When it comes to apartment living, the term “luxury” often conjures images of sleek finishes, premium amenities, and an elevated lifestyle. But what exactly defines a luxury apartment, and more importantly, is the upscale living experience worth the higher price tag?
Whether you’re seeking a water-front apartment in the Bay Area or considering a high-rise condo in New York City, luxury apartments cater to those who demand the best. In this ApartmentGuide article, we’ll explore what sets luxury apartments apart from the rest and help you determine whether the extra cost aligns with your lifestyle and needs.
Defining a luxury apartment
When it comes to luxury apartments, it’s not just about the label—it’s about the experience. But what exactly sets these high-end living spaces apart from standard apartments? Let’s break down the key elements that make these residences stand out.
Scenic views:
Panoramic floor-to-ceiling windows and corner apartments: Expansive glass walls and corner unit designs offer dual-aspect, unobstructed views of cityscapes, oceans, mountains, or skylines.
Private balconies, terraces, and rooftop deck access: Outdoor spaces, including balconies, terraces, and exclusive rooftop decks, provide personal viewpoints for enjoying sunrises, sunsets, and city lights.
High-floor location with iconic landmark visibility: High-rise apartments ensure bird’s-eye views, often featuring famous landmarks.
Waterfront and green space views: Apartments offering direct views of oceans, rivers, lakes, or nearby parks and gardens, enhancing natural beauty and serenity.
Sunlit living areas and framed art-like windows: Natural light floods living spaces through well-positioned windows, framing picturesque elements of the surroundings like living artwork.
On-site amenities:
State-of-the-art fitness center: Fully equipped gym with modern exercise machines, free weights, and personal training services.
Indoor and outdoor pools: Heated swimming pools with areas for laps, lounging, and poolside service.
24-hour concierge and security: Round-the-clock concierge services for reservations, deliveries, and assistance, combined with top-tier security features.
Residents’ lounge and entertainment spaces: Elegant common areas with lounges, game rooms, and private cinema or screening rooms.
Business center and conference rooms: Workspaces equipped with high-speed internet, meeting rooms, and business services for remote work or meetings.
Private parking and valet services: Secure, covered parking with valet services for residents and guests.
Pet amenities and services: Pet-friendly facilities, including grooming stations, dog walking services, and designated pet play areas.
Landscaped gardens and outdoor spaces: Beautifully designed gardens, walking paths, and outdoor seating areas for relaxation and socializing.
Premium interior features:
Custom-designed kitchens: Gourmet kitchens with high-end appliances, custom cabinetry, quartz or marble countertops, and spacious islands.
Smart home technology: Integrated systems for controlling lighting, climate, security, and entertainment through smart devices.
High ceilings and expansive layouts: Open floor plans with high ceilings, offering a spacious and airy feel throughout the apartment.
Customizable lighting and ambiance: Adjustable lighting systems, including dimmable LED fixtures and mood-enhancing ambient lighting.
Premium flooring: Hardwood, stone, or custom tile flooring throughout living spaces, adding elegance and durability.
Walk-in closets and custom storage solutions: Ample closet space with built-in organizers, shoe racks, and dressing areas.
Fireplaces and statement features: Designer fireplaces and unique architectural details like exposed beams or feature walls.
Soundproofing and acoustic design: Enhanced soundproofing in walls and floors, ensuring privacy and tranquility within the home.
Energy-efficient systems: Advanced heating, cooling, and insulation systems designed for energy efficiency and sustainability.
Pros and cons of renting a luxury apartment
While renting a high-end apartment might seem like living the dream, it does come with a few quirks and not-so-glamorous trade-offs.
Pros:
Quality construction: Built with durable materials and modern design.
Convenient amenities: Access to fitness centers, pools, and concierge services.
Spacious living areas: Luxury apartments typically offer more space, providing comfortable living environments.
Well-maintained and updated: These apartments are regularly maintained and updated, ensuring the property remains in excellent condition.
Prime locations: Close to dining, shopping, and entertainment.
Increased security: Features like surveillance and controlled access.
Cons:
Higher rent: More expensive than standard apartments.
Higher demand: Luxury apartments often have high demand, which can make finding availability more competitive and drive up rental prices.
Additional fees: Possible extra costs for amenities and maintenance.
Limited customization: Less freedom to make changes compared to owning.
High tenant turnover: Popular locations may lead to frequent changes in neighbors.
Restrictions: Rules on pets, renovations, and other personal choices.
Luxury apartments vs. regular apartments
When considering a regular apartment, the main appeal often lies in its practicality and affordability. Regular apartments are typically located in a wider range of areas, including suburban neighborhoods and less central urban locations. Regular apartments focus on providing the essential amenities necessary for comfortable living, such as basic fitness centers, laundry facilities, and standard security features. These buildings are usually more straightforward in design and construction, focusing on functionality rather than high-end finishes.
Management in regular apartments can vary widely, which means the level of service you receive may differ depending on the building. While some regular apartments are managed by responsive and attentive teams, others may not provide the same level of service found in luxury residences. Maintenance requests might take longer to be addressed, and the overall level of service may be more basic.
However, the lower cost of living in a regular apartment often provides greater financial flexibility, allowing you to allocate resources to other priorities like savings, travel, or education. For those who prioritize affordability and a practical living space, a regular apartment can be an excellent choice that meets your needs without the additional costs associated with luxury living.
Is a luxury apartment worth it?
Deciding whether a luxury apartment is worth the cost ultimately depends on your personal values, lifestyle, and financial situation. If you prioritize comfort, convenience, and the prestige that comes with high-end living, the investment might be well worth it. However, it’s essential to weigh these benefits against your long-term financial goals and other housing options available. While luxury apartments offer an elevated living experience, the question of value is subjective—what’s most important is finding a home that aligns with your needs and aspirations.
According to U.S. News & World Report, 66% of divorced people had shared debt with their ex-spouse. This can complicate financial situations as both parties are still liable for the debt even after divorce.
If you had joint accounts during your marriage, your ex-spouse’s information will remain on your credit report for up to 10 years after you pay off the balance and close the account. However, if you can’t pay the account in full, you have other options for eliminating shared accounts.
Read on to learn how to remove an ex-spouse from your credit report, plus tips for improving your credit post-divorce.
Key takeaways
Close joint accounts that you shared with your ex-spouse. If you can’t pay them off, transfer the balances to individual credit cards.
If you are an authorized user on your ex’s card or vice versa, call the credit card issuer to request removal.
Take steps to rebuild your credit after divorce, such as keeping credit utilization low, making on-time payments, and getting extra help from credit repair services.
Why Is Your Ex-Spouse’s Name on Your Credit Report?
Your ex-spouse’s name appears on your credit report because you took on shared debt during your marriage. When a couple gets a joint loan, both of the individuals’ names are listed on the loan agreement, and payment information appears on both credit reports. The responsibility of repaying the debt is equally shared between both individuals.
Examples of shared debt include:
Taking out a joint mortgage loan to purchase property
Co-signing an auto loan to purchase a car
Shared credit card accounts
Personal loans where you were both co-borrowers
How Do I Separate My Credit from My Husband or Wife After a Divorce?
There are a few different strategies for dealing with shared debt after a divorce and separating your credit from your ex-spouse.
Close the Shared Accounts
Generally, you will need to close shared accounts in order to remove your ex-spouse from your credit report. If you leave the account open, you and your ex’s finances will continue to be linked, and your credit could get damaged if they miss a payment.
If you were using a credit card that earns rewards, remember to redeem your points before closing the account. Once joint credit cards are closed, notify your creditor that you’re going through a divorce and consider requesting individual cards.
As a final step, check that your credit report accurately reflects the closure. Note that after you close the account, it can take up to 10 years for the account to fall off your credit report.
Transfer the Balances
If you cannot afford to pay the account in full to close it, another option is for you and your ex-spouse to both open new personal balance transfer credit cards. Then, you can divide up your debts and transfer the balance to your individual cards. Once the entire balance is transferred from the joint account, you can close it.
Remove Your Ex as an Authorized User
If your ex-spouse is an authorized user on a credit card account that you’re the primary cardholder of, you can call your issuer to have them removed. Once removed, they can no longer use the card to make purchases.
Alternatively, if you’re the authorized user and your ex-spouse is the primary cardholder, you can remove yourself as an authorized user. Typically, this doesn’t require any help from the primary cardholder, and you can call the credit card issuer’s customer service line to request your removal.
How to Improve Your Credit Score After Divorce
Divorce can affect your credit in more ways than one, often leading to less income, one-sided nonpayments, and lower credit limits—all of which can negatively impact your credit score. Luckily, you can take steps to rebuild your credit after divorce.
Here are a few ways to improve your credit score post-divorce:
Monitor your credit: After a divorce, it’s important to regularly check your credit reports and credit score for errors or discrepancies, especially as you make changes to your accounts.
Close joint accounts: As mentioned above, you should close any joint accounts that you have with your ex-spouse so your credit doesn’t continue to be linked.
Keep balances low: When your joint account goes from two people to one, the issuer may reduce the credit limit, affecting your credit utilization. As a result, you should aim to keep your balances low in order to keep your credit utilization ratio under 30%.
Repay debt on time: Late payments have a major negative impact on your credit score, so it’s important to stick to a monthly budget to make payments on time.
Consider credit repair services: Consider working with a credit repair company to help you deal with financial issues. Credit repair after divorce can help you identify shared accounts, monitor your credit report, and dispute errors with the credit bureaus.
You don’t have to let divorce get in the way of your financial goals. Removing your ex-spouse from your credit report is just the first step in getting your finances back on track. Get your free credit score today to get started.
You have a business dream, but your credit rating isn’t stellar and putting up collateral is a problem. Can you still launch a small business or expand one that is on the cusp of growth?
