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How Do Prepaid Debit Cards Function and are they right For You?

(image: https://images.theabcdn.com/i/10223387)Advertiser disclosure You're our first priority. Every time. We believe that every person should be able make financial decisions with confidence. And while our site doesn't feature every company or financial product that is available on the market We're pleased of the advice we provide and the information we offer and the tools we create are impartial, independent easy to use and free. How do we earn money? Our partners compensate us. This can influence the products we write about (and where those products appear on our site) However, it in no way affects our recommendations or advice, which are grounded in hundreds of hours of study. Our partners are not able to be paid to ensure positive reviews of their products or services. .

What is the best way to make sure that prepaid debit cards Function and are they right for You?

Pay in advance for money on an prepaid debit card and then utilize it at ATMs, or for purchases. The card can be reloaded by a variety of methods.

Written by Spencer Tierney Senior Writer | Certificates of Deposit, ethical banking, banking deposit accounts Spencer Tierney is a consumer banker at NerdWallet. He has been writing about the personal financial sector since, with a particular focus on certificates of deposit as well as other banking-related topics. The work he has written for him was highlighted by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. He is based in Berkeley, California.

Updated Mar 18, 2022

Edited by Yuliya Goldshteyn, Assistant Assigning Editor Yuliya Goldshteyn is a banking editor at NerdWallet. She was previously an editor, researcher, and a writer in a variety of industries, from medical care and market research. She received a bachelor's diploma in history from the University of California, Berkeley and a master's in social sciences from the University of Chicago, with an emphasis on Soviet culture and history. She lives in Portland, Oregon.

Review by Kathleen Burns Kingsbury Wealth psychology expert and coach Kathleen Burns Kingsbury, founder of KBK Wealth Connection and host of the Breaking Money Silence podcast, is an internationally published author and speaker. As an expert on finance psychology Kathleen has appeared on television and her work has been highlighted by The New York Times, The Wall Street Journal, "PBS NewsHour," Money magazine, Today Money, Forbes and CNBC. Kathleen was an adjunct faculty instructor at McCallum Graduate School from 2009 to 2019. McCallum Graduate School at Bentley University from 2009 until 2019 and currently teaches at Champlain College.

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A prepaid debit card acts as an alternative to an bank account, and only allows you to spend the funds you load onto the card. Like the debit card, these debit cards work at any merchant which accepts its payment network, like Visa as well as Mastercard. They're more secure and easier to use as compared to cash.

Many prepaid debit cards don't require credit checks, therefore they're not difficult to obtain. If you're one of the 7 million U.S. households without access to an bank account, prepaid cards are a viable option to securely spending money without needing to make use of the bank. Here's how you can get an prepaid debit card and how they work.

How can I purchase an prepaid debit card?

You can buy a prepaid debit card from an institution, retailer or credit card company, or another financial service provider. When you purchase one, your card is usually a in an account managed by a bank or credit union. Note that they can also be called stored-value cards, pay-as-you-go cards or, more specifically, general-purpose reloadable prepaid cards.

>> Do you want to look at comparing prepaid cards? Check out our list of

Nerdy Tip

If you're looking to improve your credit or are denied the use of a bank account, a prepaid debit card might not be the best option: , and if you can't get an ordinary checking account Try . These accounts offer another chance at banking that is mainstream and has its perks.

Savings Cash Management CD Checking Money Market

A savings account is a place where you can keep money safe while earning interest.

A savings account is an account where you can keep money safe with interest.

Member FDIC

SoFi Savings and Checking

APR 4.00% SoFi members who have direct deposit are eligible to receive up 4.00% per year in annual percentage yield (APY) on savings balances (including Vaults) and 1.20 percent APY on their checking balances. No minimum direct deposit amount needed to earn the 4.00% APY for savings. Direct deposit members will earn 1.20% APY on all account balances , including savings and checking (including Vaults). Interest rates are variable and could change at any time. These rates were last updated on 03/17/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet

Min. balance for APY $0

Member FDIC

Marcus from Goldman Sachs Online Savings Account

APR 3.75% 3.75% APR (annual percentage yield) with $0 minimum balance to earn stated APY. Accounts must have an active balance in order to remain open. APY current as of 02/14/2023.

Min. balance to APY $0

Member FDIC

CIT Bank Platinum Savings

APY 4.75%

Min. balance for APY $5,000

These cash accounts combine services and features similar to savings, checking and/or investment accounts into one account. These accounts for managing cash are usually offered by non-bank financial establishments.

The cash accounts offer features and services similar to checking, savings or investment accounts into one account. These accounts for managing cash are usually offered by non-bank financial establishments.

on Wealthfront's site

Cash Account at Wealthfront

APY 4.30%

Min. balance for APY $1

on Betterment's site

Betterment Cash Reserve - Paid non-client promotion

APY 4.20 percent Annual percentage yield (variable) is as of 03/27/2023.

Min. balance for APY $0

CDs (certificates of deposit) are a form of savings account that comes with the option of a fixed rate and time, and usually have higher rates of interest than regular savings accounts.

CDs (certificates of deposit) are a kind of savings account that has a fixed rate and term typically, they have higher interest rates than traditional savings accounts.

Member FDIC

Marcus by Goldman Sachs High-Yield 10-Month CD

APY 5.05 5 % 5.05% APY (annual percent yield) as on 03/28/2023. Special Offer Expires 09/15/2023.

Term 10 months

CIT Bank No-Penalty CD

APY 4.80%

The term is 11 months

Deposits are FDIC Insured

Current Account

APR N/A

Monthly fee of $0

Chime Checking Account

APR N/A

Monthly fee $0

Member FDIC

Axos Bank(r) Rewards Checking

APY 3.30% The annual percentage yield could be up to 3.30 percent according to the following rate of rewards Direct deposits (not including inter-bank transfers from an account) that total more than $1500 each month will earn 0.40 percent. A direct deposit that is eligible for a qualifying amount is required for the other interest rate qualifications to apply. Ten (10) transactions at the point of sale each month with your Rewards Checking Visa(r) Debit Card for normal everyday purchases with minimum $3 per transaction, or registering for Account Aggregation/Personal Finance Manager (PFM) will earn 0.30 percent; and maintaining an average daily balance of at least $2,500 per month for an Axos Self-Directed Trading Invest account will earn 1.00%; maintaining the average balance per day of at least $2,500 within An Axos Managed Portfolio Invest account will earn 1.00 percent; and making a monthly installment for an existing Axos Consumer Bank loan (commercial as well as business loans excluded) through a transfers from the rewards checking account earns a maximum of 0.60%.

