Once a year, usually in June, the government announces interest rates for federal student loans that will be first disbursed after July 1. Whether you’re a freshman or, say, a junior, these rates apply to the loans you get for the academic year that starts in the fall.
Federal student loan interest rates are determined differently than private student loan interest rates. Here’s what you should know about federal and private student loan interest rates in 2022 and 2023.
Federal Student Loan Interest Rates for 2022
As just noted, interest rates on federal student loans for the upcoming academic year are set by the government. By federal law, they’re based on the 10-year Treasury note auction in May. The rates set for the 2022 to 2023 school year are for loans first disbursed from July 1, 2022 to June 30, 2023.
For the 2023-2024 school year, the interest rate on Direct Subsidized or Unsubsidized loans for undergraduates is 5.50%, the rate on Direct Unsubsidized loans for graduate and professional students is 7.05%, and the rate on Direct PLUS loans for graduate students, professional students, and parents is 8.05%. The interest rates on federal student loans are fixed and are set annually by Congress.
How Federal Student Loan Interest Rates Work
Interest rates on federal student loans are fixed for the life of the loan. That means that if you borrowed a Direct Subsidized Loan for the 2020 – 2021 school year, and your interest rate was 2.75%, that interest rate is locked in at 2.75% for the life of that loan.
But, if you borrowed another Direct Subsidized Loan to pay for the 2021 – 2022 school year, your new loan will be disbursed with the 3.73% interest rate offered during that school year.
Since 2006, interest rates on federal student loans have fluctuated from anywhere between 2.75 to 8.50%, depending on the type of loan.
Difference Between Federal and Private Student Loan Interest Rates
Unlike federal student loans, interest rates for private student loans are set based on economic factors and underwriting unique to each lender that issues them. Lenders typically take into account a borrower’s credit history, earning potential, and other personal financial factors.
If you borrowed a private student loan, you may have applied with a cosigner to secure a more competitive interest rate. That’s likely because most college students don’t have much credit history or employment history, so interest rates on private student loans can be higher than those on federal student loans without a well-qualified cosigner.
While federal student loans have a fixed-interest rate, private student loans can have either a fixed or variable interest rate. Borrowing a variable rate loan means that the interest rate can change periodically.
How Private Student Loan Interest Rates Work
The frequency of changes in the interest rate will depend on the terms of the loan and on market factors; typically, private lenders adjust the interest on variable-rate loans monthly, quarterly, or annually. Interest rates on private student loans are typically tied to the London Interbank Offered Rate (LIBOR) or the 10-year Treasury yield.
So as the LIBOR changes, for example, interest rates on variable-rate student loans can change as well. Typically, lenders will add a margin to the LIBOR, which is determined based on credit score (and, the credit score of your co-signer if applicable).
Generally, the LIBOR tracks the federal funds rate closely. In June 2020, the Federal Reserve announced that it plans to keep the federal funds rate close to zero, likely through 2022.
This means that, so long as the federal funds rate remains low, the interest rates on private student loans are not likely to increase during that time period. However, it’s important to pay attention to interest rates, especially for borrowers with private student loans with a variable-interest rate, since these changes could cause fluctuations to the interest rate of the loan.
And given that LIBOR is scheduled to be discontinued around the end of 2021 , rates could change in other ways as new indices are chosen by lenders.
Lowering the Interest Rate on a Private Variable-Rate Loan
If you have a private variable-rate loan and are worried about interest-rate volatility, there are options available to protect against an interest-rate hike. One option is switching to a fixed-rate loan via student loan refinancing.
The new loan effectively pays off your existing loans, and gives you a new loan with new terms, including a new interest rate. Private lenders, like SoFi, review personal financial factors like your credit and employment history, among other factors, to determine a new interest rate.
If you qualify to refinance, you’re then able to choose between a fixed or variable rate loan, so if you’re worried about rising interest rates in the future, you may have a chance to qualify to lock in a new (hopefully lower) fixed interest rate.
Monthly Payments and Private Loans
You should also have the opportunity to set a new repayment plan, either extending or shortening the term of the loan. If you extend your student loan repayment term, you’ll likely have lower monthly payments, but will pay more in interest over the life of the loan.
Shortening your repayment plan typically has the opposite effect. You may owe more each month, but will most likely spend less on interest over the life of the loan.
To get a general idea of how much refinancing your student loans could impact your repayment, take a look at SoFi’s student loan refinance calculator, where you can compare your current loan to current SoFi refinance student loan rates.
Refinancing Federal Student Loans
Federal student loans can be refinanced, too. Typically, a student wouldn’t do this while still in school, since the government is paying the interest on certain federal loans during this time. Also, federal student loan interest rates are generally lower than rates for private loans disbursed in the same time period.
It should be noted, however, that refinancing a federal student loan with a private lender means you’ll no longer be eligible for federal programs and protections like income-driven repayment, forbearance, or Public Service Loan Forgiveness (PSLF).
The Takeaway
Interest rates for federal student loans reset every year in June for the upcoming school year. For the 2022 school year, rates are up roughly 1% compared to the previous year, which saw the lowest rates in years.
If you refinance your student loans with SoFi, there are no origination fees or prepayment penalties. The application process can be completed online, and you can find out if you prequalify for a loan, and at what interest rate, in just a few minutes.
Ready to take control of your student loans in 2022 and beyond? See how refinancing with SoFi can help.
Student Loan Refinancing If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) Please note that once you refinance federal student loans, you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans, such as the SAVE Plan, or extended repayment plans.
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.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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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.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
Nurses are in demand. From 2020-2030, the Bureau of Labor Statistics (BLS) predicts an average of 194,500 openings for registered nurses. Many of those openings come about due to nurses who switch occupations or exit the labor force, including those who retire.
Because nurses are in demand, you may want to attend nursing school. Let’s walk through 10 ways to help you figure out how to pay for nursing school.
1. Start With FAFSA
The Free Application For Student Aid (FAFSA®) is a federal form that students can fill out every year that gives you access to federal and institutional aid to pay for college. Your college or educational institution will use the FAFSA to determine your eligibility for federal grants, work-study, and federal loans to attend college or career school. There is no cost associated with the FAFSA.