The truth is, it won’t be easy. The Federal Reserve’s raising of interest rates to cool inflation also seems to be cooling business owners’ prospects of getting a bank loan the last couple of years.
Even with bad credit, it may be possible to secure a startup business loan with no collateral to help you launch your business without putting your personal assets on the line. However, it must be stressed that this type of financing typically comes with high rates that help compensate the lender for the risk being taken.
Learn more about your different financing options as a small business startup, as well as the pros and cons associated with these choices.
Key Points
• It may be possible to get a small business loan for your startup with bad credit, and a poor credit score is considered a FICO® score of 600 or less.
• Options for financing include small business loans, credit cards, merchant cash advances, invoice financing, equipment financing, and SBA loans.
• Alternative sources of funding for your startup business include grants, the use of crowdfunding platforms, peer-to-peer lending, and borrowing from family members or friends.
Understanding “Bad” Credit
Not only are you running your new venture and figuring out how much money it takes to start a business, you might also be wrestling with questions of credit.
Lenders use different credit scoring models to evaluate your creditworthiness. Some have minimum credit scores that they prefer to see in applicants seeking loans, as these outlays of money may present considerable risk to the lenders.
As a startup, you may not have an established business credit score. In this case, lenders generally evaluate your personal credit history. For a personal credit score, Experian® defines a “good” score as 661-780, a “fair” score as 601 to 660, and a “poor” score as 500 to 600.
Recommended: No Credit Check Business Loans
Getting Startup Business Loans With Bad Credit and No Collateral
Before you launch any applications for unsecured startup business loans, it can help to do prep work to strengthen your pitch. Even with bad credit, you can present an in-depth business plan that outlines your strategies for success and how you plan to use the funding.
A business forecast can also be helpful in giving the lender an idea of your expected cash flow in the coming months or years. As a startup, you may need to provide personal information as well, such as your tax returns.
Options for No Collateral Business Loans
With some basic financials in hand, it’s time to explore some of your options for unsecured small business startup loans, as well as some other options that may be worth considering. It is possible to find funding at this early stage, and with bad credit. But carefully review the terms of any financing agreement to understand the true cost, since these products may come with higher rates to compensate for the risk.
Recommended: How Big of a Business Loan Can You Get?
Online Business Loans
Online business lenders may offer alternative bad credit business loans with less stringent requirements compared to traditional banks. You can also explore small business loans for specific groups, such as women with bad credit. While approval and funding times can be fast, you still need to provide proof showing that you’ll be able to repay the loan.
Remember to consider the drawbacks associated with these subprime online business loans. They usually come with a very high APR and a shorter repayment term. There also may be a requirement for a personal guarantee, which means your personal credit score can be impacted for any late payments or delinquency — and your personal assets may also be at risk to pay back the loan if your business isn’t able to.
Credit Cards for Small Business
A small business credit card may be an alternative to help cover early startup costs. You could be more likely to qualify with a strong personal credit score, even if your business credit score is on the lower side of the spectrum or simply not established yet. Most of these cards come with a required personal guarantee. Many also come with an annual fee and while there may be perks or rewards, it’s wise to compare these costs before applying.
As always, your card’s APR is also an important factor, especially if you expect to carry a balance from the beginning as you get your startup off the ground.
Recommended: Can You Get a Business Credit Card Before You Open Your Business?
Merchant Cash Advance
If your business accepts credit card transactions, you may be able to qualify for a merchant cash advance. This gives you a lump sum to use as working capital, then you pay a percentage of your daily credit card transactions (known as the holdback amount) until your balance is repaid. Rather than being charged an interest rate, merchant cash advance companies use a factor rate.
This charge is a multiple of your borrowed amount, such as 1.5. A $25,000 cash advance, for example, multiplied by a 1.5 factor rate would bring the total balance to $37,500. In other words, the financing would cost $12,500. Merchant cash advances may have even higher factor rates and other fees which can make them a very expensive form of funding for businesses.
Additionally, because merchant cash advances aren’t considered a loan, generally their regulation is less stringent and regulatory oversight is less rigorous than more traditional loans.
Invoice Factoring
For a startup that already has some accounts receivable, you may qualify for invoice factoring to help your cash flow while you wait for customers to pay you. The factoring company charges a percentage of the invoice amount as their fee (typically around 85%), then fronts you a percentage of the funds before payment is received. They generally manage the payment process with your customers. Once the invoice is repaid, you’ll receive the remaining balance.
Equipment Financing
Equipment financing is a type of business loan that is used to purchase equipment for business purposes. The equipment you are purchasing acts as the collateral for the loan. Needs will vary based on the nature of the business, but some types of equipment that may be purchased with this type of loan include agricultural equipment, office equipment, printers, vehicles, restaurant ovens, and more.
Typically, when the loan is repaid, you are the owner of the equipment. In some cases, the lender may require additional assurances, such as a personal guarantee.
Crowdfunding Platforms
Crowdfunding is a unique form of financing, but it can help launch your startup without you having to worry about credit scores as much. You can create a campaign to garner interest in your business and get financial backing in one of four forms: equity, donation, rewards, or loans.
While crowdfunding allows you to raise money and test the market at the same time, it can be a much more intensive marketing process. Plus, there’s no guarantee you’ll reach your funding goals.
SBA Loans
Many lenders offer Small Business Administration (SBA) loans to startups because they come with a guarantee as long as certain underwriting guidelines are met. In some cases, even startups with credit challenges may be able to qualify for an SBA loan. One option for new businesses is the SBA Microloan program, which lets you borrow up to $50,000.
Peer-to-Peer Lending
Peer-to-peer lending services are another alternative to more traditional lending options like bank loans. With this type of lending, online platforms match potential borrowers with potential investors. Eligibility requirements will generally vary from platform to platform.
Some services have minimum credit score requirements, which can potentially make it more challenging for businesses or individuals with lower credit scores to qualify. The process to funding is generally quick, but borrowers with less-than-stellar credit may find that interest rates are higher than a traditional loan.
Recommended: No Doc Business Loans
Alternative Options for Startups With Bad Credit
Startups with bad credit often face significant challenges in securing traditional loans, but several alternative options can provide the necessary capital to get their businesses off the ground.
1. Small Business Grants: One viable option is seeking small business grants, which are essentially free money provided by government agencies, non-profits, and private organizations. Unlike loans, grants do not require repayment and are typically awarded based on merit, need, or the potential impact of the business. Startups can explore local, state, and federal grant programs tailored to their industry or demographic.
2. Business Line of Credit: Another option is establishing a business line of credit. While this may seem similar to a loan, a business line of credit offers more flexibility and often has less stringent credit requirements. It allows startups to draw funds as needed, paying interest only on the amount used, which can be particularly useful for managing cash flow.
3. Borrowing from Family and Friends: This approach requires transparent communication and clear terms to ensure personal relationships are maintained.
4. Personal Savings: Funding a business from one’s own savings eliminates the need for external approval and interest payments, though it does come with personal financial risk.
5. Bartering Services or Equity: This is where startups exchange their products or services with other businesses instead of cash, or offer a percentage of the business in return for investment.
By leveraging these alternative funding sources, startups with bad credit can find creative and practical ways to secure the necessary resources to grow and succeed.
Building Business Credit
When you’re starting your business, you can help set yourself up for success by properly establishing your business credit. Here are a few steps to get started:
1. Officially incorporating your company
2. Getting a federal employer identification number (EIN) from the IRS
3. Opening a business bank account.
It can be difficult to find no credit check financing options, so it’s generally worth building your business credit score as early as possible. When working on building your credit score, it may be helpful to establish relationships with vendors that report to the business credit bureaus. Also, pay your bills on time. Taking these steps contributes to a stronger credit profile that could help open the door to more favorable financing opportunities.
The Takeaway
When you start a business, you’ll need to weigh the pros and cons of risk. Unsecured business loans for owners with challenged credit can come with high interest and demanding terms. Exploring multiple options can help you make the best choices for your startup.
If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.
With SoFi’s marketplace, it’s fast and easy to search for your small business financing options.
FAQ
Is it possible to get a startup business loan with bad credit and no collateral?
It is possible to get a business loan with bad credit, but the interest rate might be very high. Some lenders may require a personal guarantee. That means your personal assets could be used to cover the loan if the business doesn’t succeed and that personal credit would also be impacted by the health of your startup loan.
Could I start a business with bad credit and no money?
It’s possible to start a business despite obstacles like a bad credit score and little to no startup funds. In addition to startup loans, other options to explore include things like a business credit card, merchant cash advance, invoice factoring, crowdfunding platforms, and SBA loans. Remember that when looking for financing with bad credit, you may be subject to less favorable terms, such as higher interest rates and lower loan amounts.
Can I get a business loan with a 500 credit score?
Yes, you may be able to get a small business loan with a 500 credit score, but it will be challenging and typically involves higher interest rates and less favorable terms. Traditional banks and credit unions usually require higher credit scores, so you may need to explore alternative lenders such as online lenders, microlenders, or nonprofit organizations that specialize in working with borrowers with poor credit.
Can you get a business loan with your EIN number?
You cannot get a business loan with just your Employer Identification Number (EIN). Lenders will also consider other factors such as your personal credit score, business credit history, revenue, and overall financial health.
Photo credit: iStock/JLco – Julia Amaral
SoFi’s marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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 .
There are many reasons you might consider signing up for a new credit card. Many people look at their credit card as simply a financial tool to help them meet their goals. For others, a particular credit card can be a status symbol. Meanwhile, others view the credit card they use as an extension of their personality. For these individuals, many credit card issuers allow you to personalize the design and appearance of your credit card.
Generally, if you want to get a customized credit card, you can do so when you sign up. However, if you already have your card and are wondering how to get a custom credit card, you may still be able to ask your issuer for a new card design.
