What Are Some Cash Advance Alternatives?

by Cory Santos
what-are-some-cash-advance-alternatives

Last updated on August 24th, 2023

A cash advance might seem very tempting when money is tight. After all, it is like using a debit card but without tapping into your checking account, right? Wrong – cash advances pose a variety of difficulties including soaring interest rates that can turn a small loan into a big problem. Here are some cash advance alternatives to consider.

What Is a Cash Advance?

Cash advances are a common feature of many credit cards. A cash advance is withdrawing physical cash against your credit card balance to pay for goods or services that can’t be paid for directly with a credit card

While a cash advance might seem like a good idea, there are severe downsides to considering one. A cash advance is not the same as an ATM withdrawal with a debit card. Cash advances come with very high-interest rates – typically much higher than the purchase APR. The average APR for a cash advance is around 27%, though it might range as high as 30%.

Some of the other drawbacks with cash advances include:

  • No grace period, meaning interest accumulates immediately.
  • Most issuers charge a cash advance fee, which might be up to 5% of the transaction
  • ATM fees may apply

Related Article: How to Request a Cash Advance

What Are Some Alternatives to Cash Advances?

Because of the drawbacks of cash advances, what are some alternatives you may consider instead of one?

Personal Loans

Personal loans or payday loans are a common approach to bridging a financial shortfall. If you have a good history with your bank or credit union, asking for a personal loan might be an easy option.

Several financial companies provide bridging loans, payday loans, and other types of personal loans. These companies offer competitive rates that are significantly lower than what you’d pay with either a cash advance or credit card purchases.

Some popular personal loan companies include OppLoans, Jora Credit, and Even Financial. Consider a lender like BadCreditLoans.com or a secured loan using your vehicle for those with subprime credit.

Ask Friends or Family

Asking family or friends is another good option for avoiding the high fees and interest from a cash advance.

Borrowing from family or friends comes with its own risks – particularly straining or breaking relationships, but can help avoid applications, risks or credit rejection, and other worries. Always be certain to repay your lender on time to avoid awkwardness, and never forget their kindness.

Emergency Funds

Not everyone has an emergency savings account or funds for a rainy day. However, those who do have an emergency fund could consider dipping into those funds to help bridge a financial gap between paychecks. However, always ensure that you only remove what you need and don’t treat the emergency fund as a piggy bank.

Use Your Credit Card Instead

A final option is to bypass the cash advance and just use the credit card for the purchase. For some instances, such as when cash is the only payment option, using the credit card to make a purchase might not be possible.

However, in other cases, finding a similar item or service provider that does accept credit cards might be an easier way to finance the costs. This process also bypasses the excessive interest rates f cash advances. Plus, if you repay that charge before the end of the billing period, you won’t incur any interest at all.

Related Article: Paying Off Credit Card Debt During Coronavirus

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Green Dot Launches GO2bank and Secured Credit Card

by Cory Santos
green-dot-launches-go2bank-and-secured-credit-card

Last updated on January 29th, 2024

Green Dot is one of the leading issuers of prepaid cards in the United States. The company also provides banking services to a range of leading companies, including Apple and Uber. Now Green Dot is taking its services one step further by launching its own digital bank, GO2bank, and issuing a secured credit card: the GO2bank Secured Visa.

Green Dot Launches GO2bank

Green Dot’s GO2bank launched in early January and offers a range of digital banking services. These initial services include a savings account that provides 1% APY on savings of up to $5,000 and a checking account that provides up to 7% cash back on purchases with select retailers.

GO2bank is also issuing a credit card: the GO2bank Secured Visa Credit Card. This new secured card replaces Green Dot’s previous secured credit card options: the Green Dot primor® Secured Visa range of credit cards.

The new GO2bank Secured Visa requires a GO2bank account and eligible direct deposits to open. Once a GO2bank customer meets minimum direct deposit requirements, they can use their savings to open a secured card account with a deposit as low as $100. There are no credit checks and no impact on a person’s credit score when opening the card account.