Monthly fee $0

Market accounts for money pay interest rates that are similar to savings accounts and have certain checking features.

The money market accounts have rates similar to savings accounts. They also have certain checking features.

Member FDIC

Discover Bank Money Market Account

APY 3.50 percent

Min. balance required for APY $1

How prepaid debit cards work

Prepaid cards are diverse however they usually have these features in common:

Fees: You could have to pay for activating or getting a card, or for making deposits, or using ATMs that are not in network. There's often a monthly fee that can sometimes be waived -- by having direct deposits, for example. Certain cards charge an amount for each purchase and ATM transaction.

Reload options: You can typically add funds to a credit card in various ways, such as creating direct deposits, loading cash at participating retailers and depositing checks at ATMs. Some cards let you make online transfers and mobile check deposits from a smartphone.

ATM access: Some prepaid cards have access to the free national ATM networks, including MoneyPass and Allpoint as well as to branded bank networks for cards issued by banks.

Amount limits Certain cards restrict the amount you can pay, withdraw, or spend during a certain period for example, the day or month.

Security: Reloadable prepaid cards come with the liability and fraud protections that debit cards are required to have by federal law. Some cards have purchase protections however it is difficult to challenge transactions that are not authorized or fix mistakes. A security feature that many cards offer are federal deposits insurance. This means that your funds are covered in the event the issuer goes bankrupt.

Expiration dates: Prepaid cards have expiration dates. The funds on the card shouldn't expire, however you'll need to get another card prior to the expiration date so you can continue using it. In a report from 2016 released by the Consumer Financial Protection Bureau, some users complained about having funds on their cards after they ran out of credit, but the issuer did not reissue cards that included the balances. If you're experiencing this, reach out to the company that issued your prepaid cards to see if the issue is possible to resolve the issue. If not, you may seek assistance go to the CFPB website.

Other benefits Other features: Some prepaid cards provide checking, on-line bill pay as well as multiple versions of the credit card to family members. Some cards even provide rewards such as cash back on purchases, similar to what credit cards that reward you.

>> Think a debit card might be what you need? Read more about

Prepaid debit cards have limitations

Prepaid debit cards have major restrictions compared to banking account and credit card. While they usually have online services, many prepaid cards lack standard banking options, like a way to withdraw or refill cash at no cost. The cash you put onto a card isn't likely to yield interest, neither.

If you only want to store cash in a safe place and don't expect to make many withdrawals It's a good idea to choose a savings account for your money. The debit cards you pay with aren't affecting your credit, so they don't aid in building it either.

There is no impact on credit scores: Because the debit cards that you purchase aren't credit cards, you can't build credit with them. For that, you'd want to .

Lack of bank services: Prepaid cards don't come with all the features you'd expect from accounts for checking, like access to an ATM or branch network, online or mobile banking or banking services such as wire transfers and the capability to stop the payment.

Recent horror stories: Many credit cards that are prepaid were affected by technology problems that lasted for several days or even weeks. The parent company of RushCard switched the processor for its payments in 2015 to Mastercard In 2015, an technical glitch locked hundreds of thousands of customers from their RushCard accounts for days. The Walmart MoneyCard experienced an outage in the year 2016. Netspend settled in a dispute with the federal government on claims that customers were blocked by their account access. They also provided reimbursements to those qualified.

If you want an account with a checkbook that does not charge monthly fees, consider our list of the . These are also available for those with bad credit or banking histories.

Whether used as a budgeting tool or an alternative to bank, prepaid debit cards can help you store and spend money.

Prepaid debit cards vs. debit and credit cards

Here's a quick summary of the distinctions:

Prepaid debit cards -- pay in advance: You load money onto the card by cash or checks direct deposit, or a transfer from another account before paying for transactions. A checking account is not required.

Credit cards: Pay today: You use funds directly from a checking account when paying for purchases or withdrawing funds at an ATM.

Credit cards -Pay later: You borrow money from a bank each time you use your credit card. Then, you pay the money back later.

Are you ready to look at your options? Take a look at our recommendations for the

Prepaid debit card alternatives

If a prepaid debit card isn't for you, then you can find a good alternative with the option of a checking account with no fees. While certain checking accounts have monthly costs there are many institutions online offer accounts with no annual fees and minimum requirements for balance, and you can choose a different option for those who have had issues with bank accounts prior to now. Look over these accounts, including one that doesn't need your (ChexSystems is the company that banks use to track clients who've had problems with their earlier banking accounts).

The ratings of NerdWallet are formulated by the editorial staff. The scoring formulas take into account many data points for every financial product or service.

Monthly fee: $0.

Access to ATMs for free: More than 60,000 ATMs.

Bonus features: No overdraft fees. No ChexSystems records check.

More details from Chime

Chime says: "Cash withdrawal and third-party fees can be charged. Chime is a financial technology company, not a bank. Services offered by banks debit card issued by, The Bancorp Bank or Stride Bank, N.A. and members of the FDIC."

NerdWallet's ratings are determined by the editorial staff. The scoring formulas take into account multiple data points for every financial product or service.

Monthly fee: $0.

Free ATM access: Over 43,000 ATMs.

Bonus features: Account pays interest.

NerdWallet's ratings are determined through our team of editors. The scoring formulas take into account many data points for every financial product or service.

Monthly cost: $1.

Free ATM access: Over 70k ATMs.

Bonus features: Account pays interest.

About the author: Spencer Tierney is a writer, and NerdWallet's expert on deposit certificates. The work of Spencer Tierney has been covered by USA Today and the Los Angeles Times.

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Check out NerdWallet's top picks for the best checking accounts.

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How Long Will Hard Inquiries Stay On Your Credit Report?

Advertiser disclosure You're our first priority. Every time. We believe that everyone should be able to make financial decisions with confidence. While our website does not feature every business or financial product available on the market, we're proud that the guidance we offer, the information we provide and the tools we develop are impartial, independent easy to use and cost-free. So how do we make money? Our partners compensate us. This may influence which products we write about (and where those products appear on the site), but it does not affect our advice or suggestions which are based on thousands of hours of research. Our partners are not able to be paid to ensure positive review of their services or products. .

How Long Do Hard Inquiries Last in Your Credit Report?

A hard inquiry will be at the top of your credit history for 2 years but typically , it won't affect your score for longer than a year.