What Is Credit Card Personalization?
Credit card personalization is the ability to design and personalize the appearance of your credit card. Many issuers allow you to customize the appearance of your credit card in different ways, such as by selecting a unique background, uploading a photo to serve as your card’s backdrop, or adding the logo of your favorite sports team.
That way, when you’re using a credit card, it can become a conversation starter rather than simply a way to pay for purchases.
Keep in mind that the way your credit card looks won’t in any way impact what a credit card is and how it functions — customization is simply for appearance’s sake.
Banks That Allow Personalized Credit Card
The list of banks that allow personalized credit cards can change as different issuers update their policies. Here are a few banks that are known to allow personalized cards:
• Discover: Discover allows you to customize any card to “show your true colors.” You simply need to log into your online account to select a new design for yourself or any authorized users on your account.
• American Express: Sometimes American Express offers different options for some of their credit cards. For instance, the Art x Platinum collection features artwork from Kehinde Wiley and Julie Mehretu.
• Wells Fargo: Wells Fargo allows you to use one of your own photos or a photo from their library to serve as the face of your credit card.
• Chase Bank: The Chase Disney Visa and Chase Disney debit feature favorite motifs on your card.
Because policies change, your best course of action is to contact your issuer directly, either through your online account or the phone number listed on the back of your card.
Different Ways to Customize Your Credit Card
There are several different ways you might be able to customize your credit card. This includes:
• Selecting from a limited number of design options offered by the issuer
• Getting a credit card featuring your favorite professional sports team
• Taking advantage of limited time designs
• Uploading a personal photo to use as the face of your credit card
While some issuers will allow these options, keep in mind that how credit cards work and their specifics will vary by issuer. As such, some issuers do not allow for any credit card customization.
Guide to Getting a Customized Credit Card
There are particular credit card requirements and steps that you should follow when trying to get a customized credit card.
Recommended: Does Applying For a Credit Card Hurt Your Credit Score?
Verify Your Account
Sometimes, you can choose your credit card customization as part of the initial application process, such as if you’re getting a credit card for the first time. In other cases, you’ll need to log in and verify your account in order to get a personalized credit card.
Choose a Design
Once you’ve been verified and are either in the credit card application process or account screen, you will choose your design. Some credit card issuers present you with a list of images or designs to choose from, while others allow you to upload a completely custom design.
Confirm Your Design
Once you’ve chosen your design, you will have to confirm your design to make sure that it’s what you want and that everything looks good. Your new customized credit card will then arrive at your house through the mail.
From there, the regular credit card rules — like the importance of making on-time payments — will apply, though you can feel like you’re swiping in style.
Recommended: When Are Credit Card Payments Due
The Takeaway
If you want to use your credit card as a way to express yourself, some credit card issuers allow you to customize the design of your card. You might be able to choose between a set of options, while others will allow you to upload an image of your choosing to serve as the face of your credit card.
Whether you’re looking to build credit, apply for a new credit card, or save money with the cards you have, it’s important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
How long does it take to get a customized credit card?
You shouldn’t have too much of a delay for getting a customized credit card as compared to any other credit card. The one scenario where there can be a delay is if you’re using your own uploaded image. In most cases, issuers will have someone personally review each uploaded image to make sure it meets their standards.
Can an authorized user get a custom card?
While an authorized user can sometimes get a custom card, it will usually have to be managed through the primary cardholder. Policies differ by card issuer, so check with the primary cardholder and/or issuer to see what might work for you.
Can you change your credit card design?
In many cases, you can change your credit card design. You can find out if this is possible — and if it is, start the process of getting a personalized credit card — by contacting your credit card issuer.
Photo credit: iStock/MStudioImages
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Are you looking for the best cash back apps? Finding ways to save money on everyday purchases is always a good idea. Cash back apps are a great tool to help you get some of your money back (and even free gift cards) on things you buy all the time. These apps can reward you…
Are you looking for the best cash back apps?
Finding ways to save money on everyday purchases is always a good idea. Cash back apps are a great tool to help you get some of your money back (and even free gift cards) on things you buy all the time. These apps can reward you with cash, points, gift cards, or discounts just for shopping like you normally do.
With so many cash back apps available, it can be hard to know which ones to use. Some apps focus on groceries, while others give rewards for travel, gas, or online shopping. By using the right cash back apps, you can make sure you’re making the most out of your spending.
In case you want a quick summary, my favorite cash back apps are:
There are many others on the list below that you may find helpful too!
Best Cash Back Apps
These 14 best cash back apps will help you make extra money. You can get cash back for groceries, online shopping, and more.
1. Rakuten
Rakuten is a popular cash back app and site that lets you earn rewards on your everyday shopping. With Rakuten, you get a percentage of what you spend back as cash. It’s a simple and effective way to get free money while shopping at your favorite stores like Target, Macy’s, Walmart, Old Navy, Lowe’s, and many more.
Your cash back percentage depends on the store that you are shopping at but can vary anywhere from around 1% to over 10%, which can add up quickly!
Signing up is quick and free too. Once you create your account, you can start shopping on Rakuten’s website, app, or browser extension. When you shop through Rakuten, the stores pay Rakuten a commission. Rakuten then shares part of that commission with you as cash back.
One of the coolest things about Rakuten is how easy it is to find deals. You can earn cash back on clothes, electronics, restaurants, and even ride-sharing services like Uber. The browser extension helps you find the best coupons and cash back offers.
Rakuten also has a large user base with over 15 million members. They have paid out more than $3.2 billion in cash back since they started in 1999. On average, members earned about $100 in cash back in 2023.
Payment is easy too. You can choose to get paid via check or PayPal.
Please click here to sign up for Rakuten. Plus, you can get a $30 bonus when you spend $30 if you join right now (at the time of this writing; please double-check the current offer).
2. Fetch Rewards
Fetch Rewards is a popular app that makes earning gift cards easy, and this is the app that I use for ALL of my grocery receipts. All you need to do is take a picture of your receipts using your phone.
Fetch Rewards lets you earn points by snapping receipts from any store. It works for grocery stores, clothing stores, restaurants, and even gas stations. The app also works with digital receipts from online purchases.
Some examples of what you can earn include 2,500 points for buying General Mills products, 1,000 points for Barilla Pasta, 750 points for Sara Lee bread, 5,000 points for trash bags, and more.
To get started, download the Fetch Rewards app and create an account. Then, shop as you normally do and scan your receipts to earn points. The process is quick and only takes about 10 seconds per receipt.
Once you earn enough points, you can redeem them for gift cards. These gift cards can be used at a variety of places like Amazon, Target, Starbucks, and many more. You can also choose to donate your points to charity.
The app is free to sign up for and use. There are no surveys to fill out or barcodes to scan, making it a hassle-free way to earn rewards.
You can sign up for Fetch Rewards here.
3. Swagbucks
Swagbucks is a popular app where you can earn rewards for doing simple things online. You can shop, watch videos, take surveys, and even play games to get points. These points, called Swagbucks (SB), can be redeemed for gift cards or cash.
I have been using Swagbucks for years and I think it’s a great rewards site.
One great feature of Swagbucks is how easy it is to use. You can add a browser extension to automatically earn cash back on your purchases, and this makes it super convenient as you shop online.
Another nice thing is their “Magic Receipts” feature. You just need to upload your receipts from certain stores, and you’ll earn cash back. Many big retailers are included, making it easy to earn points.
With over 20 million users and a strong reputation, Swagbucks is trusted by many. They’ve paid out more than $935 million in rewards to their users.
Please click here to join Swagbucks.
Here’s a screenshot of some of the cash back that I’ve received from Ibotta recently.
4. Ibotta
Ibotta is a popular cash back app that helps you save money on groceries and more. It’s free to download and use and with Ibotta, you can earn real cash back on everyday purchases.
Using Ibotta is easy. You just head to the Ibotta app and add offers for things you want to buy before you go shopping. These offers can be for groceries, clothing, and even dining out.
Next, you shop at your favorite stores, both in-store and online. Ibotta partners with many stores and retailers, so you have plenty of choices.
After shopping, you can redeem your cash back. You do this by uploading your receipt or linking your loyalty card to the app. It’s a simple process that only takes a few minutes.
One great thing about Ibotta is that it offers cash back on a wide range of products from daily essentials like milk and bread to big-ticket items. For example, currently I can get 50 cents back on yogurt, 75 cents back on shredded cheese, $1.00 back on Cheerios, and more.
Another perk is the bonuses that Ibotta offers. These bonuses can give you extra cash back for redeeming certain offers or for reaching specific milestones.
The app is available on both iOS and Android, making it easy to use on most cell phones.
Ibotta is a great way to make some extra cash on things you already plan to buy. It’s perfect for anyone looking to save a little more each time they shop.
You can sign up for Ibotta here.
5. Upside
Upside (used to be called GetUpside), helps you earn cash back on fuel for your car (as well as restaurants and grocery stores, but I like to mainly use it for gas).
Using the Upside app is easy. You just sign up and find deals near you. The app shows you gas stations, grocery stores, and restaurants where you can get cash back.
You can earn up to 25 cents per gallon on gas and even more for diesel. Occasionally, you can get deals for higher. For example, I recently redeemed a deal to get 89 cents off per gallon – I received $15.00 in cash back!
For groceries, you can earn up to 30% back in select cities and when you eat out, get up to 45% back at many restaurants.
There are over 50,000 locations in the U.S. where you can save money with Upside. Major gas stations like BP, Shell, and Marathon are included.
To get started, just sign up for free, link your cards, and claim offers through the app. Then, make your purchases as usual, submit your receipts or use the check-in feature, and get your cash back.
Payments can be collected through PayPal, bank transfer, or gift cards.