Part of a Long-Term Strategy

Speaking to American Banker, Green Dot’s CEO, Dan Henry, said the GO2bank launch is part of a broader strategy by the company:

Green Dot has introduced a lot of products over the years that aim to solve meaningful financial challenges for people but didn’t necessarily work together and weren’t designed with a long-term strategy and community in mind. GO2bank is not a one-off or short-term product launch — this represents a long-term strategy to deliver meaningful value and differentiated experiences that keep customers for years to come.

About Green Dot

Green Dot is the world’s largest prepaid card company. Green Dot also operates as a payment platform, with notable companies like Apple, Intuit, and Uber making use of its technologies.

 

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GM and Goldman Sachs Expanding Credit Card Reach

by Cory Santos
gm-and-goldman-sachs-expanding-credit-card-reach

Last updated on February 20th, 2024

General Motors (GM) and Goldman Sachs are seeking to expand their credit card reach in 2021. The companies are set to launch new co-branded credit cards this year, with the help of the Mastercard payment network.

Goldman Sachs and GM Announce New Credit Cards Project

General Motors has a small but valuable portfolio of consumer credit cards. The GM BuyPower credit cards have over one million users to date, with those customers spending approximately $8.5 billion with their cards each year. Goldman Sachs purchased the General Motors credit card portfolio in late 2020 for $2.5 billion.

With the Apple Card‘s success, Goldman Sachs is seeking to expand its credit card reach – and new GM credit cards are its next target. According to a press release from the two companies, these new credit cards will feature the Mastercard payment network – which the Apple Card also uses.

Reimagining the Credit Card Experience

In the release, Omer Ismail, Goldman Sachs’ global head of consumer business, said the venture’s goal is to “reimagine the credit card experience for GM customers. Our focus remains on delivering a simple and transparent experience that helps customers manage their spending and borrowing needs better.”

The success of General Motors’ credit card rewards program is not due to luck. The program is one of the oldest in the auto rewards credit card market.

GM launched its first consumer credit card nearly 30 years ago – in 1992. Since then, millions of consumers have used General Motors credit cards to earn rewards towards Chevrolet, Buick, GMC, and Cadillac vehicle purchases and services.

About Goldman Sachs

Goldman Sachs Group is a leading global investment firm. With its headquarters in New York City, the company provides investment banking, securities, and investment management for corporations, financial institutions, governments, and private individuals.

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Southwest Offering Companion Pass for New Applicants

by Cory Santos

Last updated on September 5th, 2023

Do you love Valentine’s Day as much as you love a great deal? Southwest Airlines is offering a free Companion Pass to new Rapid Rewards credit cardholders who meet a minimum spend requirement. Here’s what you need to know about the new, limited-time Southwest credit card Companion Pass bonus offer:

Southwest Credit Card Companion Pass Offer Details

Southwest Airlines and Chase are offering the perfect Valentine’s Day gift – a Southwest Companion Pass. Beginning February 9, 2021, Southwest Airlines credit card applicants can receive a juicy signup bonus of 30,000 Rapid Rewards points and a free Companion Pass when meeting minimum spending requirements. That minimum spend is $5,000 in the first three months from the account opening date.

The signup bonus + Companion Pass is valid for travel through February 28, 2022. The chance to apply for a Chase Southwest personal credit card and receive the 30,000 points and Companion Pass bonus runs through March 10, 2021.

Southwest Credit Cards

Southwest currently offers three personal credit cards for consumers. Each of these cards features an annual fee but offers various perks, anniversary bonuses, and Southwest benefits:

southwest rapid rewards plus
southwest rapid rewards premier
southwest rapid rewards priority

Southwest Rapid Rewards® Plus

$ 69 Annual Fee
  • 2X points on Southwest purchases
  • 1X points on all other purchases
  • 3,000 anniversary points
  • Points never expire
Read Review

Southwest Rapid Rewards® Premier

$ 99 Annual Fee
  • 2X points on Southwest purchases
  • 1X points on all other purchases
  • 6,000 anniversary points
  • No foreign transaction fees
  • A-List status
Read Review