You can file the FAFSA starting on October 1 for the subsequent academic year that you plan to attend college. For example, if you plan to attend nursing school in the fall of 2024, you can file the FAFSA starting on October 1 in the fall of 2023.
You’ll need a FSA ID, a username and password that confirms your identity when you’re looking at or signing official financial aid documents. You’ll need two separate FSA IDs — one for you and one for your parents, if you’re a dependent student.
You can list up to 10 colleges and universities on the FAFSA using the Federal School Code search to identify each of the schools where you’d like it sent.
The FAFSA’s data retrieval tool (IRS DRT) takes most of the work out of filing the FAFSA. It pulls information directly from the IRS. After you follow the FAFSA directions, you sign with your FSA ID.
2. Nursing School Scholarships
Some colleges may offer scholarships specific to nursing students. You can also look beyond your nursing major. Do you have talents in art, music, or leadership that could qualify you for a merit-based scholarship? (Merit-based scholarships are those that are not based on financial need.) Ask the financial aid office at the school you plan to attend for more information about merit-based scholarships.
You can also take to the web to look for more scholarships. Here are a few examples:
• The Healthline Stronger Scholarship awards four $5,000 scholarships to students who, based on their education, extracurricular activities, and career goals, are focused on both health and climate change.
• The National Black Nurses Association, Inc (NBNA) offers several scholarships each year ranging from $1,000 to $15,000. To apply, you must be a member of the NBNA, currently enrolled in a nursing program and in good scholastic standing at the time of application with at least one full year of school remaining.
• The FNSNA Undergraduate Scholarship awards scholarship funds based on a set of criteria established by the sponsor of the scholarship, which often outline a specific area of specialization within the nursing profession. Successful candidates can earn up to $10,000 per academic year.
In addition to looking into what your college or university can offer and searching online, take a look at local connections for specific educational or vocational programs in a particular field, such as nursing scholarships through local hospitals and privately owned doctor’s offices.
You can also look into community groups like 4-H, Kiwanis Club, and other organizations for available scholarships. Many foundations, such as the Bill and Melinda Gates Foundation, also offer scholarships.
3. Grants for Nursing School
Grants are primarily need-based awards, though some grants are awarded based on merit. Like scholarships, grants do not need to be repaid once you complete your program. Filling the FAFSA will give you access to grants through programs like the Federal Pell Grant. The FAFSA automatically considers your eligibility for federal grants based on need.
You may also become eligible for state grants based on the grants available to you in your state.
Unlike scholarships and grants, you must pay back college loans. As a nursing student, you may tap into several types of federal student loans or private loans — both graduate or undergraduate loans.
Federal student loans are given to nursing students through the Department of Education, which, as mentioned, means that you must file the FAFSA in order to receive them.
Federal student loans offer flexibility in that you do not need to undergo a credit check, with the exception of the Direct PLUS Loan, which does require a credit check. Federal student loans also offer low-interest rates, various repayment plans, and forgiveness options. You could also use federal student loans to cover living expenses. For example, if you need to pay rent for an apartment while you’re attending nursing school, a federal student loan can help cover those expenses.
Direct Subsidized Loans are low, fixed-rate federal loans for eligible undergraduate students to help cover the costs of college or career school. The government pays the interest while you are in school or during qualifying periods of deferment. Subsidized loans are awarded based on financial need.
Direct Unsubsidized Loans
Direct Unsubsidized Loans have a low, fixed interest rate and flexible repayment terms. Undergraduate, graduate and professional students can qualify for these loans. In contrast to the Direct Subsidized Loan, the government does not pay the interest while you’re in school. Students do not need to demonstrate financial need in order to qualify for an unsubsidized loan.
Direct PLUS Loans
Direct PLUS Loans are another option available to graduate or professional students, and parents of undergraduate students. Unlike other federal loans, PLUS loans do require a credit check. Borrowers are able to borrow up to the full cost of attendance.
Student Loan Forgiveness for Nurses
Student loan forgiveness for nurses means you don’t have to pay for your federal student loans in full. The federal government runs a few loan forgiveness programs that generally offer loan forgiveness after borrowers have fulfilled certain requirements. For example, the Nurse Corps Loan Repayment Program pays up to 85% of unpaid nursing education debt for registered nurses (RNs), nurse practitioners, and nurse faculty members. You must qualify by working in a critical shortage facility or an eligible nursing school as a nurse faculty member.
Student Loan Payment Deferrals
Federal student loans do not have to be repaid until October 1, 2022, at the earliest. In March 2020, Congress passed a bill that automatically suspended student loan payments and waived interest. The benefit was originally set to expire but has been reinstituted several times.
Current nursing students who will graduate soon will not have to make student loan payments. Depending on what the federal government does next, they may also experience another extension.
5. Private Student Loans
Private student loans come from a local bank, credit union, or another type of private student loan lender, not the federal government. Like a federal student loan, you can use private student loans to cover living expenses, tuition, and other related school costs.
Lenders evaluate an applicant’s credit history, among other factors. Students who do not have a strong credit history or score may need to add a cosigner in order to qualify or potentially qualify for a lower interest rate. If you can’t pay back the loan, your co-signer is on the hook for paying back the loan.
Private Student Loans vs Federal Student Loans
As you likely know, there are some differences between private and federal student loans, which leads many financial experts to suggest taking out federal student loans over private student loans. Here are some features of private student loans that make them less advantageous over federal student loans:
• May need a cosigner: Private student loans often require you to have a cosigner. However, if you make a certain number of on-time payments, you can apply to have your cosigner removed from the loan.
• No federal protections: You can’t tap into income-driven repayment programs, loan forgiveness and deferment protections with private student loans like you can with federal student loans.
Due to these differences, private student loans are typically considered an option only after all other funding sources have been depleted.
Through a tuition reimbursement program, a company covers some or all of the costs of an employee’s education as long as you follow the company’s tuition reimbursement requirements. This is a major benefit because you can work at another company, possibly through a part-time job. For example, the following companies offer tuition reimbursement: Target , Starbucks , and UPS .