By Bev O'Shea personal finance writer | MSN Money, Credit.com, Atlanta Journal-Constitution, Orlando Sentinel Bev O'Shea is a former NerdWallet authority on consumer credit, scams and identity theft. She has a bachelor's degree in journalistic studies from Auburn University and a master's in education from Georgia State University. Prior to joining NerdWallet, she worked for daily newspapers, MSN Money and Credit.com. Her work has appeared on The New York Times, The Washington Post, the Los Angeles Times, MarketWatch, USA Today, MSN Money and other publications. Twitter: @BeverlyOShea.

Updated November 3, 2021

A majority of the products we feature are provided by our partners, who pay us. This impacts the types of products we review and the location and manner in which the product is featured on the page. However, this doesn't influence our evaluations. Our opinions are our own. Here is a list of and .

Hard inquiries on your credit such as those that occur in the event you are applying for an loan or credit card- can stay on your for about 24 months. However, a difficult inquiry typically won't affect your credit score after 12 months.

The process of applying for credit could knock a few points off your credit score. But making multiple inquiries in the span of a few minutes is considered one inquiry when you shop for the mortgage or student loan or auto loan.

The time frame you can shop is determined depending on the type of score you have. The latest versions typically offer customers a 45-day time frame for these requests. have a shorter window for -- 14 days.

It isn't possible to select the score or score variant the lender employs, so it pays to do your comparison shopping fast.

Do you need a credit report review?

Create an account and get your credit report free and score at hand, every day.

How much does a hard inquiry on your credit report cause you to worry?

For those with lengthy credit histories, one credit application -- or hard inquiry -- has little or no impact, or is a small one.

If you've lost points because you applied for numerous credit cards within a short period of time, take heart. Credit applications are not a major factor in calculating how much credit you have.

VantageScore describes recent credit behavior and inquiries as "less influential." New applications for credit cards are 10% of FICO scores.

However, those with short credit history or have a few accounts might see a larger change.

If you're trying to make every point count in the end, so restraining new applications for a couple of months can help restore points. Particularly if you're getting a mortgage, you must wait until the day after the closing date to apply for a new credit.

could cause a major smudge in your credit, particularly if you are new to credit. It's an easy mistake to commit. Say you've just hired a house. The leasing agent will check your credit. You can then apply for financing for furniture. After that, you decide to get a card with travel rewards which is why you apply for several of them. This could mean four credit inquiries within an extremely short time which can result in a lower score.

The statistics show that those who have more than six inquiries in the last six months are eight times as likely to file for bankruptcy as people who do not have any and scoring formulas show this.

If a hard inquiry on your credit report is incorrect just like you would with any other mistake on your credit report.

Any credit score damage done through inquiries can be repaired with time. If you require credit at any time, it's a great idea to check to see whether you're likely to qualify prior to applying since a formal inquiry can be tracked whether you're approved or otherwise.

In the meantime, you should focus on the two things that have the greatest impact on your scores:

Paying on time, every time.

Keep your credit card balances to no greater than 30% or your limit on credit, and lower is more beneficial.

The habits you have in place account for more than half of your score. NerdWallet can assist you to improve your score and provide suggestions for improving other aspects of your score.

Do you want nerdy advice that's tailored to your budget? Put all your money in one account, and receive specific information to get the most value from it.

About the author: Bev O'Shea worked as a writer for credit at NerdWallet. Her work has been published in the New York Times, Washington Post, MarketWatch and elsewhere.

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ACE Elite Prepaid Debit Card Review

Advertiser disclosure You're our first priority. Every time. We believe that everyone should be able to make sound financial decisions with confidence. Although our site doesn't include every business or financial product that is available in the marketplace, we're proud that the advice we provide, the information we provide and the tools we develop are objective, independent, straightforward -- and completely free. How do we earn money? Our partners compensate us. This could influence the types of products we write about (and the places they are featured on the site), but it doesn't affect our recommendations or advice that are based on hundreds of hours of study. Our partners are not able to promise us favorable review of their services or products. .

ACE Elite Prepaid Debit Card Review

By Spencer Tierney Senior Writer | Certificates of deposit, ethical banking, banking deposits Spencer Tierney is a consumer bank writer for NerdWallet. He has been writing about personal finance since 2013 with a focus on certificate of deposit, as well as other banking issues. His work has been highlighted on The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is located in Berkeley, California.

Updated October 1, 2018

Edited by Amy Hubbard Amy is a former bank editor and copy editor at NerdWallet. She previously worked as a writer and editor in and editor for the Los Angeles Times, the L.A. Daily News and the Hollywood Reporter, among other publications.

A majority of the products we feature are from our partners, who pay us. This influences which products we write about and the location and manner in which the product is featured on the page. But, it doesn't affect our assessments. Our opinions are entirely our own. Here's a list and .

2.0 NerdWallet rating NerdWallet's ratings are set by our editorial staff. The scoring formulas consider many data points for each financial product and service.

At ACE Cash Express

The ACE Elite prepaid debit card could cost more than its worth. The card, administered by NetSpend and issued by MetaBank, has a few additional services that aren't available present on other credit cards, like an interest-bearing savings account but the card fees will add up. If you've got direct deposit it is possible to cut down on some expenses. However, there are .

Check out the following article for more information about the ACE Elite's fees and services.

Best for:

People who aren't able to sign up for an bank account, want to receive direct deposit and make use of saving features.

Pros

The card is free to use online. The sign-up procedure is easy. You'll need to provide the Social Security number when you register, but there's no credit check.

Discount on the monthly fee. If you've got at minimum $500 in direct deposits each month (from government or payroll benefits) then you are part of the FeeAdvantage $5 Plan which costs you $60 per year.

It can take up to two days when you deposit direct. The government and businesses can send your money earlier than the official payday, but banks usually wait to process the funds. ACE Elite can process direct payments faster, but it's dependent on the time they receive your cash in a timely manner.

Monthly plans do not charge charges for purchases. Most prepaid debit cards don't charge fees for using the card at retail stores However, ACE Elite's pay as you go plan has a price of $1 for each purchase. The card's two monthly plans, however, allow purchases to be made for free.

Three reload options are free. Online transfers, direct deposits made from other ACE Elite card and mobile check deposits with 10-day processing are free. Transfers made from bank accounts can be free, however it's dependent on the bank.