You can check out Upside here to learn more.
6. Dosh
Dosh is a cash back app that helps you save money without a lot of work. You link your credit or debit card to the app, and it automatically gives you cash back when you shop at participating stores or restaurants.
Using Dosh is easy too. After linking your card, just shop like you normally do. The app will take care of adding the cash back to your Dosh wallet. You don’t need to worry about scanning receipts or entering codes, which I think is very nice and convenient.
Dosh partners with many well-known brands, making it simple to save money. You can earn cash back at places like Walmart, Target, and Pizza Hut. The app also works with thousands of hotels, adding more ways to save.
One of the best things about Dosh is that it handles everything for you automatically. It deposits your rewards into your account. Once you reach a certain balance, you can transfer your cash to your bank, PayPal, or donate to charity.
If you like finding deals and saving money without effort, Dosh might be a great app for you. It makes saving easy and fun, helping you make the most of your purchases every day.
7. TopCashback
TopCashback is a great choice if you want to save money on your purchases. This app connects you with over 7,000 retailers, making it super easy to earn cash back.
To start, sign up for a free account. Then, search for your favorite store and click on the offer. After you shop, your cash back gets added to your account.
TopCashback stands out because it tends to have higher cash back rates compared to other apps. This means you can save more money on each purchase.
It’s important to note that while TopCashback is very user-friendly, I did find some reviews where some people find that it could improve in processing times for gift card purchases.
If you shop online often, TopCashback can help you earn cash back on your regular spending. The app is available on both iOS and Android, so you can use it on the go.
8. PayPal Honey
PayPal Honey is a browser extension that makes online shopping easier and cheaper. When you shop online, Honey automatically finds and applies coupon codes at checkout. You just add it to your browser and it starts working right away.
Honey works with over 30,000 stores. This includes big names like Amazon, Macy’s, and Nike, so there’s a good chance you’ll find a discount on something you’re buying.
Another cool feature is the Droplist. You can keep an eye on items you want to buy and get alerts when their prices drop, and this helps you buy things at the best time and save even more money.
Honey is free to use and easy to install. If you want to save money without the hassle of searching for coupon codes yourself, it’s worth trying out.
You can learn more about Honey by clicking here.
9. Shopkick
Shopkick is an easy way to earn rewards when you shop. You can get “kicks,” which are points, for doing simple things.
For example, you earn kicks just by walking into certain stores, and this makes it super easy to start earning rewards right away.
You can also earn kicks by scanning the barcodes of products in the store. Some items even give extra kicks when you buy them and submit your receipt.
Shopkick isn’t just for in-store shopping. You can also earn kicks when you make purchases online through the app.
Once you collect enough kicks, you can trade them in for free gift cards. These gift cards can be used at many popular stores, which gives you a lot of options.
The app is free to use, and it has a lot of participating stores. This makes it a great way to earn rewards on stuff you already buy.
Here’s a screenshot of my personal Capital One Shopping account. You can see how much money it has saved me here!
10. Capital One Shopping
Capital One Shopping is a handy tool for anyone who likes to shop online. It’s a browser extension that finds coupon codes while you shop. This makes saving money super easy because the tool does all the work for you. Just shop as usual, and it will automatically apply the best coupon codes at checkout.
I have Capital One Shopping installed on my browser, and I love how it helps me save money without me having to think about it. I used to always forget to look for coupon codes, or sometimes it would take forever to find a coupon code that worked. Capital One Shopping takes all of that wasted time and does it for you.
You can use Capital One Shopping on almost any browser, including Chrome, Firefox, Edge, and Safari. It’s also available as a mobile app for both iOS and Android. This means you can save money whether you’re shopping on your computer or your phone.
Another great feature is the price comparison tool. If you’re looking at an item, Capital One Shopping checks other websites to see if you can get a better deal.
Another perk is that you earn rewards points while you shop. These points can be turned into gift cards for many popular stores. It’s like getting a little cash back on your purchases. I recently redeemed $71.00 in free gift cards for simply just doing my normal online shopping.
You can also add items to a watchlist, and the tool will let you know if the price drops. This way, you can buy things at the best possible time.
Capital One Shopping is free to use and easy to install. Just add the extension to your browser or download the app and then shop as you normally do and enjoy the savings!
You can learn more in my Capital One Shopping Review.
11. Receipt Hog
Receipt Hog is a cash back app that helps you earn cash back by simply scanning your receipts.
You take pictures of your shopping receipts and upload them to the app. For each receipt, you get coins. These coins can then be exchanged for money through PayPal or gift cards.
The cool part is, you can use receipts from nearly any store. Whether you shop at a grocery store, department store, or even a gas station, you can take a photo of that receipt and earn coins.
Receipt Hog also has special bonuses and sweepstakes. Sometimes, you might get extra coins or the chance to win larger prizes. It’s a fun way to get rewarded for your everyday shopping.
Recommended reading: 14 Best Apps To Scan Receipts for Money
12. Checkout 51
Checkout 51 is a user-friendly cash back app that helps you save on groceries, gas, and more. It’s free to download and simple to use.
With Checkout 51, you can look at their weekly offers and select the ones you like. When you buy those items, you just need to upload your receipt to the app.
New deals are added every week, so there is always something new to save on. It’s a great way to cut down on your grocery and gas expenses.
13. Receipt Pal
Receipt Pal is an app that makes earning rewards easy. You just need to scan your receipts and this app works with any store, so you can rack up points from grocery shopping, gas, dining out, and more.
Each time you scan a receipt, you earn points. These points can be turned into gift cards for popular retailers.
The app is free to use. You need to take a picture of your receipt within 14 days of your purchase. Once you upload the receipt, Receipt Pal will handle the rest.
You can also earn extra points by completing surveys and playing games within the app. This can make reaching your reward goals go more quickly.
14. Upromise
Upromise is a cash back app that helps you save money for college. Instead of just giving you cash back for everyday purchases, it allows you to put those savings into a college fund. This makes it a great option for families planning for future education expenses.
When you shop through Upromise, you earn cash back on things you buy. It works with many stores and restaurants. You can also earn rewards by scanning receipts and dining at participating restaurants. The cash back can be automatically transferred to a 529 college savings plan.
Another cool feature is that you can also link someone else’s 529 plan to your account. This means grandparents or other family members can contribute to your child’s college savings too.
Upromise is a good way to turn your everyday spending into savings for the future. It helps make the dream of paying for college a little more achievable.
What Are Cash Back Apps?
You may have questions about cash back apps. If so, then I would like to talk about them and how they work in this section.
Cash back apps help you save money on everyday purchases. By using these apps, you can get a percentage of your spending back in the form of cash rewards.
How cash back apps work
When you shop through a cash back app, the cash back app partners with retailers to earn a commission. Instead of keeping all the commission, the app shares a portion with you so that you will be persuaded to use their app more (everyone wins). This means you get back a small percentage of what you spent.
You start by downloading the app and creating an account. Then, you browse through the app’s partner stores to find the ones you like. When you make a purchase through the app, you earn cash back that you can usually redeem for PayPal, bank deposits, or gift cards.
Benefits of using cash back apps
Cash back apps can save you money without much effort. Every time you shop through these apps, you earn a little back on what you’re already spending. Over time, these small savings add up.
Many apps also give extra bonuses or special promotions, which means even more savings. These promotions can include higher cash back rates for a limited time or bonus cash for shopping in particular categories.
Plus, cash back apps are free to use, making them a simple way to save a bit on everyday purchases.
I use cash back apps all the time, and I like how they can help me save more money easily.
Frequently Asked Questions
Below are answers to common questions about the top cash back apps.
Which app gives the most cash back?
Rakuten is known for giving a lot of cash back for online purchases, many times over 5%. Others, like Fetch Rewards, also give a good amount of rewards, especially for groceries.
Do cash back apps really work?
Yes, cash back apps do work and you earn money or points for purchases you make. These apps partner with many stores to give you a percentage back.
What’s the best cash back app for groceries?
I think that Fetch Rewards is the best for groceries. It has good deals on food items at many big grocery stores. You can scan receipts or link your store loyalty card to earn cash back.
Is Fetch or Ibotta better?
Fetch is easier to use since you just scan any grocery receipt. Ibotta requires more work because you must select offers before shopping. Both are good. Ibotta typically pays a little more, but you do have to do a little more work to earn the points.
What are the best automatic cash back apps?
Rakuten and Capital One Shopping are top apps for automatic cash back. Once you download the browser extension, they automatically give you cash back at partner stores. It’s simple and requires no extra work.
Another way to get automatic cash back is by using cash back credit cards. The best rewards credit cards can give cash back of around 1%-2% automatically on your purchases.
How can I tell if cash back apps are safe and legit to use?
To see if a cash back app is safe and legitimate, I recommend that you look for reviews and ratings in app stores.
Best Cash Back Apps – Summary
I hope you enjoyed this article on the best cash back apps.
The best cash back apps can help you save money on things you buy every day with little effort. With these apps, you can earn rewards on groceries, eating out, online shopping, and more. Whether you want to save a bit of money or get the most savings, these apps have different features to help you.
Plus, depending on the cash back app, you can get your cash back directly to your bank account, PayPal account, or even through free gift cards.
The best cash back apps don’t have any fees either, so you can save money without having to spend any more.
Savings accounts sometimes have withdrawal limits, such as no more than six outgoing transactions per month. That’s because savings accounts are fundamentally different from checking accounts, which are designed for everyday spending.
Because money in a savings account is meant to primarily stay put and be added to, it earns interest. Checking accounts, on the other hand, generally offer no interest or a nominal interest rate, as it’s constantly flowing in and out. Due to this distinction, there are sometimes withdrawal limits on savings accounts.
Here, you’ll learn more about savings withdrawal limits, why they exist, when they are applied, and how you might be able to avoid them.