7. Hospitals/Employers That Pay for Nursing School
Another option may be to work at a hospital or other health care employer through a tuition reimbursement program. For example, you could get a job in the billing office of the hospital and go to nursing school during your off hours, or you may be able to work with your employer to put together the best schedule for both of your needs.
Hospitals and health care employers want to retain good workers, particularly in nursing, which has such a shortage of employees.
Learn more about the health care employer’s requirements for tuition reimbursement, including the amount they will reimburse. Note that it may not equal 100% — it might be 75% or 50% instead.
8. Getting a Nursing Degree Abroad
Completing a nursing degree abroad can take about two to three years. However, you can find short-term study abroad programs (a fall semester, summer, or a few weeks between terms) in many different countries.
You can often find free programs, scholarships or grants that will help cover the cost of your study abroad program — some countries offer various options for students. Consider looking into countries that have reputable health care programs, such as Denmark, Germany, Norway, Switzerland, or Sweden.
9. Military Service
You may have a large range of education benefits if you complete military service. For example, you can access the Post-9/11 GI Bill if you served at least 90 days on active duty (either all at once or with breaks in service) on or after September 11, 2001, or received a Purple Heart on or after September 11, 2001 and were honorably discharged (after any amount of time), or served for at least 30 continuous days (all at once, without a break in service) on or after September 11, 2001, and were honorably discharged with a service-connected disability, or are a dependent child using benefits transferred by a qualifying veteran or service member.
Follow the rules regarding military service requirements, depending on your branch of the military. The college and university you plan to attend will have more information about your education benefits and so will your military branch.
10. Nurse Corps Program
The Nurse Corps Program is a scholarship available to eligible nursing students. In exchange for the scholarships, recipients work in critical shortage areas after graduating with their nursing credentials.
Deciding Which Route to Pursue
When you need help paying for nursing school, which option makes sense for you? Your preferences might offer you the most insight into the best option to pay for school. For example, it might make sense to avoid the military programs offered because you have no interest in joining the military. You may also not have the resources to study overseas or have a family who depends on you for financial support. Your goal may also be to learn how to pay for nursing school without loans.
Whatever your goals, one thing you can do is to meet with the financial aid office of the school you plan to attend. A financial aid professional can lay out all your options and help you choose the right option for you.
Private Student Loans From SoFi
When you’re readying yourself for nursing school, it’s good to have options. SoFi offers low fixed rates and variable interest rates to help you access the right private student loans for you and your future needs.
Our private educational loans are designed to make paying for undergraduate or graduate education easier. These loans for students can cover up to 100% of school-certified costs, which includes tuition and food, books, supplies, room and board, and other education expenses.
Can FAFSA be used for nursing school financial aid?
Yes, you can use the FAFSA in order to qualify for financial aid for nursing school. The amount of financial aid you receive depends on your level of need, year in school, dependency status, and other factors. For example, you can access Direct Subsidized and Unsubsidized Loans between $5,500 to $12,500 per year in undergraduate. In graduate or professional school, you can borrow up to $20,500 each year in Direct Unsubsidized Loans.
Can an employer pay for you to attend nursing school?
Yes, an employer may pay for you to attend nursing school. Your current employer may help you pay for nursing school. Talk to the human resources office to learn more about tuition assistance, the amount you can receive for attendance, and the details about your employer’s tuition reimbursement regulations.
If you aren’t currently aware of jobs that pay for nursing school, you may want to contact the college or university you plan to attend and learn more about your employment options, including work-study opportunities.
Can you use private student loans for nursing school?
You can access private student loans to pay for nursing school. SoFi can offer private loans that cover nursing school and even living expenses. Learn more about your private student loan options with SoFi.
Photo credit: iStock/FatCamera
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.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
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.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Graduate school can boost your marketability, help you pursue your academic and professional interests, help you make connections and potentially increase your earnings.
When you’re ready to invest in your future by attending graduate school, your thoughts may also turn to paying for grad school. Does FAFSA® cover graduate school?
In short, yes. The FAFSA application can be used by graduate students to apply for financial aid. Graduate students may qualify for federal grants, work-study, and federal student loans by completing the Free Application for Federal Student Aid (FAFSA). (You may already be familiar with the FAFSA from filing it when you were an undergraduate.) The FAFSA is a form that you must fill out every year if you want to be considered for federal student aid for your graduate school program.
Do You Have to Fill Out FAFSA for Graduate School?
While filling out the FAFSA is not required to attend graduate school, students who are interested in receiving federal student aid as graduate students will need to fill out the FAFSA. For example, you may not want to file the FAFSA if you have the money stashed away for graduate school or if you plan to pay for graduate school using a combination of tuition reimbursement money from your employer and money from your weekly paycheck.
How do you become eligible for financial aid in graduate school?
In addition to meeting basic FAFSA requirements, like being a U.S. citizen or qualifying noncitizen, you’ll need to fill out the FAFSA to become eligible for aid. You can file the FAFSA graduate school form after October 1 preceding the year you plan to attend graduate school. For example, if you plan to attend graduate school beginning in the fall of 2023, you can fill out the FAFSA beginning on October 1, 2022. Check on the financial aid deadlines at the graduate schools at which you plan to apply.
You’ll also need to sign up for an FSA ID (if you don’t already have one for your undergraduate years), which is your login. You can use your FSA ID to sign your Master Promissory Note (MPN) (your loan agreement), apply for repayment plans, complete loan counseling, and use the Public Service Loan Forgiveness help tool.
Grants, work-study, and federal student loans may help you in paying for grad school. Let’s walk through each of these types of financial aid.
Grants are primarily need-based awards, though some grants are awarded based on merit. Like scholarships, grants generally do not need to be repaid once you complete your program (except in certain circumstances, such as not completing your enrollment period).
Grants can come from the federal government, your state, your graduate school, or a private or nonprofit organization.
Some grants, such as the Pell Grant and FSEOG Grant, are reserved for undergraduate students only. Furthermore, grants such as the Iraq and Afghanistan Service Grants require you to be under 24 years old or enrolled in college at least part-time at the time of a parent’s or guardian’s death. If you don’t meet those requirements, you cannot receive this type of grant.