Has savings account with an APY of 5% for the first $1,000. This year-round percentage rate is very high but once you have reached $1,000, the rate decreases to 0.50 percent APY on the remaining balance. That means you'll earn $50 in interest for the first $1,000, and $5 for the next $1,000 then the same amount for the following. If you have to pay an entire year's worth of monthly charges, however, that price alone may outweigh any you earn in interest.

>> See more options See our selection of

Cons

A high monthly cost. Prepaid debit cards typically charge a monthly amount of $5, on average, however, the ACE Elite fee is $9.95.

Other charges. If you stop using this ACE Elite card for 90 days or ask for a check for the balance remaining on your card that's $5.95 cost. There's also a fee to purchase the card at stores, up to $9.95; a $1 fee for transactions that are declined as well as fees for certain calls to customer support.

No free-withdrawal network for any customers. Cash withdrawal from any ATM, or at a bank will cost $2.50 each time.

Has optional overdraft program. One of the major selling points for the majority of credit cards for prepaid debit is the fact that there are no overdraft charges should your account go into the negative. ACE Elite, like other NetSpend-managed credit cards, offers an overdraft plan that charges the option of a $15 fee for overdrafts and a maximum of three per month. It is less expensive than many banks' overdraft plans, however, it is not the best option for budgeting assistance.

There's no way for you to manually add money that's fast. Online transfers can take days to process, and the option to process check deposit mobile in a matter of minutes is a cost of at least 2% of the amount of check.

There is no free-reloading service. Cash reloads at retailers in NetSpend's Reload Network, such as CVS Pharmacy and 7-Eleven, are immediate, but they charge an additional cost, usually $3.95 which varies depending on the store. Certain locations do not charge however, there are many that do.

Overview of prepaid debit cards

What is a pre-paid debit card?

A prepaid debit card form of payment card that only allows you to spend the funds you load onto the card. They don't assist in building credit. As with debit cards, the prepaid card can be used with any retailer that accepts its payment network, like Visa, Mastercard or American Express. It's safer and easier than using cash. Usually the prepaid card has an app that allows you to deposit checks and transfer funds. Find out more in our guide to the prepaid debit card.

Unlike checking accounts, debit cards that are prepaid might not have certain services, like free ATM or branch networks, checks, among others. If none of that appeals to you, check out our list of best checking accounts. If you've been struggling with banks in the past, check out second chance checking options.

Prepaid debit card vs. debit card vs. credit card

Pay with prepaid debit cards in advance the card is loaded with money the card using cash, checks or direct deposit to an bank account before paying for transactions.

Debit cards -- pay now Pay now: You can use the money directly from your checking account to pay for purchases or withdrawing funds from an ATM.

Credit cards -- pay later: You take money from a bank when you make use of the card. You pay it back later.

How does FDIC insurance on prepaid cards work?

Prepaid debit cards nearly always come with FDIC assurance, which helps keep your funds safe in the event the issuer goes under. Only financial institutions can have FDIC insurance, which means the prepaid card must be managed by a bank or a prepaid credit card company that partners with a bank to offer this insurance. You must register your debit card prepaid using your personal name as well as other identification information in order to qualify to receive FDIC insurance and other protections.

Author bio Spencer Tierney is a writer and NerdWallet's authority on certificates of deposit. He has had his work highlighted on USA Today and the Los Angeles Times.

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Best Banks and Credit Unions

Advertiser disclosure You're our first priority. Every time. We believe that every person should be able to make sound financial decisions without hesitation. And while our site doesn't feature every company or financial product available on the market, we're proud that the advice we provide and the information we offer as well as the tools we design are impartial, independent, straightforward -- and free. How do we earn money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on our site), but it does not affect our suggestions or recommendations, which are grounded in hundreds of hours of research. Our partners are not able to pay us to guarantee favorable review of their services or products. .

The Best Credit Unions and Banks

Check out our list of the best credit unions and banks which can assist you in managing and increase your money efficiently.

by Ruth Sarreal Content Management Specialist Bank accounts, bank account bonuses Ruth Sarreal is a content management specialist covering the topics of banking for consumers at NerdWallet. She has more than 10 years of experience in creating and editing content for consumer websites. She has previously edited content on personal finance issues at GOBankingRates. She has had her work highlighted on Nasdaq, MSN, TheStreet and Yahoo Finance.

Updated 17 March 2023

Editor: Yuliya Goldshteyn Assistant Assigning Banking Yuliya Goldshteyn is a banking editor with NerdWallet. She previously worked as an editor, a researcher and writer in industries ranging from health care to market research. She graduated with a bachelor's degree in the field of history at the University of California, Berkeley as well as a master's degree in social sciences from the University of Chicago, with a focus on Soviet culture and history. She lives in Portland, Oregon.

The majority or all of the products featured here come from our partners who pay us. This impacts the types of products we write about and where and how the product is featured on the page. However, this does not affect our opinions. Our views are our own. Here's a list of and .

The most suitable institution or bank is based on what you're in the market for such as a savings account, a checking account or both. Whatever you're searching for, NerdWallet will have you covered.

Here's a look at the best overall institutions and accounts for 2023. APYs shown are current as of March 17 2023. The other information is up-to-date as of Jan. 13th 2023.

+ See a summary of NerdWallet's top banks and credit unions of 2023.

Best-of 2023 Banking Winners:

Alliant Credit Union: Best credit union.

Ally Bank: Best bank and the most reliable cash market bank account.

Capital One 360: Best online banking experience.

Charles Schwab Bank: Best bank or credit union to get ATM access.

Chase: Great for signing-up bonuses as well as branches access (tie).

Discover Bank: Best savings account.

SoFi: The best savings and checking account Best checking account for all; most reliable checking account with high interest; best checking account that doesn't charge a monthly fee; top checking account for overdraft fee avoidance.

Synchrony Bank: Best bank or credit Union for CDs.

Wells Fargo Bank: Best credit union or bank for branches with branch accessibility (tie).

Other excellent accounts :

Axos Bank: Excellent to check interest on checks as much as $50,000.

Connexus Credit Union: Great for interest-checking as much as $25,000.

LendingClub Bank: Best for cash back.

Marcus is a product of Goldman Sachs: Best for the same day, high-limit transfer.

Quontic Bank: Most domestic ATMs.

Best banks and credit unions

NerdWallet spent nearly 200 hours in comparing and rating over 80 financial institutions which includes banks, neobanks as well as credit unions, to pick winners in more than 10 categories. Read on for more information about the accounts and institutions that took top honors this year.