Southwest Rapid Rewards® Priority

$ 149 Annual Fee
  • 2X points on Southwest purchases
  • 1X points on all other purchases
  • 7,500 anniversary points
  • No foreign transaction fees
  • $75 Southwest annual travel credit.
  • 4 upgraded bookings
Read Review
southwest companion pass

About Southwest Companion Pass

Southwest Airline’s Companion Pass is one of the most sought-after perks of any airline’s frequent flyer program. The pass typically requires either 100 qualifying one-way Southwest flights per year or accumulating 125,000 Rapid Rewards points in a calendar year – neither an easy feat to achieve.

The Companion Pass allows a companion to fly with a traveler for just the cost of taxes and fees. This exceptional perk means one friend or family member can fly with the cardholder for as little as $5.60 per flight.

About Southwest Airlines

Southwest Airlines is one of the leading low-cost carriers – and one of the largest airlines – in the United States. The airline flies to over 70 destinations in the U.S., plus dozens of locations in  Mexico, the Caribbean, and Central America.

Rapid Rewards is the frequent flyer loyalty program of Southwest Airlines. Rapid Rewards allows frequent travelers to earn points for flights, baggage, and in-flight purchases with Southwest, plus purchases with eligible Southwest partners. Points apply towards flight ticket discounts, award travel, and more. 

Related Article: The Ultimate Southwest Rapid Rewards Program Guide

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Sam’s Club Plus Offers Bigger Rewards with Credit Card

by Cory Santos
sams-club-plus-offers-bigger-rewards-with-credit-card

The Sam’s Club® Mastercard® offers cash back rewards on purchases anywhere Mastercard is accepted – currently in over 212 countries worldwide. Now the Sam’s Club® Mastercard® is making it even more rewarding to shop with the wholesale club. New, additional cash back rewards on select categories are available thanks to the Sam’s Club Plus program.

Sam’s Club Mastercard Offering Up to 5% Back for Plus Members

Sam’s Club is upping the value of its Sam’s Club® Mastercard®. The product, which features no annual fee, already earns 5% cash back rewards on the first $6,000 of gas purchases per year, 3% back on dining, and 1% on all other eligible purchases.

However, now the card offers up to 5% cash back on Sam’s Club’s purchases for Sam’s Club Plus members. That cash back potential is 2% higher than the earning rate of regular Sam’s Club® Mastercard® holders, who earn 3% back.

Sam’s Club Plus

Sam’s Club Plus is the premium tier of Sam’s Club membership. The Plus program costs $100 but offers a host of premium perks for members, including:

  • Free shipping on purchases at SamsClub.com
  • Early shopping hours for Plus members (check your local Club for store hours)
  • Special pickup hours for members (7 am Monday-Saturday and 10 am Sunday)
  • Free select generic prescriptions, plus 600+ others for $10 or less
  • 20% off glasses on a complete pair, plus free shipping
  • 15% off Pandora subscriptions

Should You Consider The Membership?

The $100 fee for Plus might be off-putting for some Sam’s Club members. After all, a regular Sam’s Club membership is $45 per year. The ability to earn 5% back on Sam’s Club purchases, however, is enticing.

The Plus membership tier is most appealing to those who already have the Sam’s Club® Mastercard® and regularly use it to make purchases at the wholesale club. That additional $55 per year fee is easily offset by the 2% extra cash back the tier offers cardholders.

Even those new to Sam’s Club will find value in the Sam’s Club Plus and Sam’s Club® Mastercard® combination. Those who buy in bulk, and those who spend heavily on gas and dining, will find the savings challenging to beat with other credit cards on the market.

Related Article: Dillons Offering 55¢ Off Per Gallon of Fuel for Mastercard Applicants

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New Credit Card Designed Especially for Women Announced

by Cory Santos
New Credit Card Designed Especially for Women

A Kuwaiti bank is issuing a new rewards credit card designed especially for women. The Rose Gold Mastercard launch isn’t the only credit card designed to empower women, however. The U.S.-based startup, Sequin, follows the same concept with its Sequin Card. Here is what you need to know about the launch of the two card products.