Key Points
• Savings accounts typically impose withdrawal limits to distinguish them from checking accounts, which are intended for regular transactions and spending.
• Regulation D historically limited convenient transactions from savings accounts to six per month, though this enforcement was lifted in 2020, allowing banks more flexibility.
• Many banks still impose withdrawal limits despite the change, potentially resulting in fees or account conversions if exceeded, emphasizing the importance of checking individual bank policies.
• Only certain transactions, like electronic transfers and debit card purchases, count toward the withdrawal limit, while in-person withdrawals and ATM transactions do not.
• To avoid exceeding withdrawal limits, use checking accounts for frequent transactions and consider making larger transfers to checking when anticipating more withdrawals.
How Many Times Can You Withdraw From Savings?
“How many times can I withdraw from savings?” is a common question. To help maintain the distinction between checking and savings accounts (and encourage people to save money), bank accounts traditionally come with savings account withdrawal limits. A federal rule called Regulation D used to limit certain types of transfers and withdrawals — known as “convenient transactions” — from a savings deposit account to no more than six a month.
That changed in April 2020, when the Federal Reserve removed the requirement that banks enforce the limit. However, many banks and credit unions have kept restrictions in place. They may charge a fee, transition your account to a checking account, or close it if you go over that amount.
💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.
Earn up to 4.60% APY with a high-yield savings account from SoFi.
Open a SoFi Checking and Savings account and earn up to 4.60% APY – with no minimum balance and no account fees.
Why Is There a Savings Withdrawal Limit?
Savings account withdrawal limits stem from Regulation D, mentioned above, which is a federal regulatory rule that sets standards for how banks and credit unions oversee savings deposits. But why are these guardrails in place? Some points to know:
• One of the main reasons Regulation D exists is to ensure that banks and credit unions have the necessary amount of cash on hand to always cover customer withdrawals.
• When you deposit any amount of money in your bank account, the bank uses most of that money for other things, such as consumer loans, credit lines, and home mortgages. (They most likely loan that money at a higher rate than the interest rate they pay you, the savings account depositor. That’s one of the ways banks make money.)
• Banking institutions, however, face a legal requirement to have cash available to service customers. Withdrawal limitations help protect both banks and consumers.
• One of the other motivations for Regulation D is to encourage consumers to see their transactional accounts and savings accounts as separate.
• A savings account ideally encourages long-term savings, whereas checking accounts enable short-term spending. In some cases, these limitations can help motivate consumers to prioritize saving overspending.
Recent Changes in Savings Account Withdrawal Rules
Because of the financial strain caused by the coronavirus pandemic, the Federal Reserve altered the rules regarding Regulation D in April 2020. Currently, depository institutions have the ability to suspend enforcement of the six transfer limit.
Regulation D
As you’ve learned, in the past, Regulation D was in place and enforceable in order to limit the number of transactions flowing out of savings accounts. This encouraged bank customers to keep money in savings accounts, hopefully save for their goals, and allow banks to use the funds on deposit, confident that the money wouldn’t constantly be flowing in and out.
Now, however, financial institutions can allow their customers to make an unlimited amount of convenient withdrawals and transfers from their savings accounts. The word “can” is important here.
Just because banks aren’t required to follow the six transaction limit anymore, however, doesn’t mean they won’t continue to penalize the account holder for going over that limit.
Many banks still enforce caps on the number of convenient transactions customers can make from their savings accounts.
It can be well worth your while to check in with your financial institution and find out what policies are in place regarding savings withdrawal limits.
💡 Quick Tip: Want a simple way to save more everyday? When you turn on Roundups, all of your debit card purchases are automatically rounded up to the next dollar and deposited into your online savings account.
Which Transactions Apply to the Cash Withdrawal Limit?
Only “convenient transactions” count towards the monthly withdrawal and transaction limits that consumers face when managing their savings account. But what exactly are convenient transactions?
Regulation D sees these types of transactions as convenient transfers:
• Overdraft transfers
• Automated clearing house (ACH) transfers, such as bill-pay
• Electronic funds transfers (EFTs)
• Transfers made by writing a check to a third party
• Debit card transactions
• Transfers or wire transfers made by phone, fax, computer, or mobile device.
Which Transactions Don’t Count Toward the Withdrawal Limit?
While the six transaction limit per month can sound fairly strict, it does not mean account holders can’t access their savings accounts more than six times a month.
Whatever type of savings account you have, there are less-convenient transfers you can make that do not count towards the monthly limit. These include:
• Withdrawals or transfers made in-person at the bank.
• Transfers and withdrawals made at the ATM.
• A withdrawal made by asking the bank to send you a check.
Recommended: ATM Withdrawal Limits
Convenient Transactions
As mentioned above, Regulation D defines convenient transfers to include such transactions as:
• Transfers, whether by check, electronic funds transfer, overdraft, or other means.
• ACH transfers
• Payments made with your debit card.
What If I Go Over The Savings Withdrawal Limit?
The penalty for exceeding the cap set by your bank for savings transactions will depend on your institution.
You may be charged a fee, and even if your financial institution charges a low (or no) fee for exceeding the cap on transactions per month, you may still want to watch how many withdrawals or transfers you make.
The reason: If there are excessive withdrawals from a savings account, financial institutions have the right to convert the savings account into a checking account or even close the account.
Savings Withdrawal Limit Fees
If you are charged a fee for too many convenient transactions, it might be called a “withdrawal limit fee” or “excessive use fee.” These fees tend to run anywhere from $1 to $15 per transaction.
In some cases, you might ask your bank and see if they would waive the fee.
3 Tips to Avoid Hitting Withdrawal Limits
If your financial institution does have withdrawal limits, here are a couple of ways to avoid fees.
Use Your Checking Account
One simple way to avoid overstepping savings account withdrawal limits, is to use your checking account for most of your transactions.
It can be easy to get your accounts mixed up when you are banking online or in an app. By learning which account is which as you transfer funds, you can minimize use of your savings account.
Do a Single Large Transfer to Checking
If you think you will need to use your savings account to make more than six (or whatever your bank’s current transaction limit is) in a given month, consider making one substantial transfer from savings to checking at the beginning of the month.
You can then arrange to have your withdrawals or automatic bill payments taken right out of checking.
Try Work-Arounds If You Get Close to Your Limit
If you are already at your limit, you can avoid penalties by visiting the bank in person or using the ATM to initiate withdrawals or transfers from your savings account. (You may want to make sure, however, that you’re not triggering any out-of-network ATM charges.) 💡 Quick Tip: When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.
Opening a Bank Account with SoFi
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.
FAQ
How much can you withdraw from your savings account?
Individual banks set limits about withdrawals, both the number and the amount, often according to method (such as ATM withdrawals). Check with yours to learn the specifics.
Why can you only withdraw 6 times from savings?
Regulation D set the number of convenient transactions out of a savings account at six to encourage people to save and to leave their funds in the account, earning interest. The bank, in turn, could count on having a significant amount of those funds to use in their business activities.
Can banks stop you from withdrawing money?
Your bank account can be frozen, which will stop you from withdrawing money. Your bank may do this if they think illegal activity is occurring, or if a creditor or the government requests it.
The SoFi Bank Debit Mastercard® 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 members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Discover strategies for achieving early retirement with the FIRE movement and learn how to maximize your credit card rewards.
How much do you have to save if you want to retire early? Can you double your credit card rewards by paying off one card with another? Hosts Sean Pyles and Elizabeth Ayoola discuss the FIRE movement and maximizing credit card rewards to help you understand how to achieve financial independence and optimize your financial strategies. They begin with a discussion of the FIRE movement, with tips and tricks on understanding different FIRE strategies (Lean FIRE, Fat FIRE, Barista FIRE), adapting financial goals to individual circumstances, and the feasibility of saving significant portions of income amidst rising living costs and inflation.
Then, credit card Nerd Erin Hurd joins Sean to discuss maximizing credit card rewards. She explains the impossibility of doubling rewards by paying off one card with another, effective strategies for couples to maximize credit card points like leveraging multiple sign-up bonuses and using authorized users, and the best and worst ways to redeem credit card points, emphasizing considerations such as point expiration, the impact of inflation on point value, and the importance of having a realistic plan for point usage.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Elizabeth Ayoola:
It’s another day at work doing the best job a girl could ask for, talking about money and hoping I earn enough to retire early.
Sean Pyles:
I feel you, Elizabeth. But given the current cost of living, is early retirement still a possibility? And how can people do that when it can be hard to save anything? Welcome to NerdWallet’s Smart Money Podcast. I’m Sean Pyles.
Elizabeth Ayoola:
And I’m Elizabeth Ayoola. Now this episode we are going to answer a listener’s question about how to get the most out of their credit card points. Are you better off using them to get cash back or booking airline tickets? Speaking of which, I might do that soon. And what about using them at checkout at Amazon? But before we dig into that, let’s chat a little bit about the FIRE movement, one of my favorite topics, and whether it’s still a thing considering how the cost of living has gone up for so many, even though inflation has been cooling lately.
So Sean, you should already know I’m going to be putting you in the hot seat and quizzing your CFP knowledge. For new listeners, Sean is studying for his designation, and he’s almost about to throw up a peace sign after his final exam. So tell us, Sean, what is FIRE?
Sean Pyles:
Yeah, I have just a few more months until I sit for the CFP exam, and the studying is getting very intense. But anyway, it means I know a lot more than I did even a few months ago, which is great. So FIRE stands for Financial Independence Retire Early, and it’s a movement aimed at using different saving strategies to help people, you guessed it, retire early. Early looks different for everyone, but it’s certainly before the Social Security retirement age of 66 or 67 depending on when you were born. The main goal is to save as much as you can to retire at your chosen age. For some people that means saving between 50% and 70% of their income for retirement. That probably sounds extreme, but that’s what it might take to avoid working into your golden years.