However, graduate students may qualify for a TEACH Grant, which means that you could receive up to $4,000 per year if you plan to complete coursework related to education. You must teach at a school or educational service agency that serves low-income students for four years, teach in a high-need field and complete the required four years of teaching within eight years after you graduate.
There may be additional grants available to you depending on your course of study.
You may be familiar with work-study programs through your undergraduate institution. Graduate students are also eligible for the Federal Work-Study Program, which provides part-time jobs to students who demonstrate financial need.
Work-study is available to both full-time or part-time students, though your graduate school must participate in the Federal Work-Study Program. Your school’s financial aid office can give you more details about the work-study program and the types of jobs available to you. Your program may offer assistantships or teaching roles to help you pay for school.
Federal Student Loans
Just like any other loan, you must repay federal student loans with interest. However, the federal student loans you can get in graduate school are slightly different from those you can take out in undergraduate school. For example, you cannot take advantage of Direct Subsidized Loans, which are loans in which the government pays the interest while you are in college and also during the grace period. Direct Subsidized Loans are only available to undergraduate students with demonstrated need.
However, you can take more money out in Direct Unsubsidized Loans compared to what you could access in your undergraduate years, which we’ll go over in the next section.
Direct Unsubsidized Loans
What exactly is a Direct Unsubsidized Loan? It’s a loan that offers a low, fixed interest rate and flexible repayment options. However, unlike a Direct Subsidized Loan, the government does not pay the interest while you’re in college and during the grace period. Graduate students can tap into up to $20,500 at an interest rate of 5.28%, for the 2021-2022 school year.
Grad PLUS Loans
To qualify for a grad PLUS loan, also called a Direct PLUS Loan, you must be a graduate or professional student enrolled at least half-time in a program that will lead to a graduate or professional degree or certificate. You must not have an adverse credit history or must meet additional criteria to be considered if you do not meet credit standards.
You can borrow up to the cost of attendance of your graduate school program minus other financial assistance you get. The current interest rate for Direct PLUS Loans for graduate students is a fixed 6.28%.
When you fill out the FAFSA as a graduate student, what can you expect? Continue reading for more information on when you’ll hear back and the average disbursed amount you can receive.
When Will You Hear Back?
You’ll submit your Federal Student Aid (FSA) ID and information about your Social Security number or Alien Registration Number, bank account balances and investment account information as well as federal income tax information. Your dependency status will differ, however, because you’re no longer considered a dependent student and will not input your parents’ information onto the FAFSA.
Once you submit the FAFSA form, you’ll receive a Student Aid Report (SAR) in up to three weeks and can learn basic information about your aid eligibility through that report.
It’s a good idea to contact the graduate school you plan to attend to determine any other information you must submit to qualify for other types of institutional aid.
The university will then review your FAFSA information and other documents and send you a financial aid award that details the scholarships, grants, and federal student loans you can receive. You may receive your financial aid award not long after you receive your acceptance letter to the graduate school. However, every school is different, so it’s a good idea to ask the admission or financial aid office of your school for more information.
Average Disbursed Amount
Graduate Unsubsidized Loans have borrower caps. Again, you can access $20,500 at a current interest rate of 5.28%. Direct PLUS Loans have no maximum amount you can borrow and the fixed interest rate is 6.28%. You can borrow up to the cost of attendance for the institution with a Direct PLUS Loan.
Let’s take a look at all the amount of money you can receive based on the FAFSA results across both undergraduate and graduate school, including the limits to unsubsidized loans. (The unsubsidized amount is aggregated across all years of graduate and undergraduate school.)
Year
Dependent Students
Independent Students
First-Year Undergraduate Annual Loan Limit
$5,500 (not more than $3,500 in subsidized loans)
$9,500 (not more than $3,500 in subsidized loans)
Second-Year Undergraduate Annual Loan Limit
$6,500 (not more than $4,500 in subsidized loans)
$10,500 (not more than $4,500 in subsidized loans)
Third Year and Beyond Undergraduate Annual Loan Limit
$7,500 per year (not more than $5,500 in subsidized loans)
$12,500 (not more than $5,500 in subsidized loans)
Graduate or Professional Student Annual Loan Limit
Not applicable (graduate students are independent students)
$20,500 (unsubsidized only)
Subsidized and Unsubsidized Aggregate Loan Limit
$31,000 (not more than $23,000 can come from subsidized loans)
$57,500 for undergraduates (not more than $23,000 can come from subsidized loans); $138,500 for graduate or professional students (not more than $65,500 in subsidized loans, and this includes an aggregated amount from undergraduate school)
Alternatives to Federal Aid
What alternatives to federal aid exist for graduate school? Let’s take a look at private student loans, grants, scholarships, fellowships and assistantships, and employer tuition assistance.
Private Student Loans
Private student loans are offered by financial institutions such as a bank, credit union, or another type of private student loan lender. Just like private student loans for undergraduates, you can get private student loans for graduate school, and you may be familiar with this process if you obtained private student loans to help you pay for your undergraduate education.
Private student loans usually carry a higher interest rate than federal student loans. Your interest rate will be based on factors including your credit score and income. To get a private student loan, you’ll fill out an application and the lender determines your rates and terms. It’s often possible to hear back from a private student loan lender quickly.
However, it’s important to recognize that you lose out on several federal benefits with private student loans, including income-driven repayment programs (where you pay back your loans based on your income level), loan forgiveness (in which you don’t have to repay your loans), and deferment options (where you put off paying off your loans).
Grants
You can find research grants at the graduate and professional level, such as the Research Publication Grants in Engineering, Medicine, and Science through the American Association of University Women . Certain grants are only restricted to graduate students, such as the prestigious Fulbright Graduate Degree Grants , sponsored by the U.S. Department of State.
Your state may also distribute grant money for students based on need or interest. The financial aid office at your graduate school will have more information about both graduate school-specific and organization-specific grants.
Scholarships
Just like grants, you can receive scholarships from a number of sources, including your graduate school, local organizations, philanthropic associations, and more. Also similar to grants, you do not have to pay scholarships back.