Gulf Bank Launching Rewards Card for Kuwaiti Women

Gulf Bank, a leading Kuwaiti bank, is teaming with Mastercard to launch a credit card designed with women in mind. The new card, the Rose Gold Credit Card, allows women to earn rewards through the Gulf Bank Gulf Points loyalty program. Gulf Points enable shoppers to earn valuable points for free airline travel, hotel accommodations at over 300,000 global properties, and exclusive seasonal travel packages.

Enabling Women to Pursue Their Passions

Nadia Ghissassi, Mastercard’s Country Manager for Qatar, Kuwait, Iraq, and Oman, hailed the launch of the new credit card and the opportunities it presents:

“We are delighted to collaborate with Gulf Bank on the launch of the Rose Gold credit card. Including women by design and enabling them to pursue their passions is at the core of what we do at Mastercard. With this new credit card, women in Kuwait can enjoy premium lifestyle benefits, all with the comfort of quick, safe, and secure contactless payments.”

Gulf Bank’s Head of Marketing, Najla Al-Essa, also praised the new Rose Gold Credit Card:

“We are proud to be debuting a product designed to empower and reward women when spending at their favorite locations. The Mastercard’s Rose Gold Credit Cardholders will have access to exclusive benefits that they can enjoy in the county and across the region. Whether their interests lie in fashion, fitness, dining, or traveling, consumers can now enjoy the highest rewarding credit card for women in Kuwait.”

Sequin Card Is a Credit Card Designed to Empower Women in the U.S.

The launch of the new Rose Gold Card echoes a similar project in the United States. The Sequin card is the product of a fintech startup seeking to provide a “credit card that puts women in charge.”

The company’s credit card, the Sequin Card, is the vision of a former Visa employee, Vrinda Gupta. Gupta created Sequin to help empower females in the credit card space.

The Sequin Card, set to launch in 2021, aims to help women become “credit visible.” According to a 2010 Federal Reserve report, married women were twice as likely as married men to have authorized user accounts make up the bulk of their credit history. Sequin is hoping to reverse this trend and help its customers build positive credit histories on their own.

Those interested in the Sequin Card can sign up for its waitlist.

Related Article: Do Credit Card Perks Also Apply for Authorized Users?

Featured photo by Sarah Pflug / Burst

Citi ThankYou Rewards Offer $20 TurboTax Savings

by Cory Santos
citi-thankyou-offers-20-turbotax-savings

Last updated on March 8th, 2023

Citi is making tax season a little more rewarding thanks to a $20 statement credit for TurboTax. The new, limited-time promotion seeks to help alleviate any stress around accounting for planned (or unplanned) changes to finances because of the coronavirus pandemic.

Save Up to $20 On Tax Prep with Citi ThankYou Rewards

The coronavirus has added an extra layer of stress to tax season – already a period of worry for millions of Americans. The pandemic has altered personal finances in many unforeseen ways, meaning the 2021 tax season will likely be one of the most confusing on record for filers.

Citi is seeking to help alleviate those concerns by offering statement credits for ThankYou Rewards cardmembers. Eligible Citi ThankYou Rewards cardholders can now save up to $20 on their tax preparation software with TurboTax through the April 15th tax deadline.

In addition, eligible cardmembers (including those with a Citi Prestige® Card, Citi Premier® Card and Citi Rewards+® Card) who opt to pay for TurboTax with PayPal will also have the option to redeem ThankYou Points when checking out to pay for all or part of their purchase.