Elizabeth Ayoola:
Definitely sounds extreme for the average person, I think. But I do often sit and think about how nobody warned me that I would be spending decades of working or maybe I was too worried thinking about how I was going to stay married for decades and missed that I was going to be at work every single day, anyway. But assuming you start working at the age of 21 and retire at 66 without any career breaks, that’s like 45 years of working. So for people who do not have time for all of that, they tend to subscribe to the FIRE movement. I am people. As much as I love my job, I definitely would love some more flexibility. So anyway, there are various types of FIRE out there to fit one’s savings and lifestyle preferences, so to speak. But the main types of FIRE that are out there include Lean FIRE, Fat FIRE, and Barista FIRE.
Sean, do you quickly want to explain what those are for us? Break those down.
Sean Pyles:
Sure. So Lean FIRE is for people who want to retire early and retire fully, but it requires a steep sacrifice as you’ll likely have to save well over half of your income. It’s also ideal for people who can embrace a minimalist lifestyle and live off of little during retirement.
Fat FIRE is essentially the opposite. People who are high earners and want to continue maintaining that lifestyle in retirement. They have to invest larger amounts of money than Lean FIRE disciples for this reason. Finally, Barista FIRE is for folks who are more focused on choosing the type of work they do and the frequency at which they work. So think of people who want to partially retire and maybe work part-time. They save enough so they don’t need the bulk of their income to come from paid work.
Elizabeth Ayoola:
Love, love, love that. And I love how there’s so many different options for different people, but I personally would love to retire in my 40s or 50s and I’m definitely a Fat or Barista girl. So I want to do all the fabulous things during my retirement and I want to be a grandma and I want to bring my fabulous grandkids along sometimes. And just for the listeners, my 6-year-old son said he wants 10 kids, so who’s going to-
Sean Pyles:
Wow, that’s a lot of grandkids.
Elizabeth Ayoola:
It’s a lot of grandkids. And he said I’m apparently going to help him look after them, so I’m going to need a lot of money here. You know what I’m saying? Yeah, right. But yeah, I will always want to do some sort of meaningful work, that said, but would love more flexibility in terms of when I work and the type of work that I do. So Sean, is early retirement something you think about and where would you fall in between the three?
Sean Pyles:
I would love to retire early. Don’t get me wrong, I really like my job and helping people through my work gives me a sense of purpose and satisfaction, but also I want to do what I want when I want. So I think I would lean more toward the Barista FIRE. Once I have my CFP certification, I can see myself building a portfolio of clients that I manage and that would be my equivalent of Barista work.
Elizabeth Ayoola:
I love that. I love that, I love that. All right, so now I’m wondering how feasible it is to save half or more of your income in this economy. I know I’ve seen a few data points this year about Americans either dipping into their retirement accounts because of inflation or cutting back on retirement savings altogether. So for instance, the 2023 TIAA Institute-GFLEC Personal Finance Index found that 25% of employed adults cut their retirement savings because of inflation-induced financial pressure, and almost half of that group halted their savings altogether. Also, a 2024 Allianz Life Study found that 67% of Americans are more concerned about paying their bills than about their financial future. Another 42% have withdrawn from their retirement savings because of inflation.
So what is my point in all of these data points? The question is, is FIRE even still on people’s radar when they’re trying to survive daily expenses? My assumption is there is still a population of people who are feeling the pinch but can afford to still save more than the average person or make sacrifices to do so. Now, honestly, I was able to do it easily last year saving a big chunk of my income. But this year with new expenses, moving cities, and the cost of living, I’ve had to scale back some. So I’m still saving a decent chunk, I’d say, but certainly not half of my income or more.
Sean Pyles:
Yeah, I mean the truth is the FIRE movement is a pipe dream for most people, but so is the idea of completely retiring for many people, unfortunately. To zoom out, the median retirement savings for folks between the ages of 35 and 44 is $45,000. And for those between the ages of 55 and 64, it’s $185,000, and neither amount would be enough to fund decades of retirement. So for many people, retirement will be funded through some combination of money they’ve saved, Social Security, and some form of work. And a quick aside here, for those who are thinking that Social Security won’t be around when they retire, I say please do not fall for numerous political messaging. We have earned these benefits and we need to fight for them if we want them, but that’s my own little thing.
Elizabeth Ayoola:
I know that’s right because I’ve earned the benefits and I need them when I retire. So we’re in the fight together, Sean. That said, I understand that it’s probably not feasible for the average person to participate in FIRE and save half of their income. In some instances, it might require getting an extra job or a side hustle to fund those early retirement dreams. That’s what I personally did, but it did take a lot of discipline and sacrifice because I was working more than I probably would have wanted to. And I wasn’t able to go on shopping sprees or vacation on a whim because I was like, “Hey, got to earmark this for retirement.”
Sean Pyles:
Totally. So if retiring early really is a priority for you, it is going to take some combination of living off much less than you earn, likely increasing the amount that you do earn, and getting really creative about how you save and invest money. And this does raise the question of how much you even need to retire. For many people, they can get away with living off of 80% of their current salary in retirement. So for a very basic estimate of how much you might need to retire early, figure out what 80% of your salary is, multiply that by your life expectancy, and you have the magic number that you need to save for. Again, that’s at a really simple level at least.
Elizabeth Ayoola:
Right. And I think even if people aren’t with the FIRE movement, it’s still good to think about what your retirement plan is. And I’m often talking to friends, family, and one of my favorite icebreaker questions is “When do you want to retire?” I know I’m not a fun icebreaker, but still, it does get people thinking about “Ooh, when do I want to retire?” And then it gets the ball rolling in terms of starting to do that math to see how much you need to save. So while you may not be able to retire in your 50s or 40s, it doesn’t hurt to see where you are and whether you can even afford to retire at the Social Security retirement age with your current savings and the pace that you’re currently putting away money as well.
Sean Pyles:
Yeah, sometimes seeing that number can be the motivation that you need to get more organized with your money, ask for that raise or even start looking for a higher-paid job.
Elizabeth Ayoola:
Right, and even if you can’t save the amount you want to right now, having a plan in place means as soon as your income increases, you can roll that plan into action. It’s easy to put off thinking about it, but as my mom friends say, the days are long, but the years are short. And I think to whatever extent we can control, we should try and set ourselves up for the best retirement possible. And money plays a huge role in that.
Sean Pyles:
So I think the bottom line here is that yes, the world is expensive, but there are also plenty of people who earn a lot of money and are able to sock away a big portion of that money. FIRE is still feasible for a dedicated privileged few, but for the rest of us, we’ll have to keep working hard, saving our money, and doing what we can to ensure that Social Security pays out when we are in our golden years.
Elizabeth Ayoola:
And playing the lottery. Just kidding.
Sean Pyles:
If you’re lucky.
Elizabeth Ayoola:
Sean Pyles:
Well, before we get into this week’s money question, we have an exciting announcement. We are running another Book Giveaway Sweepstakes ahead of our next Nerdy Book Club episode. Our next guest is Janice Torres, author of “Financially Lit, the Modern Latina’s Guide to Level Up Your Dinero and Becoming Financially Ponderosa,” which offers tips to young people on how to get started with managing their money.
Elizabeth Ayoola:
To enter for a chance to win our Book Giveaway, send an email to [email protected] with the subject book sweepstakes during the sweepstakes period. Entries must be received by 11:59 PM PT on August 22nd, so you’ve got a couple of weeks. Include the following information: your first and last name, your email address, your zip code, and your phone number. If you need more information, please visit our Official Sweepstakes Rules page.
Sean Pyles:
We are back and answering your money questions to help you make smarter financial decisions. This episode’s question comes from a listener’s text message. Here it is. “Hi. I recently got married and I’m wondering about the best way to work with our different credit cards. Is it possible or a good idea to put all of our purchases on one card and then pay off that card with another card, thereby giving us rewards on both cards? We would of course then pay off the card using a checking account to avoid carrying a balance.” To help us answer this listener’s question, we are joined by NerdWallet credit card pro Erin Hurd. Erin, welcome back to Smart Money.
Erin Hurd:
Thanks so much, Sean. Thanks for having me.
Sean Pyles:
So let’s talk about this clever idea that our listener and their spouse have. Paying off one credit card with another credit card to try to effectively double the amount of points that they could get for their purchases. Is that even possible?
Erin Hurd:
Well, I have to say it’s a very clever idea. And so I give a big hats off to this reader for thinking outside the box and also for making a plan to avoid carrying a balance upfront. Because if you’re carrying a balance on a credit card, the interest you’re going to pay will far outweigh any rewards that you’ll earn. However, unfortunately, this strategy is not possible. You cannot pay the monthly bill of one credit card using another credit card, and the rewards that you earn from credit card issuers, they come at a cost for the credit card issuers. And so they would be out of business if they were paying double rewards that way.
If the listener was carrying a balance on another credit card, it would be possible to transfer that balance to a new credit card so they could open up a new card with a 0% intro APR period on balance transfers, and then they would get some extra time to pay off that balance without paying interest. But that’s really the only way that you can essentially pay one credit card with another credit card. And I also wanted to note that you won’t earn any rewards on a balance transfer.
Sean Pyles:
In fact, there’s almost the opposite of a reward because you typically have to pay a fee for the balance transfer.
Erin Hurd:
That’s correct.
Sean Pyles:
So our listeners’ original idea won’t work out, but there are some other clever ways that couples can tag team their credit card points game. Can you talk us through some of those?