Look for scholarships from professional associations in your field. Your graduate school department or career department can often help you find scholarships based on your qualifications.
Fellowships and Assistantships
Graduate fellowships provide financial support to graduate students and vary widely in their purpose, duration, and requirements. They are often awarded at a specific stage in the educational continuum.
An assistantship, on the other hand, also provides financial support, except they provide experience in a profession under a faculty or staff member. They vary depending on the academic department’s needs, funds available, and graduate student qualifications. They may include teaching, research, or administrative duties.
Graduate departments can offer more information about fellowships and assistantships.
Employer Tuition Assistance
If you work for an employer that offers tuition assistance, your company may cover some or all of the costs of your education as long as you meet the program’s eligibility requirements.
You may even be able to access tuition assistance through a part-time job. Your human resources office will have details about tuition assistance, qualifications, and reimbursement procedures.
The Takeaway
When you’re trying to put together the best ways to finance your graduate school education, it often requires you to take a look at many different sources of money, including saving money for grad school, grants, scholarships, fellowships and assistantships, federal student loans, private student loans, and more. And the answer to the question, “Do you fill out FAFSA for grad school?” is yes — if you want to qualify for federal aid.
Private student loans are one of the most common ways to finance your graduate school education, and SoFi offers low fixed rates or variable interest rates on private student loans to fit your budget.
Learn more about how a SoFi private student loan could help you pay for graduate school.
FAQ
How much can FAFSA disburse for graduate school?
Graduate students can borrow up to $20,500 in unsubsidized loans each year. PLUS loans are also an option, and allow students to borrow up to the cost of attendance.
Is financial aid harder to qualify for graduate students?
It’s not necessarily harder to qualify for financial aid. However, in terms of federal student loans, graduate students are subject to different FAFSA requirements, including dependency status — you are independent for financial aid purposes and no longer tied to your parents’ income. In addition, graduate students are ineligible for Direct Subsidized Loans and subject to borrowing limits.
Do you need to make a new FAFSA account for graduate school?
No, you do not need to make a new FAFSA account for graduate school. You can keep the same FSA ID that you had during your undergraduate years. However, you will have to file the FAFSA for graduate school every year prior to the start of a new academic year.
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Credit cards can offer a number of additional protections, including if you were to lose your job or otherwise become unable to pay your bills. Some credit card protections, like travel insurance, are perks of the card included in the annual fee. For others, like credit card payment protection, you may have to opt in and pay an additional fee.
Read on to learn more about the types of credit card protection you can get, how they work, and when they may be worth it.
What Is Credit Card Protection?
Credit cards may offer various forms of protection in their perks and benefits. These protections can help protect your purchases and ensure you don’t pay for charges that aren’t yours. They can also help you in a dispute with a vendor. For example, if you ordered an item that never made it to you, and the merchant won’t give you a refund, you could invoke a credit card chargeback with your credit card company.
Perhaps the most common form of protection associated with the term ‘credit card protection’ is credit card payment protection insurance. This is an insurance plan that you can opt into for a monthly fee that would offer protection if something were to happen that prevented you from paying your bills.
Some of the types of protection that may be available on credit cards include:
• Fraud protection
• Return protection
• Price protection
• Purchase protection
• Travel insurance
• Car rental insurance
Read on for more details on each of these forms of credit card protection.
Fraud Protection
A key part of what a credit card is, fraud protection is a big reason why people use credit cards over debit cards or cash. If someone were to steal your credit card number or your physical card, fraud protection shields you from being responsible or liable for charges.
Under the Fair Credit Billing Act, creditors cannot “take actions that adversely affect the consumer’s credit standing until an investigation is completed.” This means that all credit card companies will launch an investigation if fraud occurs, during which you will not be held liable (though make sure to make your credit card minimum payment so you don’t incur late fees or a ding to your credit during the investigation).
Some credit card companies may go beyond that and offer even more fraud protection, including $0 liability. (The FCBA caps liability in case of fraud at $50 if the thief presents the card. The liability is $0 if the card is not physically present, as in the case of someone stealing a credit card number and using it online).
While fraud protection can offer peace of mind, it’s also important to be proactive about recognizing fraud. If you lose your credit card, call your issuer to have the card frozen. And always let your issuer know ASAP if you notice a charge that isn’t yours.
Return Protection
Return protection is another form of purchase protection offered by some credit cards. It allows you to return an item for a set period of time defined in your membership agreement. This return window may offer more leeway than that of the merchant you made the purchase from (for example, 90 days instead of 30 days.)
There are exclusions to what can and can’t be returned. Further, there also may be a cap on the cost of the item being returned, as well as an annual cap per card, though it depends on how your credit card works specifically.
Price Protection
Have you bought something, only to see the item go on sale a few weeks later? That’s where credit card price protection comes in. With this perk, you may be able to receive a refund for the difference in price if you purchased something with your card.
Generally, it’s your responsibility to track price drops. And your issuer may have certain terms, such as limiting the protection to price drops within a set time period. Price protection also may exclude certain types of purchases, such as tickets to sporting events or concerts.
Purchase Protection
Similar to return protection, purchase protection can help protect you if purchases are lost or damaged, or services aren’t rendered or delivered as expected. Generally, you would bring the issue up with the merchant or service provider. But if they don’t initiate a refund, then you can dispute the charge with your credit card company. This process initiates what’s called a credit card chargeback.
There may be limitations and exceptions to purchase protection. It can be a good idea to talk directly with the merchant before reaching out to your credit card company.
Travel Insurance
Travel insurance can be a big reason to put a trip on a credit card. In fact, some card issuers offer insurance as a perk for using the card.
The specifics of travel insurance depend on the card issuer, but it may include insurance for lost luggage, or coverage for trip interruption or cancellation. In general, these insurance policies may not be as comprehensive as a standalone policy, but they can provide some peace of mind when planning a trip.
Car Rental Insurance
Car rental insurance is another type of insurance offered as a credit card perk. If you rent a car with the credit card, the card may provide insurance protection in case of damage. Generally, this includes collision/loss damage waiver coverage.