Alliant Credit Union: Best credit union

More than 80,000 ATMs are free and interest checking options.

2.70% APR on savings.

Learn more about our .

Ally Bank: Best bank and best money market account

No fees for overdrafts plus greater than 43,000 ATMs

3.75% APY on savings and 3.80% APY on all accounts within the cash market accounts.

Learn more about our .

Capital One 360: Best online banking experience

More than 70,000 ATMs are free offer tools, such as virtual help and card number virtualization Teen checking is available.

3.40 percent savings APY.

Learn more in our .

Charles Schwab: Best for ATM access

Unlimited worldwide ATM cost reimbursements.

0.45% checking APY.

Learn more about our .

Chase: Best for sign-up bonus offers and Branch access (tie)

There is no minimum deposit requirement to earn cash bonus for new checking account.

Over 4,700 branch locations spread across 49 states.

Find out more about us in our .

Discover Bank Best savings account

No monthly fees and 3.60% annual percentage yield.

Find out more about us in our .

SoFi: Great for savings and checking High interest checking, the ability to avoid fees for overdrafts and more.

The possibility of 4.00 percent APY on savings balances and up to 1.20% APY on checking balances (APY is variable and subject to fluctuation).

There are no overdraft charges and there is no cost for coverage for overdrafts.

Learn more in our .

Synchrony Bank: Great for CDs

Highly affordable CD rates.

Bump-up CDs and 11-month no-penalty CDs are available.

Read more in our .

Wells Fargo Bank: Best branch access (tie)

Around 4,700 branches spread across the country.

Find out more about us in our .

Another great account of 2023

You should also consider an account for savings or a checking account at one of the banks listed below. Savings accounts have APRs that are much greater than the national average of 0.37 percent and the checking accounts have perks like interest on accounts with balances in the checking account as well as ATM fee reimbursements. (Read more about each type of bank account by reading our article about and .)

Axos Bank: Great for interest checking up to $50,000

up to 3.30% APY when checking balances up to $50,000.

Unlimited ATM fee reimbursements.

Find out more about us in our .

Connexus Credit Union: Great for checking interest on up to $25,000

up to 1.75% APY on checking balances of up to $25,000.

More than 67,000 ATMs are fee-free.

Find out more about us in our .

Savings Cash Management CD Checking Money Market

Member FDIC

Savings and SoFi Checking

The APY is 4.00 percent SoFi customers who have direct deposit are eligible to earn up to 4.00 percent annually-percentage yield (APY) on savings balances (including Vaults) and 1.20 percent APY on checking balances. There is no minimum amount of direct deposit that is required to be eligible for 4.00% APY for savings. Customers who do not deposit direct deposits will earn 1.20% APY on all account balances in checking and savings (including Vaults). The rates of interest are variable and can change at any point. The rates listed are current as of 03/17/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet

Min. balance for APY $0

Member FDIC

Marcus by Goldman Sachs Online Savings Account

APY 3.75 percentage 3.75% Annual percentage yield (annual percentage yield) with $0 minimum balance to earn the stated APY. Accounts must be in a positive balance to remain open. APY valid as of 02/14/2023.

Min. balance for APY $0

Member FDIC

CIT Bank Platinum Savings

APY 4.75%

Min. balance to APY $5,000

These cash accounts combine features and services that are similar to savings, checking and/or investment accounts into one product. The cash management account is typically offered by non-bank financial institutions.

The cash accounts offer services and features similar to checking, savings and investment accounts into one product. Cash management accounts are usually offered by non-bank financial establishments.

on Wealthfront's website

The Wealthfront Cash Account

APY 4.30%

Min. balance for APY $1

on the Betterment's website.

Betterment Cash Reserve - Paid non-client promotion

APY 4.20 Percentage of annual percent yield (variable) is as of 03/27/2023.

Min. balance to APY $0

CDs (certificates of deposit) are a kind of savings account that comes with an interest rate fixed and a term typically, they have higher interest rates than traditional savings accounts.

CDs (certificates of deposit) are a type of savings account with the option of a fixed rate and time generally, they offer higher interest rates than regular savings accounts.

Member FDIC

Marcus by Goldman Sachs High-Yield 10-Month CD

APY 5.05 percent 5.05 percent APY (annual percent yield) as on 03/28/2023. Special Offer Expires 09/15/2023.

Term 10 months

The CIT Bank no-penalty CD

APY 4.80%

Term 11 months

Checking accounts are utilized for cash deposits on a regular basis as well as withdrawals.

Checking accounts are used to deposit cash on a daily basis and for withdrawals.

The deposits are FDIC Insured

Current Account

APR N/A

Monthly fee of $0

Chime Checking Account

APR N/A

Monthly fee: $0

Member FDIC

Axos Bank(r) Rewards Checking

APY 3.30% Your annual percentage yield can be as high as 3.30 percent depending on the following combination rate-rewards: direct deposits (not including transfers between banks from an account) with a total of $1,500 or more every month earn 0.40%. A direct deposit that qualifies as a direct deposit is required to satisfy to meet the other interest rate eligibility to apply. Ten (10) point-of-sale transactions each month, using Your Rewards Visa(r) Debit Card to make regular purchases, with at least $3 for each transaction, or registering for Account Aggregation/Personal Finance Manager (PFM) will earn 0.30 percent; and maintaining your average balance per day of $2,500 for your Axos self-directed trading Invest account earns 1.00%. Maintaining an average of $2,500 a month on the Axos Managed Portfolio Invest account will earn 1.00 percent; and making a monthly installment to an open Axos bank consumer loan (commercial as well as business loans exempted) via transfer from your Rewards Checking account can earn a maximum of 0.60%.

Monthly fee: $0

Market accounts for money pay interest rates similar to savings accounts and have some features for checking.

The money market accounts have rates similar to savings accounts, and come with some checking features.

Member FDIC

Discover Bank Money Market Account

APY 3.50%

Min. balance to APY $1

LendingClub Bank: Best for cash back

Unlimited 1% cash back on debit card purchases if you meet a minimum monthly balance or direct deposit requirement.

Unlimited worldwide ATM fees reimbursement.

Find out more about us in our .

From top to bottom

Marcus is a product of Goldman Sachs: Best for the same-day, high-limit transfer

Same-day external transfers online up to $125,000.

3.75% annual percentage yield (annual percentage yield) with a minimum balance of $0 to earn stated APY. Accounts must be in an active balance in order to remain open. APY valid as of 02/14/2023.

Find out more about us in our .