Erin Hurd:
Absolutely. I love partners working together in credit cards because two partners mean double the potential for new card signup bonuses. So if you’re thinking about a new card, it could make sense for your partner to also apply for a new card. That could be the same card, they could be different cards, but that way each of you will earn a nice signup bonus. And it can even make sense to double up on some cards that charge an annual fee, which paying double annual fees might give you a little bit of pause. But for example, some hotel credit cards, they’ll offer a free annual night certificate. So if both partners get the card, not only will they get two signup bonuses, but they’ll also get two free hotel nights a year. That way they can have a nice weekend getaway instead of just one night. They will pay two annual fees, but the cost of those two annual fees should work out to be a fraction of the value of what they would pay in cash for a free weekend away at a nice hotel.
Sean Pyles:
But I would imagine this would require the couples to be more proactively managing all of the various points and benefits that they get from their cards, right?
Erin Hurd:
Absolutely. And meeting a signup bonus is an important part of opening a new card. And so if you are not going to be able to meet the spending thresholds in order to earn those bonuses, then think twice about the cards that you’re going to open up and maybe just one card.
Sean Pyles:
So Erin, I know this is something that you and your husband do. Can you talk about how you approach this strategically with your partner?
Erin Hurd:
Absolutely. So first of all, we are going to make sure that we have enough spending coming up in our everyday expenses that we’re going to be able to meet the minimum spending requirements if we’re opening two cards. We want to make sure that we’re not spending more than we would ordinarily in order to hit those bonuses. And for people who don’t spend as much on the cards, they don’t have big expenses coming up, another way to hit a bonus quickly is that you could add your partner as an authorized user on your new card, and that way two people spending on the same account can help you hit that spending threshold a little bit more quickly.
Sean Pyles:
So someone could be an authorized user on their partner’s card even if they have the same card?
Erin Hurd:
That’s correct. And also I wanted to point out that some credit card issuers do allow you to pool points with your partner or even sometimes with other family members, and that can make it easy to amass a big stash of points that you could maybe use for a big trip. Sometimes partners can even refer each other for a new card. So sometimes I could refer my husband and if he uses my referral link to open up the card, then I will get a referral bonus and he’ll get the new card signup bonus.
Sean Pyles:
Oh, very nice, I like that. So this listener’s question got me wondering about all of the different ways that we can use our credit card points when we have accumulated them. Some cards will let you redeem your points to cover purchases or let you redeem them for items in their online stores. Some will even let you redeem your points when you’re checking out at Amazon. And I imagine that your points will go further in some places than others. So how can people determine where is the best place to use their points?
Erin Hurd:
That is such a great question, and it’s one that can be really confusing because these options are popping up more and more. And so first, let me say that your points are best spent however they’re most useful to you. So if you have a bunch of travel points but you don’t have any travel plans on the horizon, it’s okay if you choose to use them for something else, even if they’ll be less valuable. Don’t feel guilty about them. They’re your rewards. You can spend them however you want to spend them.
But if you do want to get the maximum value from your points, the first step is to have an understanding of how much these points could be worth. So when rewards are cash back rewards, they’re easy, 1 cent is worth 1 cent, but travel points can be more difficult. NerdWallet does a deep dive analysis on the current value of many top airline and hotel programs. We can link to that in the show notes, but each different kind of point or mile will be worth different amounts. And so having a basic understanding of the average current value of these points will really help you make some smart redemption decisions.
Sean Pyles:
Well, are there places where people should maybe avoid using their points?
Erin Hurd:
Yeah, so I would watch out for the options we see more and more of these days to redeem your points directly at stores. So at Amazon, for example, when you go to checkout, I’m sure you’ve probably seen the option to pay using your points. They have lots of different kinds of credit card rewards points available, and it makes it really easy. You feel like you’re getting stuff for free if you’re using points instead of actually using your real credit card, and that feels good. Getting free stuff feels good. Sometimes using your points can even be the default payment method at some of these stores without you even choosing it. So I would watch out for that. The good news is it feels like you’re getting free stuff, but the downside is that you’re often getting poor value for the points when you use them this way, unfortunately. You’re paying for the convenience and the store is betting on people not really understanding or questioning the value of your points. So for example, if you use Chase Ultimate Rewards Points at Amazon checkout, they will be worth 0.8 cents each. But those same points can be worth up to 1.5 cents each when you use them to book travel through Chase, depending on which Chase credit card you have. Or sometimes you can even get higher than 1.5 cents if you transfer them to travel partners. And so that’s a big difference there.
Sean Pyles:
Quick note that Chase is a NerdWallet partner, but that doesn’t affect how we talk about them. So Erin, you are a credit card expert. Do you have a hierarchy for maybe the best to worst ways to use your credit card points?
Erin Hurd:
So I have a lot of credit cards. I have a lot of different points in various different loyalty programs. So for me, I’m doing a lot of mental gymnastics, deciding if it’s a good deal or not when I redeem my points. But here are some of the things that I’m considering in my head when I’m deciding. So I’m thinking about the expiration. Are these points going to expire? Thankfully, most points don’t expire as long as you have the credit card still open.
Or for some of the travel points, if there’s some activity in your account every 18 to 24 months, your points won’t expire for the most part. But if you anticipate closing a card, make sure you can use all those points first, even if you’re not getting the best value. Because points in some airline and hotel programs, they can have a hard expiration date even if there is activity in the account. So that’s the first thing I would look at, are these points ever going to expire?
Sean Pyles:
And even if someone’s points won’t expire soon, it’s likely a good idea to use them sooner than later because inflation is decreasing the value of our credit card points, right?
Erin Hurd:
That’s right. Holding onto a whole bunch of points is not really a good investment strategy because you’re not earning any interest and you are definitely going to be a victim of inflation at some point or another.
Sean Pyles:
All right, so what other questions are you asking yourself as you think about what points to use where.
Erin Hurd:
I’m considering if I have a realistic use for these points in the next year or two. It can be really easy to hoard these points, even inadvertently, in order to save them up for a big trip or a big someday aspirational something. But if you’re hanging onto those points for years and years, it really just isn’t a great strategy because the points are worth money. But those points, like I said, they’re not earning any interest, they’re just gathering dust in your account, and really the travel redemption options, if that’s what you want to use your points for, those options are always changing and they’re often getting devalued, and it’s completely out of our control. And so I say it’s better to use them now even if it’s for a lesser value.
Sean Pyles:
Yeah, I recently found myself in a similar situation of inadvertently hoarding some points. I had this credit card that I took out years ago because it gave me a decent amount of points at the pump, but then I eventually stopped using that card as frequently, but I had a bunch of points racked up and they were just sitting there. I would get emails every so often from this credit card saying, “Hey, you want to use your points on something?”
So I went into their online store. When you log in, you can get random things like sunglasses or Stanley Cups or what have you. And I bought myself an Apple TV basically for the sake of using the points, but I did wonder whether I was making the most efficient or optimized use of those points. So I don’t know. I would love to hear how you think about these online storefronts that credit cards have. Do you think these are a good use of credit card points or not so much?
Erin Hurd:
It really depends. Usually they’re not the best value. Sometimes the credit card issuers will run specials where buying items with your points, and usually it’s only specific items, it’s not all the items, but maybe items that no one’s really buying, and that’s why they’re going on sale with the points. Sometimes it can be a decent deal. I’m recalling in recent memory, Chase has offered a 10% bonus on Apple products through their portal on occasion. So that can be a good use of points if you’re in the market for an Apple product anyway. But for the most part, I would say do the math, compare how many points they’re asking to the cash price, and just make sure that you’re getting a decent value.
Sean Pyles:
Any other questions that you ask yourself as you’re thinking about where to use your points?
Erin Hurd:
Yeah, especially in terms of shopping. I’m thinking about can I get more value for myself if I redeem these points for cash instead of using them for shopping? Like we’ve been discussing, some of the options to use the points at checkout are convenient, but you’re paying for that convenience. So here’s another example for you. Citibank issues Thank You Points, that’s their reward currency. And those points can be redeemed through PayPal, if you check out at PayPal, for anything that you’re buying for a rate of 0.8 cents each. Now, in most cases, those same points could be redeemed for cash at 1 cent each. So if you’re going to use them through PayPal for 0.8 cents, you might as well take the couple of extra steps and redeem them for cash and then use the cash to buy whatever you were going to buy for PayPal.
Sean Pyles:
And a quick note that Citi is also a NerdWallet partner, but again, that does not affect how we talk about them. Your example there underlines a certain skepticism that I have about all of these corporate partnerships in the credit card space. Like the PayPal Citibank collab seems like it could be a good deal for customers, but as you just outlined, it isn’t so much. So should people in general just be wary of these deals that they see between different companies or are they sometimes actually a better deal for us?
Erin Hurd:
I rarely would say that they’re a better deal. Sometimes they are as good of a deal as you could get in other circumstances, but oftentimes they’re not. So I would just really advise understanding how much your points could be worth, and if you can take that extra step to redeem them from cash and then use that cash, you’re probably going to be better off.
Sean Pyles:
All right. And as ever, ask yourself “What’s the catch?” Well Erin, thank you so much for talking with us.
Erin Hurd:
Thank you so much for having me.
Sean Pyles:
And that’s all we have for this episode. Remember, listener, that we are here for you and your money questions. So send them our way. You can call or text us on the Nerd hotline at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. Visit nerdwallet.com/podcast for more info on this episode. And remember to follow, rate, and review us wherever you’re getting this podcast. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.
This episode was produced by Tess Vigeland. Sara Brink, the best audio editor in the world, mixed our audio, and a big thank you to NerdWallet’s editors for all their help.
Here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the Nerds.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
One of the biggest misconceptions about credit scores is that they’re simply a way to get credit cards or loans. Some people believe that as long as they don’t want a credit card or to take out loans, there’s no need for a good credit score. The important question people should be asking is, “What happens if you have a bad credit score?”