Car rental insurance through your credit card may allow you to forego the insurance options offered by the car rental agency. However, as with any insurance policy, it’s a good idea to read the fine print to know exactly what is and is not covered.
How Credit Card Protection Works
Most protections are part of the overall perks and benefits of the card. But credit card payment protection is a little bit different. It’s generally an opt-in program that offers protection if you are no longer able to pay your credit card bill. The protection offered can be short term, such as for a life event like a change in employment, or long term, extending for 12 to 24 months in the event of a job loss or hospital stay.
Usually, credit card payment protection carries an additional monthly fee. Also note that payment protection doesn’t let you off the hook from paying the bill down the road. Rather, for a set period of time, your credit card issuer would offer a break on making payments or lower your minimum payments due, as well as pause any fees. Your issuer will continue to report your account in good standing during that time.
Tips to Keep Your Credit Card Safe
Protection programs can give you peace of mind. But losing a credit card or dealing with fraudulent activity can be stressful regardless of what protections you have in place. It can also potentially open the door to identity theft, which could potentially harm your credit.
That’s why it’s smart to set up some smart security behaviors. Read on for some tips for how to keep your credit card safe.
Practice Credit Card Protection From Day One
When you’ve applied for a credit card, keep an eye out for the card to arrive in the mail. It should come in between five and 14 days; your issuer may provide a timeline.
If you don’t receive your card within that time period, call your issuer. They will issue you a new one. And as soon as you do get your card, follow the steps to set it up for use.
Keep Your Account Number Private
Don’t write down your credit card account number. Also consider whether or not you want to save payment information online. While it can be convenient, it could leave your information vulnerable. If you are using your credit card to make a payment, make sure that you are doing so through an encrypted service.
Keep Your Information Current
Make sure that the email address, mailing address, and telephone number on file with your card issuer are up to date. That way, you are aware of any communication between you and your card issuer. Further, this will prevent a new card from being delivered to the wrong address.
Be Careful With Your Receipts
While federal law prohibits how much credit card information is on receipts, this may not be true in other countries. If you’re traveling abroad, it may make sense to be even more mindful about how you dispose of receipts.
Secure Your Devices and Networks
Being mindful of how and when you use your credit card online can help you avoid fraud. Using your own network, rather than public WiFi, can be one security step. It can also be helpful to check that a website uses encryption for payment.
Protect Yourself Online
When you’re using a credit card for payment, it’s important to be cyber-savvy. Credit card scams to try to obtain your information or your credit card number are not uncommon.
You’ll want to be on the lookout for phishing attempts. If a merchant or bank asks you to email your credit card number, call the merchant directly. Know that banks will never ask for sensitive information over email.
Additionally, pay attention to any odd links, misspellings, or emails that include a link. Instead of following the link within the email, consider manually typing in the URL of a website.
Check Your Account Often
It can be good to get in the habit of regularly checking your credit card balance. Doing so a few times a week, instead of just waiting for a statement to come out, can alert you to fraud as soon as it happens. And remember, a fraudster could steal your information even if your physical card has always remained in your possession.
Report Lost Cards and Fraudulent Activity Right Away
If you see something odd on your credit card balance, let your card issuer know right away. The same goes if you can’t find your credit card.
Even if you’re 99% sure your card is somewhere in your house or car, it can be a good idea to call your card issuer. In some cases, they can freeze your card. This means that you’ll be able to unfreeze it once you’ve found it, without getting a new card and a new card number.
In general, credit card payment protection insurance has restrictions regarding when it applies, and it may require documentation.
Some reasons you may be able to request long-term credit card payment protection may include:
• Job loss
• Disability
• Hospitalization
• Death of a child, spouse, or domestic partner
• Leave of absence (for family or child care, or for military duty)
• Federal or state disaster
Meanwhile, you may be able to get short-term protection for the following reasons:
• Marriage
• Divorce
• Graduation
• Childbirth
• Adoption
• Retirement
• New job and job promotion
• A move to a new residence
Situations that may not qualify for payment protection include incarceration or voluntarily leaving your job, such as to pursue higher education.
Pros and Cons of Payment Protection
Is payment protection right for you? That depends. The opt-in program usually costs an additional fee. Plus, while paying your full balance each month is ideal, you could potentially pay the credit card minimum payment if you were going through hard times to keep your account in good standing, though your annual percentage rate (APR) would still apply.
In many cases, it may make sense to focus on bringing down your balance so your minimum payment is relatively low. That way, if the worst were to happen, you might still have wiggle room in your budget to handle minimum payments.
Pros of Payment Protection
Cons of Payment Protection
Gives you a breath on monthly payments
Will incur an additional monthly fee, adding to your balance
Offers peace of mind
May be other assistance options with no added cost
Helps protect your credit in the event you can’t make payments
Generally limited to two years of assistance
Pauses your credit card’s fees
Limits on what qualifies for protection insurance to kick in
Is Credit Card Payment Protection Worth It?
Weighing the pros and cons of credit card payment can help you assess whether it makes sense for you. If you carry a very high balance and are in the process of paying it down, payment protection may give you peace of mind — especially if you don’t have a good APR for a credit card. But keep in mind that you could potentially switch to minimum payments during a hard time and still maintain your payment history.
To decide whether credit card payment protection is right for you, read the fine print and assess how the fees would impact your overall financial picture. Also take into consideration your current financial situation, your savings account balance, and the general stability and security of your job and lifestyle.
Credit Card Protection Scams and How to Avoid Them
As credit cards offer protection, scammers see opportunities — and these can be tailored, beyond just credit card skimming. There are several credit card protection scams that may target card holders, including:
• Phone scams offering loss protection for a fee. Some scammers have been calling people and telling them they may be liable for charges beyond $50 on their credit card. They then try to get people to buy loss protection and insurance programs. If you get this call, know that credit cards include fraud protection at no additional fee — plus, your liability is limited to $50 by law. Call your credit card company if you have any questions about its fraud protection programs.
• Scams claiming your account has been compromised. In this case, the scammer will ask you to provide personal details, such as your credit card number, claiming your account has been compromised. Don’t ever give sensitive credit information over text or email. If someone calls claiming to be your credit card company, call the company directly from the number on the back of the card, instead of any number you may get during a call.