About Citi ThankYou Rewards

ThankYou Rewards is the rewards currency of premium Citibank credit cards. ThankYou points apply towards the following redemption options:

  • Cash Back: Cash back applies to cash rewards, statement credits, and mortgage and student loan payments for Citi loans.
  • Gift Cards: Citi rewards apply to gift cards from over 100 leading retailers and brands.
  • Shopping: Cardholders can use ThankYou points to shop with Amazon, Best Buy, Expedia, PayPal, or 1-800-Flowers.
  • Charity: Cardholders can also use their points to donate to the American Red Cross or Smile Train.

ThankYou Rewards points also apply to travel bookings through the Citi ThankYou travel portal. Reservations can be made through the portal for flights, hotels, cruises, and rental cars. Points also apply to select activities. The two premium Citi travel cards, the Citi Premier® Card and the
Citi Prestige® Card, offer the best value when booking travel (up to 1.7 cents per point).

Citi’s Response to the Coronavirus Pandemic

Over the last year, Citi has been evolving its ThankYou Rewards program to reflect the ever-changing needs of consumers in the current landscape, including introducing an option to Shop with Points at the Pump in October of 2020. This exciting new offer provides another avenue for customers to redeem points where, and when, it matters most.

About Citi

Citi, a leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries worldwide. Citibank is the fourth-largest bank in the U.S. by total assets – and the third-largest issuer of credit cards. Over 68 million Citi credit cards are currently in circulation, including co-branded credit cards with names like Bloomingdale’s, Macy’s, American Airlines, and more.

Related Article: New Citi ThankYou Shop with Points Gas Promotion

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Chase Offering 5% Back Bonus on Gas Purchases for Freedom Cardholders

by Cory Santos
chase-freedom-offers-5-back-on-gas-purchases

Last updated on July 21st, 2022

Chase Freedom credit cardholders can enjoy more savings in February thanks to the bank’s Month of More promotion. This celebration provides additional value, including a new cash back bonus. Read about the new offer, which provides Chase Freedom cardholders with 5% cash back at gas stations for a limited time.

Chase Freedom 5% Cash Back Gas Bonus Offer Details

Chase is making its Freedom credit card lineup even more lucrative for rewards thanks to the addition of 5% cash back on gas station purchases in February. Cardholders will receive 5% total cash back on up to $150 in combined purchases made with their Chase Freedom card at gas stations from February 1st to February 28th, 2021. To take advantage of the limited-time gas cash back offer, eligible Chase cardholders must activate the promotion at Chase’s website.

The 5% gas station bonus is an excellent addition to both the Chase Freedom Flex and Freedom Unlimited. Freedom Flex cardholders will enjoy a nice bonus besides the 5% back they already earn on the first $1,500 in spending on Q1 2020 categories:

  • Wholesale clubs
  • Select streaming services
  • Phone, internet, and cable service providers

Chase Freedom Credit Cards

The Chase Freedom cards received an impressive product refresh in the second half of 2020. Those upgrades saw the Chase Freedom Card‘s replacement with the Chase Freedom Flex and the addition of 5% back on travel purchases made through Chase Ultimate Rewards and 3% back on dining and drugstore purchases. These last two benefits apply to both the Freedom Flex and Chase Freedom Unlimited.

Chase Month of More

Chase’s Month of More is a special promotion for eligible cardholders that runs the entire month of February. The promotion provides added value to Chase Ultimate Rewards for cardholders, including extra cash back through select retailers (like Samsung, Overstock, and Athleta), savings on gift cards, and more.

Related Article: Chase, Discover, & ABOC 2021 5% Cash Back Calendars

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How to Dispose of Old Credit Cards

by Cory Santos
how-to-dispose-of-old-credit-cards

Last updated on August 24th, 2023

Getting rid of unwanted items is usually as easy as throwing them in the trash and forgetting about them. With credit cards, however, there are more concerns than tossing the old card into the garbage. Because of fraud, ID theft, and other potential threats, destroying an old credit card the right way is essential. So, what should you do with an old credit card, and how should you dispose of it?

What to Do with Old Credit Cards

There are multiple reasons why you might consider disposing of a credit card. Maybe your card expired and you need to replace it with a newer version. Perhaps you fear your card account was compromised and you need to destroy it to be safe.