Surveys show that many Americans don’t understand the consequences of a bad credit score. In one survey, 45 percent of respondents said they don’t need a good credit score because they don’t plan on taking on any loans or debt, and 33 percent said it’s not financially important. The same survey shows 43 percent of people have experienced the side effects of a bad score.
The reality is that a bad credit score makes life more difficult and can cost you quite a bit of money. As you continue reading, you’ll learn about the negative consequences for people with bad credit, as well as some tips to increase your credit score and get back on the right track.
Key Takeaways
A bad credit score costs you more due to higher interest rates and bigger deposits when turning on utilities or renting a home.
Getting approved for a loan can be more difficult, and loans will often come with a much higher interest rate.
Poor credit scores can lead to higher insurance rates and can prevent you from getting certain jobs or promotions.
Those with bad credit scores have a harder time reaching their financial goals for retirement.
What’s a bad credit score?
There’s technically not a specific score that’s considered a “bad credit score”, but the FICO® scoring model classifies 580 to 669 as “fair” and 300 to 579 as “poor.” Depending on what you’re trying to do, even scores within the “fair” range may come with some negative side effects. For example, you typically need a score of at least 620 to qualify for a home loan.
As you’ll soon learn, although you may get approval for credit cards or loans with a bad credit score, it can cost you a lot more money than if you had a higher score. In addition to higher interest rates, many other aspects of life are more difficult when you have a low credit score.
It’s harder to get a loan
Your credit score is a three-digit number that lets lenders know a bit about your finances, and a low score may indicate that you’re a high risk. Those with a low credit score may be more likely to make late payments or possibly default on their loan. If you have a bad credit score, many lenders may deny your loan application. This can affect getting the following:
You have fewer renting options
A bad credit score not only makes it harder to purchase a home, but it may limit your ability to rent an apartment or house as well. Similar to lenders, landlords want to ensure that you’ll pay your rent on time before they enter into a lease agreement with you. When you’re looking to rent, you often have to fill out an application with your information so the landlord can run your credit report.
The credit bureau Experian® recommends having a FICO score of 670 when looking to rent. They may approve you with a lower score, but they might look closer at your financial situation to better assess the potential risk.
Insurance costs more
Insurance companies base insurance rates on various factors — one of them being risk. Many people don’t think their credit score has anything to do with their car insurance, but there are many insurance companies that take your score into consideration. According to Allstate, the only states where this isn’t allowed are California, Hawaii and Massachusetts.
To assess risk, insurance companies use an insurance score. The insurance score looks at your credit report information and insurance claim history. Much like your credit score, the insurance score looks at your:
Payment history
New credit
Credit mix
Credit utilization
Credit age
You pay higher deposits for utilities
If you’re fortunate enough to rent with a bad credit score, you then have to worry about the higher deposits when turning on utilities. Some of the utilities that may require a larger deposit include:
Electricity
Gas
Cable and internet
You may also have to pay a deposit when getting a cellphone plan.
As you start to add up these increased deposits for necessities like housing and utilities, you begin to see how a bad credit score costs you more money and limits your finances. One of the many benefits of a good credit score is that you often don’t need to pay a deposit when turning on your utilities.
Bad credit could affect your ability to get a job
Some jobs run a credit check as part of the application process, and your low score may disqualify you from getting the position. This isn’t for all jobs, but one survey found that 29 percent of employers run a credit check as part of their pre-employment screening. Much like the other scenarios on this list, this has to do with managing risk.
Many of the jobs and positions that do a credit check involve handling money. A low credit score can indicate that a person is irresponsible with money or has debt, which could potentially lead to theft. People with a low credit score may be great for the position and aren’t a risk, but employers are always looking for ways to minimize risk and losses.
You pay more in interest fees
As you now know, a low credit score indicates a higher risk. Lenders want to ensure there’s a high likelihood of a person paying back a loan, but that’s difficult if a person has a low credit score. To offset this risk, lenders charge higher interest rates. The Experian 2023 State of the Automotive Finance Market Report found that people with scores of 300 to 500 pay roughly nine to 14 percentage points more in auto loan interest. This can add up to thousands of dollars.
Credit cards also charge higher interest rates based on your credit score. The Bureau of Consumer Financial Protection reports that people with a credit score of 740 and above have an average APR of 16 to 18 percent. Those with scores below 669 pay 22 percent or more.
It’s harder to reach your financial goals
A low credit score costs you money, and it also limits your opportunities. Each time you pay higher deposits and higher interest rates, it takes away from your financial goals. New York Times best-selling author and financial educator Ramit Sethi recommends allocating 10 percent of your income toward your retirement and five to 10 percent to savings. This becomes much more difficult if you’re constantly paying more due to your credit score.
5 tips to improve your credit score
Many people have turned their credit situation around and have come back from poor credit scores. This process takes time, but as you set up healthy credit practices, you can improve your credit score and work toward your financial goals. Below, we have five simple tips to help you improve your credit score.
1. Take care of derogatory marks
Negative marks on your credit report can decrease your credit score significantly. Some of the most common derogatory marks include missed payments, collections accounts and bankruptcies. Some of these may take seven to 10 years to fall off, but you may be able to negotiate some to have them removed earlier with methods like a pay-for-delete letter.
2. Pay down your debt
There are many ways to get out of debt, but one of the best ways is to start by paying down your high-interest debts first. High-interest debts are costing you more money over time, so paying them off gives you more money to pay down your other debts. You can also use the “snowball method,” which involves paying off your debts from the smallest to the largest one.
3. Make all of your payments on time
One of the most important factors in your credit score is your payment history. Making your monthly payments on time helps build a good credit history and builds your credit score. One simple way to do this is to set up automatic payments. If you have extra money to pay toward your debts, you can make additional payments.
4. Get a secured credit card
Secured credit cards are a great option for those with no credit or bad credit. The majority of these credit cards don’t have a minimal credit score. These work by making a deposit at the financial institution, which becomes your credit limit. Banks do this because there’s virtually no risk because you’re borrowing your own money. As you make your payments, they are reported to the credit bureaus to help raise your credit score.
5. Dispute credit report errors
Sometimes, there are errors on your credit report that are causing you to have a low credit score. To find potential errors, you’ll need to review your credit report. You can then write a 609 dispute letter to try and have it removed from your credit report.
Get help from credit professionals
Improving your credit score can change your life for the better by saving you money and helping you reach your goals. If you feel overwhelmed, you can get help from credit professionals here at Lexington Law Firm.
At Lexington Law Firm, our credit repair assistance includes a breakdown of items on your credit report summary and credit score monitoring. We also address credit reporting errors on your behalf. To get started, sign up for your free credit assessment today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
As $90 Trillion “Great Wealth Transfer” Approaches, Just 1 in 4 Americans Expect to Leave an Inheritance Estate Expectations: A considerable gap exists between what Gen Z and Millennials expect in the way of an inheritance and what their parents are actually planning to do Banking on a Benefactor: Half of Americans expecting an inheritance … [Read more…]
Success often feels like an elusive goal, but learning from those who’ve already achieved it can provide invaluable insights and motivation. Millionaire quotes, distilled wisdom from some of the world’s most successful individuals, can serve as powerful tools on your journey to financial independence and personal achievement.
Discover the top 10 reasons why integrating millionaire quotes into your daily routine can inspire, educate, and guide you toward reaching your own success. Whether you’re looking for a mindset shift or practical advice, these quotes offer a wealth of benefits to help you stay focused and motivated.
The power of millionaire quotes
Image Credit: Bobboz from Getty Images.
Millionaire quotes can help shift your thinking and inspire you to work toward financial freedom. These quotes often come from those who’ve succeeded and want to share their wisdom. I can attest to the power of using millionaire quotes.
How to use millionaire quotes
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Use millionaire quotes daily to remind yourself of your goals. Write them down or keep them where you can see them often. This keeps you focused on your journey to financial independence. Repeating them often is important.
Motivation is Key
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Millionaire quotes can be a great source of motivation. They remind you of what’s possible and push you to work harder towards your financial goals.
Find Inspiration
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Reading millionaire quotes can spark new ideas and inspire you to keep going. They show that financial freedom is achievable if you stay dedicated.
Change your Mindset
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Millionaire quotes help change your mindset from scarcity to abundance. They encourage you to think like a millionaire and believe you can achieve financial freedom.
To learn more: With the Right Money Mindset, Go from Broke to Rich
Uncover Wisdom
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These quotes are packed with wisdom from those who have made it. Learning from their experiences can guide you on your own path to financial independence.
Focus on your Goals
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Millionaire quotes help you stay focused on your financial goals. They remind you why you started and keep you on track to reach your smart money goals.
To learn more: 10 Smart Financial Goals That You Need
Offer Perspective
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Quotes from millionaires can offer a fresh perspective on money and success. They help you see the bigger picture and understand that setbacks are part of the journey.
Find Encouragement
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When you’re feeling down, millionaire quotes can lift you up. They provide encouragement and remind you that others have faced similar challenges and succeeded.
To learn more: Top 50 Money Mantras to Boost Your Financial Freedom
Get Practical Advice
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Many millionaire quotes offer practical advice on how to manage and grow your money. They can give you actionable tips to help you make smarter financial decisions.
Manifest Your Dreams
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Using millionaire quotes can help you manifest your financial dreams. They keep your mind focused on what you want to achieve and attract positive energy towards your goals.
Take Action
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Millionaire quotes often stress the importance of taking action. They remind you that dreaming is not enough; you must take steps to make your financial dreams a reality.
Select Your Favorite Millionaire Quotes to Memorize
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Choose a few millionaire quotes that resonate with you and memorize them. Having these quotes in mind can provide a quick boost of motivation whenever you need it.
To learn more: Millionaire Quotes: Motivate Yourself to Achieve Success
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