• Fraudulent text alerts. Scammers also may send text messages asking for your CVV number on a credit card to “fix” a security problem. A real credit card company would never ask for this information.
• Fake account protection offers. Any account protection should come directly from your credit card company, not from a third party. If you receive these offers, don’t take them up on it.
The Takeaway
Credit card protection can be one of the great benefits of using a credit card. While some credit card protections are standard, including fraud protection, it can be helpful to weigh what protection offers are important to you and what you’ll get the most use out of if you’re adding on any others. With credit card payment protection insurance, for instance, you can get protection if something were to happen that prevented you from paying your bills, but you’ll owe an added monthly fee.
Protections are just one of many factors to consider when it comes to choosing a credit card. The SoFi Credit Card, for instance, allows you to earn rewards, lower your APR with regular on-time payments, and enjoy protections like cell phone protection and Mastercard ID theft protection.
The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1
Take advantage of this offer by applying for a SoFi credit card today.
FAQ
Are there limits to credit card payment protection?
There may be limits on what qualifies for credit card payment protection, and your issuer may need to see proof of hardship. Further, there may be a time limit on how long credit card payment protection is offered.
Is there a time limit on credit card payment protection?
Generally, issuers have a time limit for credit card protection policies. These vary between issuers, but may be as short as several months or as long as two years, depending on the circumstances.
Should I get credit card payment protection insurance?
Credit card protection insurance may incur an additional fee, unlike other protection options offered as part of your overall perks and benefits within your card. That fee can add to your balance. If your credit card balance is at or near $0, credit card payment protection insurance may not be necessary.
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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.
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.
The SoFi Credit Card is 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.
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.
1
When you elect to redeem rewards points as cash deposited into your SoFi Checking and Savings account, as a statement credit to a SoFi Credit Card account, as fractional shares into your SoFi Invest account, or as a payment toward your SoFi Personal Loan or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.
Curious to know when credit cards were invented? There were actually a number of early iterations of what we know and use today as a credit card, with the first versions of the concept dating back to the early and mid 1900s.
Let’s take a look at the major milestones in the history of credit cards and how this payment method developed.
Invention of Credit Cards
Who invented credit cards? As mentioned before, there were several precursors to the modern version of the credit card. Credit card history can be traced back to 1914, when Western Union rolled out the idea of “Metal Money,” which was granted to a handful of customers and allowed them to push back payment until a later date.
The next iteration of credit cards was introduced in 1946, when New York City banker John Biggins introduced the Charg-it card. These charge cards were usable within a two-block radius of Biggins’ bank. Purchases made by customers were forwarded to his bank account, and merchants were reimbursed at a later date.
Let’s take a look at when different types of credit cards were first used, from the first store card to the first international card.
First Store Cards
The first store card that gained widespread use was the Diners Club Card. The idea for the card arose when businessman Frank McNamara misplaced his wallet and couldn’t pay for dinner at a New York City restaurant. The good news is that his wife was there to cover the tab.
In 1950, McNamara returned to the same restaurant with his business partner, Ralph Schneider, where he used a cardboard card to pay the bill. That card was the Diners Club Card, and the dinner became known as the “First Supper.”
First Bank Cards
In 1958, American Express developed its first credit card that was made of cardboard. The next year, the plastic credit card was developed and released.
Also in 1958, Bank of America mailed its credit card to certain segments of the market in California, where it was based. The bank offered a pre-approved limit of $300 to 60,000 customers in Fresno.
Then, in 1966, Bank of America’s BankAmericard became the country’s first general use credit card, meaning more places would accept credit card payments with it.
First Interbank Cards
In 1966, a cluster of California banks joined together to form the Interbank Card Association (ITC). The ITC soon rolled out the nation’s second major bank card. Initially called the Interbank card and later the Master Charge, this card became Mastercard in 1979.
First International Cards
The first international credit card is claimed to be the Diners Club card, mentioned above. It’s said to have become the first globally accepted charge card in 1953 when businesses in Cuba, Mexico, and Canada began accepting payments from those with Diners Club cards.
And in 1970, Bank of America rolled its BankAmericard on a global scale, prompting the formation of the International Bankcard Company (IBANCO).
Regulation and Litigation
Over the decades, credit cards have undergone several rounds of regulation. Let’s take a look at some of the major regulatory milestones in the history of credit cards:
1970:
• The Fair Credit Reporting Act was passed to regulate the collection, access, and use of consumer credit report data.
• Also this year, the Unsolicited Credit Card Act was introduced to prohibit credit card issuers from sending credit cards to customers who didn’t request them.
1974:
• The Fair Credit Billing Act of 1974 was created to protect consumers from unfair credit billing practices. It stated that consumers have the right to dispute unauthorized charges, charges made due to errors, and charges when goods are undelivered and services not rendered.
• The Equal Credit Opportunity Act (ECOA) was passed, which prevented lenders from discriminating against credit card applicants based on gender, race, age, religion, marital status, national origin, and whether you receive benefits from a public assistance program. It also specified that a lender can’t charge higher fees or a higher than average credit card interest rate for any of those reasons.
1977:
• The Fair Debt Collection Practices Act was introduced to prevent debt collectors from using deceptive, unfair, or abusive practices in their efforts to collect debt that have gone to default and are in the hands of debt collectors. It limited calls to between the hours of 8 a.m. to 9 p.m. and prohibited contact at an unusual time or place. Further, it specified that if you’re represented by a debt attorney, the debt collector must stop calling you and reach out to your attorney instead.
2009:
• The CARD Act boosted consumer protection by “establishing fair and transparent practices related to the extension of credit.” It prohibits credit card issuers from offering credit without first gauging the consumer’s ability to pay, and introduced special rules when it comes to extending credit to consumers under the age of 21. The CARD act also limits the amount of upfront fees an issuers can charge during the first year after an account is opened, as well as the instances that issuers can charge penalty fees.
Technological Evolution of Credit Cards
Here are some of the main technological milestones and changes of credit cards throughout their history:
1980s: Magnetic Stripe
Credit card networks and banks started rolling out cards with the magnetic stripe, which became widely adopted. While it’s on the verge of being phased out, consumers still use magnetic stripe for payment today.