Regardless of the reason, once a credit card is no longer useful, it should be destroyed – not just thrown away. How you dispose of a credit card depends on the materials of which the card is composed. There are two main types of physical credit cards: metal and plastic.

Plastic Credit Cards

Plastic credit cards are the most common type of credit card. Getting rid of an old, plastic credit card is an easy process that can be done at home.

Here is what you need to do to dispose of an old plastic credit card:

Demagnetize the magnetic strip

Step one in destroying an old credit card is demagnetizing the black stripe on the card’s back. While many credit cards are moving towards EMV chips and contactless payments, the magnetic strip is still a regular credit card feature.

To demagnetize the strip on your card, run a fridge magnet (any magnet will do) down the magnetic stripe of your credit card. Swiping a magnet across the strip will render that strip useless – thereby preventing fraud.

Cut up the card

Next, cut the credit card. Using scissors or a shredder, cut the card into as many pieces as possible. Only making a few snips might make the card easy to piece together should the destroyed card fall into the wrong hands. Since the numbers are essential for online purchases, making only a few cuts is not enough to make your old card unusable.

Dispose of the card in multiple places

Once you slice your credit card into many small pieces, dispose of those parts in as many different trash loads as possible. Dividing your credit card up and distributing the components in multiple locations ensures that no thief can get all the card pieces to steal your information.

What not to do

Burning your credit card might sound like a good way to dispose of it, but please do not do this. While plastic melts under flame and heat, it also releases harmful toxins that can be hazardous to your health.

Metal Credit Cards

Metal credit cards are highly coveted because they both look and feel high-quality. Like the Chase Sapphire Reserve, Mastercard Black Card, and Platinum Card from American Express, metal cards feature a sleek design and have a weighty feel to match their impressive perks and rewards.

Metal cards are much more difficult to destroy than plastic credit cards. Their strength makes them difficult (if not impossible) to shred. Instead of getting out the wire cutters, why not contact your issuer and have them dispose of the credit card for you?

Credit card issuers, like Chase, offer cardholders the option of sending in their old credit cards for destruction. Call the toll-free number on the back of your credit card and speak with a customer service representative. The bank or issuer will send you a prepaid envelope in which you can place the card.–The bank will handle the rest of the process for you.

If your card issuer has a physical branch near you, you can also visit the branch and turn in your old card.

Related Article: 5 Steps to Take Immediately After Credit Card Fraud

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Digital Payment Fintech Melio Raises $110 Million

by Cory Santos
digital-payment-fintech-melio-raises-110-million

Last updated on January 29th, 2024

Melio, an Israeli fintech startup, has raised more than $110 million in funding for its U.S. small business digital payment platform. The latest funding round, which was led by a NY-based hedge fund, raises the valuation of the fintech to over $1.3 billion.

Melio, Digital Payment Fintech Making Payments Easier for Small Businesses

Israeli fintech startup Melio is now valued at approximately $1.335 billion thanks to a successful fundraising round. The fintech startup, founded in 2018, provides digital payment platforms – including accounts payable services – to small and medium-sized U.S. businesses.

Melio allows companies to simplify their payments and paperwork process by letting them pay vendors with credit or debit cards. The platform manually adds vendors and will enable businesses to schedule payments. The service, which offers QuickBooks integration, is free – but charges a 2.9% fee for credit card payments.

“Getting better control over cash flow and the ability to manage payments remotely, especially in a socially distant world, are key elements of a business’ health, and that process shouldn’t be complicated,” Matan Bar, Melio CEO, said in a statement.

“Going Digital Is the Only Way for Small Businesses to Compete”

NY-based hedge fund Coatue headed the latest round of funding for Melio. Previous funding rounds have featured notable names, including American Express Ventures, Salesforce, and more.

Speaking in the release that accompanied news of the funding, Michael Gilroy, General Partner at Coatue, praised the leadership and foresight of Melio. “Melio has identified both the opportunity and duty to help small businesses manage their finance remotely and improve cash flow, in normal times as well as during this crisis, as physical payments supply chains are interrupted and overwhelmed,” he said. “Going digital is the only way small businesses can compete against larger rivals and stay ahead of the curve.”

