills to a credit card, you may want to at least try to negotiate medical bills down.

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

Benefits of Paying Bills With a Credit Card

There are a few key benefits associated with paying bills with a credit card.

1. Ease of Payment

It may be possible to pay a bill with a credit card online, in an app, or over the phone.

2. Easy to Prove Payment

If a payment dispute arises, paying by credit card is an easy way to keep a record of payments.

3. Fraud Protection

Paying bills with a credit card offers stronger fraud protection than using a debit card or a direct bank transfer. If you spot a suspicious charge, the issuer will typically remove it from your statement and investigate the claim on your behalf, so you don’t have to pay for it while the issue is resolved.

4. Autopay

It’s easy to use a credit card to set up autopay for bills so you never accidentally forget to pay them.

5. Can Build Credit History

Given how credit cards work, using a credit card to make payments and then paying that balance off on time and in full can help you build your credit.

6. Earn Rewards

Paying your bills with a credit card can help you earn cash-back rewards and credit card points.

Downsides of Paying Bills With a Credit Card

There are also some downsides to paying bills with a credit card that are worth keeping in mind.

1. May Cost More

Because many bill services charge fees to pay with a credit card, it’s possible to spend more than necessary on processing fees.

2. Can Lead to High-Interest Debt

If you can’t afford to pay off your credit card balance after using it to pay for bills, you can end up with high-interest debt on your hands. As mentioned, debt can accrue quickly on credit cards with high, compounding interest rates, and it’s unfortunately not an uncommon situation to be in. In the United States, the total credit card balance recently rose to $1.23 trillion.

In fact, credit card interest caps have become a hot topic, including a proposal for a temporary 10% cap on credit card interest rates. While opinions are divided on interest rate caps, one increasingly popular option is applying for a personal loan. Personal loans interest rates average 10-12%, compared to 20%-25% for credit cards, and they have predictable, fixed terms.

3. Processing Fees Can Cancel Out Rewards

It’s important to do the math to make sure that the cost of processing fees isn’t canceling out the cash back you’re earning with the purchase.

4. Leads to Another Bill to Pay

Similar to when you pay a credit card with another credit card, paying a bill with a credit card simply leads to another bill to pay. This can cause more hassle than it’s worth.

5. Can Hurt Credit Utilization Ratio

Carrying a higher balance on a credit card can lead to a higher credit utilization ratio, which can be damaging to your credit. One common credit card rule of thumb is to keep your utilization below 30%, meaning you’re not using more than this percentage of your total available credit at any given time.

Recommended: What Is a Charge Card?

Guide to Using a Credit Card to Pay Bills

At this point, it’s clear that it is possible to pay some bills with a credit card. But should you? In short, it depends.

If the bill provider won’t charge a processing fee and you can afford to pay off your credit card balance in full, then paying bills with a credit card can be a great way to earn rewards and potentially build credit.

However, in many cases, the processing fee some merchants charge can outweigh the value of cash back or other rewards earned. And carrying a credit card balance can lead to incurring expensive interest and fees.

The Takeaway

The decision to pay bills with a credit card hinges on two main factors: whether the provider charges a processing fee and your ability to pay the full credit card balance on time. If you can avoid fees and pay your statement in full, using a credit card for bills can be a smart way to earn rewards and build credit. However, high processing fees or carrying a balance that accrues high-interest debt can quickly negate any potential benefits.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

Enjoy unlimited cash back rewards with fewer restrictions.

FAQ

Should I put non-debt bills on a credit card?

Paying non-debt bills like streaming, cable, phone, and internet with a credit card can be a smart move, if the provider doesn’t charge a processing fee and you can afford to pay the credit card balance in full each month.

When done responsibly, you can earn credit card rewards (like cash back or points) and potentially build your credit history without accruing high-interest debt. However, you should avoid using a credit card for bills that incur high processing fees or if you are unable to pay off the balance on time and in full.

Is it wise to pay monthly bills with a credit card?

Generally, paying monthly bills with a credit card can be wise if you can consistently pay the full credit card balance on time. This approach allows you to earn rewards, such as cash back or points, and can help build a positive credit history. However, it is not wise if the bill charges a processing fee that cancels out the rewards, or if you anticipate carrying a balance, which can lead to high-interest debt.

Is it better to pay bills with a credit or debit card?

Paying bills with a credit card is generally better than using a debit card because credit cards generally offer more robust fraud protection. Additionally, using a credit card responsibly can help you earn rewards and build your credit history, benefits a debit card does not offer.

Should I pay off my credit card in full or leave a small balance?

Paying off your credit card in full each month is the wisest financial move. This allows you to avoid interest charges, as credit cards typically offer a grace period between the statement date and the due date. By paying the entire balance, you can save money, maintain a good credit utilization ratio (which can positively impact your credit), and enjoy any earned rewards without the cost of high-interest debt. Leaving a small balance is unnecessary and only results in paying interest.

What happens if you pay the full amount on your credit card?

When you pay your entire statement balance by the due date every month, you benefit from a grace period. This is the window between the end of a billing cycle and the payment due date during which the issuer does not charge interest on new purchases. This means you are effectively using the card interest-free, maximizing any rewards earned, and maintaining a healthy credit utilization ratio, which can positively impact your credit.

Does paying a bill with a credit card count as a purchase?

Yes, paying a bill with a credit card typically counts as a purchase. This means the transaction will be subject to the card’s terms, including earning rewards like cash back or points, and contributing to your credit utilization.

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Photo credit: iStock/Damir Khabirov

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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.

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.

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

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