2004: Contactless Credit Cards
Contactless credit was used for the first time in 2004. They started to become more popular in 2008, when major credit card networks like Visa, Mastercardm and American Express started offering their own versions of contactless cards.
2010: Chip Cards
Pin-and-chip technology made its way to America in 2010. This technology offers greater security than magnetic credit cards, which can be copied. These days, the majority of credit cards in America have EMV chips.
2011: Mobile Wallets
In 2011, Google introduced the first mobile wallets, and Apple followed in its footsteps in 2012. In 2014, Apple Pay was released, followed by Android and Samsung Pay in 2015. As mobile wallets are stored on your smartphone, they grant greater security than physical cards, which can be more easily stolen. Plus, smartphones have security features, such as fingerprint recognition and passcodes, which make them more secure.
How Do Credit Cards Work?
Credit cards are a tangible card that you can use to make purchases. If you’re wondering how credit cards work, they’re a type of revolving loan, which means that you can tap into your line of credit at any given time to borrow funds up to your credit limit, which is set when you apply. Your line of credit gets depleted when you make transactions, and it gets replenished when you pay back what you owe.
Credit cards have an interest rate, expressed as annual percentage rate (APR). This represents how much interest you pay during an entire year. You’ll only pay interest if you have a remaining balance after your payment due date. When you pay the full balance that you owe on your card, your balance is zero and you will not owe interest. When you pay more than you owe, or if a merchant issues you a refund for an amount larger than your total balance, then you have a negative balance on your credit card.
Credit cards might also come with perks, such as rewards points and cashback. Cardholders may also enjoy additional benefits like travel insurance and discounts at select merchants. Credit cards also have built-in security features, such as pin-and-chip technology, fraud monitoring, and a three-digit CVV number on a credit card.
As for how to apply for a credit card, you’ll first want to know your credit score, as this will indicate which cards you may be eligible for. You may consider applying for preapproval to determine your odds of getting approved. When you’ve compared your credit card options and decided which one is right for you, then you can apply online, over the phone, or through the mail.
Credit Cards and Credit Scores
Credit cards can have a major impact on your credit score. For one, your account activity is reported to the three major credit bureaus: Equifax, Experian, and TransUnion.
Making on-time credit card minimum payments can help your credit, as payment history makes up 35% of your FICO consumer credit score. On the flipside, making late payments can drag down your score.
You’ll also want to keep an eye on how much debt you rack up relative to your total amount of credit available. Your credit utilization ratio, which measures how much of your available credit has been used, accounts for 30% of your score. It’s generally recommended to keep your credit utilization below 30% to avoid adverse effects to your credit score.
Other factors related to how your credit card can impact your score include the length of your credit history, which makes up 15% of your score, and your mix of credit, which accounts for 10% of your credit score. Having an account open for longer and holding a mix of different types of credit accounts both can help boost your score.
Types of Credit Cards
Nowadays, there are a number of types of cards to choose from. Let’s take a look at the different types of credit cards in modern times.
Rewards Cards
Rewards cards feature a way to earn rewards through travel miles, cash back, or points. You usually collect rewards when you make purchases. For example, you may earn one point for every dollar spent.
You usually can redeem the rewards you earn in different ways, such as on travel accommodations, airline tickets, gift cards, merchandise, or as credit toward your balance statement.
Low-Interest Cards
As the name suggests, low-interest cards feature a low APR. Having a card with a low APR can certainly benefit you if you carry a credit card balance or plan to use your card to make a large purchase, as you may be able to save money on interest.
When looking for low-interest credit cards, you usually need to have a strong credit score to qualify.
Credit Building Cards
If you have a short credit history or less-than-stellar credit score, a credit building card can help you boost your credit. As payments made on a secured credit card are reported to the three major credit bureaus, using your card can help build your credit as long as you stay on top of your payments.
While these cards are more accessible than many other credit cards out there, they also tend to have higher interest rates and fees. They may also offer a lower credit card limit.
As demonstrated in the past few decades, credit card technology is constantly evolving to meet the needs and demands of consumers. The next time you reach your credit card expiration date, you could see an updated product in the mail.
It’s expected that contactless payments, which increased in popularity during the pandemic, will continue to proliferate. In the future, it may even become possible to make payments via voice command tools.
Additionally, the security used in credit cards will continue to evolve. It’s anticipated that magnetic stripe cards will soon fall by the wayside, getting replaced by biometric cards, which use fingerprints and chip technology to enhance security.
Looking for a new credit card?
As you can see from learning the history of credit cards, a lot has changed since the payment method was first introduced. Credit cards remain as popular a payment method as ever, and it’s expected they’ll continue to evolve as technology and consumer needs shift.
When you’re looking for a credit card, it’s important to consider what features you want it to have and how you’d like it to serve your needs. One option is to apply for a credit card with SoFi.
The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1
Take advantage of this offer by applying for a SoFi credit card today.
FAQ
Who invented credit cards?
There were several early iterations of credit cards, so it’s difficult to pin down exactly who invented credit cards. The credit may go to businessman Frank McNamara and his business partner Ralph Schneider, who invented the Diners Club Card, the first store card to gain widespread use. However, there were more limited versions of credit cards around before that.
How were credit cards first used?
While the concept of paying by credit can be traced back to ancient civilizations, the first modern day example of paying with a credit card was the Diners Club card, which could be used at restaurants. However, this card had one major difference between modern credit cards: you had to pay off the balance in full each month.
What was the first type of credit card?
The first type of credit card was most likely the Diners Club card, introduced in 1950. It was the first credit card that could be used at multiple establishments.
Photo credit: iStock/DoubleAnti
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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
The SoFi Credit Card is 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 cardholders earn 2% unlimited cash back rewards when redeemed to save, invest, or pay down eligible SoFi debt. 1 1
When you elect to redeem rewards points as cash deposited into your SoFi Checking and Savings account, as a statement credit to a SoFi Credit Card account, as fractional shares into your SoFi Invest account, or as a payment toward your SoFi Personal Loan or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.