Featured photo by Matthew Henry / Burst

3 Reasons to Consider Applying for the Indigo Platinum Mastercard

by Cory Santos
things to know about indigo platinum mastercard credit card

Last updated on February 20th, 2024

The Indigo Mastercard is a popular option for people looking to rebuild their credit score. In fact, Indigo’s website states the card is ideal “for those with less than perfect credit.” As with any credit card offer, however, doing your homework is essential before making the jump and applying. Here are three factors you should know as you consider applying for the Indigo Mastercard:

You Can Pre-Qualify with a Soft Inquiry

One of the Indigo Mastercard‘s best features is that it will not hurt your credit score to inquire about your suitability for the card. Indigo conducts what is known as a “soft pull” to pre-qualify potential applicants.

A “soft pull” is a type of credit check where the credit card issuer pulls basic information from a credit file instead of pulling their entire credit history. Because a soft pull has no impact on credit scores, it is preferable to hard inquiries. Those with low credit scores can immensely benefit from credit cards that only require a soft pull, as they may provide better odds of receiving new credit.

The Indigo Mastercard Great for Building Credit

Building credit is difficult. Whether you are establishing it for the first time – or trying to recover from a bankruptcy, foreclosure, or another financial hit – finding a lender willing to extend credit is challenging.

Credit builder credit cards, like the Indigo Card, are vital lifelines in this credit journey. The Indigo Card reports to all three major credit bureaus – TransUnion, Equifax, and Experian – meaning exercising financial responsibility can pay dividends quickly.

Finding a quality credit card, like the Indigo, is just one piece of the puzzle, however. The other part is using the card responsibly.

Payment history is the single biggest impactor of the FICO credit scoring model. This means paying your balance on time every month is the best way to boost your credit score. Part of making on-time payments each month is paying the statement balance in full. Paying in full eliminates the need to pay interest on the card, saving you money and simultaneously building your credit score.

It Features a Modest Credit Limit

Paying in full each month is also essential because the Indigo Card comes with a relatively modest credit limit to start. The initial credit line with Indigo is $300.

Paying off account setup fees is a great way to establish a solid payment history, however. Once those fees are taken care of, paying in full is essential for keeping credit utilization low. Credit utilization, or how much you are using of your available credit lines, accounts for 30% of a FICO Score. Ideally, you want to keep your credit use below 10%, as this is the fastest way to improve your credit score. If that isn’t possible, however, aim for less than 30% usage.

Is the Indigo Mastercard Right for You?

Like any subprime credit card, the Indigo Mastercard has its pros and cons. The biggest drawback with the card is the low credit limit. Fortunately, this downside is tempered with the knowledge that the card does not require a cash deposit, like a secured credit card.

The Indigo’s most significant upside is that it provides a decent avenue into credit repair for those who might not find a card from other banks. And, since Indigo conducts a soft inquiry to pre-qualify potential applicants, there is less worry about rejection.

Related Article: Credit 101: A Comprehensive Guide to Building Credit

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10 Common Credit Card Traps to Avoid

by Allan Guzman Chinchilla
10 Common Credit Card Traps to avoid

Last updated on April 7th, 2021

When it comes to being a responsible credit card user, apathy is not an option. No matter your credit score, there are common credit card traps that you’ll want to avoid while building your credit that would otherwise have negative effects on your credit report for years to come. Thankfully, with a little knowledge and foresight, these pitfalls can be easily overcome.

1. Intro APR Rates Aren’t Forever

Promoting low introductory interest rates is a great way for credit card issuers to attract new customers, but that amazing APR is temporary. When shopping for credit cards, it’s important to read the terms and conditions (boring as they may seem) in order to know exactly how long that low intro APR will last, and if the standard APR that follows is something that you’ll be able to manage when it comes into effect.