Quontic Bank: Most domestic ATMs

More than 90,000 in-network ATMs.

1.10% APY on checking when you meet minimum debit card spending requirements.

Read more in our .

Are you looking for more great alternatives? Check out our top picks and

Do you have something more specific in mind? If so, take a look at these articles:

Compare the best cash-back and savings accounts

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A summary of the top banks and credit unions in 2023

Financial institution

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NerdWallet's ratings are determined by the editorial staff. The scoring formulas take into account multiple data points for each financial product and service.

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The ratings of NerdWallet are formulated by our editorial team. The scoring formulas take into account multiple data points for each financial service and product.

Best bank overall.

The best Money Market Account.

NerdWallet's ratings are determined by our editorial team. The scoring formulas consider many data points for every financial product or service.

The best online banking experience.

The NerdWallet ratings are made through our team of editors. The scoring formulas take into account many data points for every financial product or service.

The best credit union or bank to use for ATM access.

The NerdWallet ratings are made by our editorial team. The scoring formulas consider many data points for every financial service and product.

Best bank or credit union for signing-up incentives.

Best bank or credit union to access branch locations (tie).

NerdWallet's ratings are made by our editorial team. The scoring formulas are based on multiple data points for every financial product or service.

The best savings account.

The ratings of NerdWallet are formulated by the editorial staff. The scoring formulas take into account many data points for every financial product or service.

Best checking and savings combination.

Best overall checking account.

The best checking account to earn high-interest.

Best checking account for checking with no monthly cost.

Best checking account to avoid overdraft fees.

The ratings of NerdWallet are formulated by our editorial team. The scoring formulas consider many data points for every financial product or service.

The best credit union or bank for CDs.

The ratings of NerdWallet are formulated by our editorial team. The scoring formulas consider many data points for each financial product and service.

The best credit union or bank to access branch locations (tie).

Another great account of 2023

The NerdWallet ratings are made by the editorial staff. The scoring formulas consider many data points for every financial product or service.

Ideal for checking interest on up to $50,000.

NerdWallet's ratings are made by our editorial team. The scoring formulas take into account multiple data points for every financial service and product.

Excellent for interest-checking for the amount of $25,000 or more.

NerdWallet's ratings are determined by our editorial team. The scoring formulas consider several data points associated with each financial service and product.

Best for cash back.

The ratings of NerdWallet are formulated by our editorial team. The scoring formulas take into account several data points associated with each financial product and service.

Best for same-day, high-limit transfers.

NerdWallet's ratings are made by the editorial staff. The scoring formulas take into account several data points associated with every financial product or service.

Most domestic ATMs.

>> Looking for the biggest banks in the country?

We took a close look at nearly 80 financial institutions as well as financial service providers, including the biggest U.S. banks based on assets, internet search traffic, and other aspects; the nation's largest credit unions in terms of membership and assets; and other prominent and/or emerging players in the field. We evaluated them based on criteria including annual percentage yields and minimum balances, fees, digital experience , and many more.

The financial institutions and providers that are surveyed are: , the following are the the and , , , , the , Liberty Bank, , , (by Axos), and , , , , , Scarlet, , .. , , , , , , , , and .

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How to use Carvana to buy a car Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial decisions by offering interactive financial calculators and tools as well as publishing high-quality and impartial content, by enabling you to conduct research and compare data for free - so that you can make informed financial decisions. Bankrate has agreements with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this site are from companies who pay us. This compensation can affect the way and where products appear on the site, such as, for example, the order in which they may be displayed within the categories listed in the event that they are not permitted by law. Our mortgage, home equity and other home loan products. But this compensation does have no impact on the information we publish, or the reviews that you see on this site. We do not cover the vast array of companies or financial offers that may be open to you.

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5 min read . Published in October 06, 2022.

Authored by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the ways and pitfalls of taking out loans to buy the car they want.

Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to control their finances by providing concise, well-researched, and well-organized data that simplifies complex topics into manageable bites.

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this post may contain references to products from our partners. Here's a brief explanation of how we make money .

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Founded in 1976, Bankrate has a proven track record of helping people make informed financial decisions.

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They ensure that what we write will ensure that our content is reliable, honest and reliable. Our loans reporters and editors focus on the points consumers care about most -- the various kinds of lending options as well as the most favorable rates, the best lenders, how to repay debt, and more . This means you're able to be confident about making a decision about your money.

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Carvana is working to improve the process of purchasing an old vehicle by streamlining the process of the selling process for your current car and the one that's new to you. Since its beginning in 2012, Carvana's mission is to help users to obtain their next car from its vending machines with the same ease that you might expect when grabbing an ice cream bar. Setting the fun of the gold coin and vending machine aside, determining if Carvana is the right choice for you will require you to think about what aspects of car buying matters most to you. To find the most affordable price learn about the process all through from research through financing the car to getting the keys before you go to its online showroom. What can you expect when purchasing a car using Carvana The Carvana used car buying process is based in a seamless process while encouraging personalization through its customer service. Carvana currently operates fully online and has only 34 vending machines across the U.S. But, aside from its vending machines, it also offers delivery. The goal of the company is "to ensure that you are provided with peace of assurance when purchasing the car you purchase." In the "about us" section of the website states that while Carvana sells cars, it does not have car salespeople. This approach separates the company from the traditional competition that could put pressure on the staff. Plus, it removes negotiation as well as face-to face communication, perfect for people looking to buy and drive their vehicle without any additional hassle. How to buy the car using Carvana The process of buying the vehicle with Carvana can be completed entirely online, and according to the help desk -- can be completed in just two steps. To be able to qualify for financing prior to beginning the car shopping process It is best to make an application for a car loan through Carvana -- and at least 2 other lending institutions. The process, which takes less than five minutes, according to Carvana it will give you an understanding of . Prequalification is an essential step to make. Simply fill out personal information like your contact information as well as your employment status and income. If you are looking for a car with the budget you are able to manage, you can now browse the 25,000 cars available- all inspected by both Carfax as well as AutoCheck. Go to the "find the right car" section on the website and you'll be presented with a variety of choices in your region. Here you can also get specific on the price you'd like to pay, the amount you'd like to pay for it, make and model, year and the amount of miles, the body type, and features you'd like. If you've got a specific vehicle in mind , search to see the availability of it in your region. Take a look at the car you want to buy. After setting your sights on the car you want to own that will be parked for 30 minutes, you will be able to virtually tour the interior and exterior of the vehicle by clicking on the "get to work" tab. Here you can also get a better idea of the car's miles, specifications and available warranty. All Carvana vehicles come with a seven-day money-back assurance, as well as a one-year guarantee. Check your payment option. This page also outlines the expected cost for the vehicle in both,"pay-once" as well as the "pay once" as well as the "pay monthly" option. The "pay once" price considers the entire up-front cash price for the vehicle, which includes shipping. For those choosing for financing, "pay monthly" will reveal your monthly price in relation to your prequalification number. If you're interested in financing, consider this alternative here. Pick pickup or delivery once you have chosen your vehicle and paid your payment, you are able to decide if you'd like to have the vehicle delivered directly to your door or take it to any of 34 vending machines across the nation. If you live close to a vending machine and opt for this option, you will receive a personalized coin that after inserting it will free your vehicle off the tower and transport it to the delivery area. You now can drive off with your new car. The pros and pros and Carvana If the aim is to stay clear of in-person negotiations and shopping Carvana can be a wish that many drivers can realize. However, it's important to weigh the benefits and disadvantages of having a remote procedure. Advantages to Carvana The primary advantage of buying a car with Carvana is convenience. Since, yes, the idea of having your car to your doorstep is attractive, it's an excellent option for those who want to steer clear of the traditional car purchasing process altogether. If you bought your vehicle from an old-fashioned dealership, you will conduct some research ahead of time on the internet, talk to the salesperson, wander around the showroom and then walk away with a vehicle or return a day later. If you decide to purchase through Carvana you can decide on your vehicle in the morning and have your new set of wheels by sundown that night. This is a huge benefit for many buyers seeking to purchase their vehicle in the easiest way imaginable. The drawbacks of Carvana The most significant drawbacks customers might face result from the inability of getting an authentic feel for the vehicle from pictures alone. The warranty program does mean that you are able to return the car if it is not the best fit for you but the process for returning the vehicle could be a hassle. In contrast to the dealership there is no way to be able to take the car to a test drive prior to signing off. Another thing you can't get from pictures only is any exterior damage or the way certain features perform for you. Although Carvana cars are subject to an inspection that is 150 points long, you cannot experience the full-scale performance of an automobile unless you're in person. Review of Carvana These reviews posted directly on the Carvana website are mostly positive, and have a rating of 4.7 out of 5. A majority of reviews praise the "smooth and effortless" procedure. Others comment on the variety of vehicle prices available and quick loan preapproval. This is in line with the things Carvana prides itself on and remains the most popular choice for many motorists. Beyond the Carvana universe, however, there are some drivers that had a more negative buying experience. Reviews on Trustpilot have an average 3.7 score, which is less than Carvana's internal score. Common complaints include drivers having drive over 50 miles just to pick up their vehicles and unhelpful customer service reps. What can you do to ensure that you get the most efficient vehicle using Carvana As with any vehicle purchase, the most important thing to ensuring you get the best automobile experience is doing your doing your research. Be patient when you shop and comparing different cars. Look out for specific factors like MPG, and other technological features, and look for reviews from outside sources. In the 7-day time frame following buying your car, it is wise to bring the vehicle in to get inspected by mechanics. This way, you can avail Carvana's Carvana return policy if the car isn't perfect. Do I want to purchase my next vehicle from Carvana? The most important thing to remember is: If the thought a dealership brings stress to you, then stay clear of it and go for the non-contact option that leaves you with a new vehicle. If you're looking for the thrill associated with the most lucrative bargain and you're looking to get in the driver's seat to see if it's the right fit then Carvana may not be the right choice for you.

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Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers in navigating the ins and outs of securely borrowing money to purchase the car they want.

Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers gain the confidence to manage their finances through providing concise, well-researched, and clear data that reduces otherwise complex topics into manageable bites.

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What Is a Credit Score and What are the Credit Score Ranges?

Credit scores assess your probability of repaying new debt. Scores of 690 or above are generally considered to be good credit.

by Amanda Barroso Lead Writer | Credit scoring, budgeting personal finances Amanda Barroso is a personal financial writer she has joined NerdWallet in 2021 and focuses on credit scoring. She has also written data-driven studies and has was a contributor to the NerdWallet's "Smart Money" podcast. Before joining the team, Amanda worked for more than 10 years covering the issues that affect numerous Americans as well as writing at the Pew Research Center, a policy analyst at the National Women's Law Center and a professor at the college level. Amanda obtained a doctorate at The Ohio State University.

and Bev O'Shea personal finance writer | MSN Money, Credit.com, Atlanta Journal-Constitution, Orlando Sentinel Bev O'Shea is a former NerdWallet authority on consumer credit, scams and identity theft. She has a bachelor's level degree in journalism from Auburn University and a master's in education from Georgia State University. Prior to joining NerdWallet, she worked for daily newspapers, MSN Money and Credit.com. Her work has been featured throughout the world in The New York Times, The Washington Post, the Los Angeles Times, MarketWatch, USA Today, MSN Money and many other places. Twitter: @BeverlyOShea.

Updated Mar 28 2023

Edited by Kathy Hinson Lead Assigning Editor Personal financial, credit scoring, financial management and debt Kathy Hinson leads the Core Personal Finance team at NerdWallet. Previously, she spent 18 years with The Oregonian in Portland in capacities such as chief of the copy desk and team director of design and editing. Previous experience included copy editing and news for various Southern California newspapers, including the Los Angeles Times. She graduated with a bachelor's in journalism and mass communications at Iowa's University of Iowa.

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Credit scores affect all aspects of your life. For instance, the amount you can get from a loan or credit card, what interest rate you pay and whether you can get an apartment you want.

A higher credit score can give you access to greater credit options -- and with lower interest rates. People with credit scores that are higher than 775 or less typically have many options, including the possibility of obtaining no-interest financing for cars and for credit cards with 0% introductory interest rates.

It is important to understand how credit scores work and what the credit score ranges are.

What is an credit score?

Credit scores are a 3-digit number, generally on an scale from 300 to 850, that indicates how likely you are to pay back borrowed funds and pay off bills.

Credit scores are calculated using data about your credit account. The information is collected by credit-reporting companies, also called , and compiled into your credit reports. The three biggest companies comprise Equifax, Experian and TransUnion.

You don't have a single credit score -- you may have several and they probably vary slightly. This is because two large businesses calculate their scores. More on that in the following.