2. Pay Attention to Promotional Offers

Similar to how low introductory APRs can lure in loads of new credit card signups, so too can the amazing limited-time promotional offers attached to many cards. As appealing as these offers are (ranging from additional bonus points to cash back upon signup), you sometimes have to charge a certain amount on the card within a short period of time in order for them to take effect.

Tens of thousands of bonus airline miles may be appealing, but if you aren’t likely to spend the money required for the bonus to trigger, that aspect of the credit card is null.

3. Don’t Push it to the Limit

Just because you could go on a shopping spree doesn’t mean that you should, particularly if it means that you can avoid accumulating unwanted credit card debt. Maxing out your card usually makes it more difficult to pay off your debt and can lower your credit score due to your high debt-to-credit limit ratio. Instead, if you can afford to do so, you should…

4. Pay More than the Monthly Minimum

Easier said than done for many people on a budget, sure, but if you only make the minimum payments on your credit card balance, you’ll be feeling the effects of interest payments in your bank account that could have been avoided. Credit card companies charge interest if you don’t pay off the balance in full each month, so the faster that you can wipe that debt out, the sooner you’ll be debt-free.

5. Stay on Schedule

Mark it on your calendar, add a reminder on your smartphone, and do whatever else you need to do to make sure you (1) remember to pay your credit card balance by the due date, and (2) actually do it. Not only can you be charged late payment fees that are likely higher than your minimum payment amount, but these infractions really add up over the course of 12 months.

Even if you rely on automatic payments to make sure that your credit card is paid down each month, ACTUALLY CHECK to make sure that this payment was made to avoid the negative effects mentioned above.

6. Don’t Ignore Your Balance

If you think that your balance will be any lower or payments will be forgotten because you do not check on them regularly, you’ll be in for a rude awakening. Instead, take charge of your financial well-being and check your credit card balance every single day.

Like going to the gym and eating a balanced diet, holding yourself accountable for your credit card activity can have positive long-lasting effects. Always check to make sure that your payments went through and verify the charges made on your card. Doing so can also provide insight into your spending habits and catch fraudulent activity before it gets out of hand and you end up paying for it.

7. Balance Transfers as Bandages

Balance transfers can be incredibly effective when it comes to paying down your debt, especially when you find a credit card that grants 0% APR for well over a year’s time. That said, each time that you apply for credit, your credit score can drop by as much as 35 points due to the hard inquiry that follows.

Generally speaking, the longer that your credit card accounts have been open the better they reflect on your score as well, so applying for a bunch of cards at once to split your debt among them can only stop the financial bleeding for so long.

8. Cash Advance Catastrophe

Unlike a cash withdrawal from an ATM using your debit card, cash advances tend to come at a steep price. Should you find yourself at a cash-only merchant point of sale without any bills in your wallet, you may be tempted to use your credit card at an ATM to get the money needed.

Doing so, though, draws against your credit line at a rate that may be double your standard interest rate, if not more so in some cases. You may also be charged a fee for your cash advance, either as a flat amount or percentage, so it’s best to avoid the situation if you can.

9. Annual Fees Aren’t All Bad

Dismissing a credit card solely because it has a high annual fee or any annual fee at all for that matter, is a great way to miss out on the value that some of its other perks bring to the table.

Paying upwards of $400 a year for a travel rewards credit card may seem like a ludicrous venture, but if you’re getting thousands of dollars in value through a combination of rewards miles, lounge access, and discounts on checked bags during flights, the card quickly pays for itself.

10. Don’t Forget to Reward Yourself

All of the accumulated points on a credit card mean nothing if you don’t eventually put them to good use. Storing them for years with a particular goal in mind, such as comped airline passes or hotel stats, will be for naught if said points expire before you decide to use them.

Take the time to read the fine print on your credit card’s terms and conditions to avoid such a financial travesty. Keep these 10 common credit card traps to avoid in mind the next time that you charge into a transaction, and you’ll be better prepared to lead a more financially responsible life. Your credit score will thank you for it.

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