The best credit score you can receive is 850. However, there isn't much difference between the "perfect" score and an outstanding score when it comes to the rate and the types of products you are eligible for. That's why you shouldn't be anxious about achieving an 850 score, especially because scores can fluctuate frequently.

Find out how your credit is assessed

See your free score and the factors that impact it, as well as tips on how to keep building.

How can you tell the different of FICO score and VantageScore?

Two companies dominate credit scoring. It is the most well recognized score. Its principal competitor is . In general, both companies have a credit score range of 300 to 850.

Every business has different versions of its scoring formula, as well. The scoring formulas that are most often tend to be VantageScore 3.0 and FICO 8.

FICO and VantageScore draw from the same information, weighing the information slightly differently. They generally move in tandem When you have an excellent VantageScore, then your FICO will likely be very high too.

Why are my FICO score as well as my VantageScore different?

The score represents a moment in time and the score can fluctuate depending on the time you review it. The score you receive will vary based the credit bureau that provided the credit report data used to create it or the bureau supplied the data. Some credit companies do not send information about their accounts to the three bureaus, and so your credit report from each is distinct.

What are the credit score ranges?

Creditors establish their own standards for the scores they'll accept however, these are generally accepted guidelines:

A score of 720 or higher is usually considered to be a good score.

A score between 690 and 719 can be considered .

Scores ranging from 630 to 689 are .

Scores of 629 or less are

In addition to the credit rating, other factors such as your income or other debts could influence creditors decision-making on whether they will approve your application.

Did you even know...

The scoring in America United States varies a bit between the two main scoring models. The average FICO 8 score stood at 716 in August 2022. It was the same as a year earlier. [0] FICO Choices Blog . . Accessed on Aug 30, 2022.

Its VantageScore 3.0 mean was at 695 at the second quarter of 2021.

What are the factors that affect how your scores on credit?

The two major model of credit score, FICO and VantageScore, take into account the same elements, but weigh them in a different way.

In both models of scoring, two elements which matter the most are:

Paying bills in time. A misstep here can cost you dearly. If you're at least 30 days over the due date is recorded on your credit report for a period of time.

The amount you are owed. Credit utilization describes how much of your credit limit you are making use of. It is recommended to limit your use to less than 30 percent of your credit limit and lower is more beneficial. There are a variety of steps to

Much less weight goes to these elements, but they're still important to keep an eye on.

The more time you've had credit and the greater an average account's age, the better your score.

Credit mix Credit mix: Scores reward having more than one type of credit, such as the traditional loan and a , as an example.

How recently have you made an application for credit: If you make an application for credit, it could result in a temporary dip in your credit score.

Factors that don't affect your credit scores

There are some aspects that aren't included when calculating credit scores The majority of these have to do with demographics.

For example the race, ethnicity, sexual status or age aren't included in the calculation. Neither is your employment record -- which may include things such as your salary, title or employer -or the place you live.

How can you improve your credit score?

What is your credit score indicate? In one word creditworthiness. But what exactly does this mean? Credit scores are an attempt to determine your financial habits. This is why the factors that go into your score can also provide reliable ways you can build up your score:

Make sure to pay all charges at the time they are due.

Limit credit card balances to 30% of their limit and, in the ideal case, much less.

Maintain older credit cards open to ensure the age average of your accounts. You should also take into consideration the possibility of having a mix of credit cards as well as installment loans.

Space out credit application forms instead of making a large number of applications in a short period of time. Usually, lenders initiate an "hard pull" on your credit when you make an application, which will temporarily affect your credit score. Too many applications too close to each other could cause further damage.

There are several options to consider when starting out and ways to when you've got it established. Doing things like making payments towards your account balances a few times throughout the month and requesting higher credit limits could boost your score.

How can I examine and track my credit?

You can look up your personal credit score -- it's thereyou can know what the lender is likely to see.

You can obtain a score through a personal finance website such as NerdWallet that offers TransUnion VantageScore 3.0. Many personal banking apps also offer free credit scores, so you can make a habit of checking in when you log in to pay bills.

It's crucial to use the same score each time you take a look. If you don't, it's like trying to track your weight using different scales , or possibly shifting between kilograms and pounds. Choose an appropriate score and create a game plan to monitor your credit. Any changes that are made by one score are likely to be seen in other scores.

Be aware that, just like the weight of your body, scores change. As long as you maintain a healthy range, those fluctuations won't effect on your financial health.

You can protect your credit by contacting every credit bureau. It is possible to continue using credit cards, however you cannot apply for credit using your personal data because access is denied by freezing your credit. Freezing your credit is easy and takes only a few minutes, but it goes a long way in securing your finances.

>> MORE:

About the authors: Amanda Barroso covers consumer credit and debt at NerdWallet. She was previously employed at Pew Research Center. Pew Research Center and earned a doctorate at The Ohio State University.

Bev O'Shea is a former credit writer for NerdWallet. Her work has appeared in the New York Times, Washington Post, MarketWatch and elsewhere.

In a similar vein...

Dive even deeper in Personal Finance

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How do Prepaid Debit Cards Work ? And Are They the Right Choice For You?

Advertiser disclosure You're our first priority. Every time. We believe that everyone should be able to make sound financial decisions with confidence. And while our site doesn't feature every company or financial product available on the market however, we're confident of the advice we provide and the information we offer and the tools we develop are objective, independent simple, and completely free. How do we earn money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site) However, it doesn't affect our recommendations or advice that are based on thousands of hours of study. Our partners cannot promise us favorable ratings of their goods or services. .

What are the advantages of prepaid debit cards? Work ? And Are They the Right Choice for You?

Pay in advance for money on a prepaid debit card, and then utilize it at ATMs, or for purchases. The card can be reloaded by a variety of methods.

Written by Spencer Tierney Senior Writer | Certificates of Deposit, ethical banking, banking deposit accounts Spencer Tierney is a consumer banker at NerdWallet. He has covered finances for individuals since the year 2013, with a focus on certificate of deposit as well as other banking-related issues. His work has been highlighted in The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. The location of his work is Berkeley, California.

Updated on Mar 18, 2022.

Edited by Yuliya Goldshteyn Assistant editor Yuliya Goldshteyn is a bank editor for NerdWallet. She previously worked as an editor, writer and a research analyst in a variety of industries, from health care as well as market research. She earned a bachelor's degree in history from the University of California, Berkeley as well as a master's degree in sociology from University of Chicago, with an emphasis on Soviet culture and history. She is located within Portland, Oregon.

Read by Kathleen Burns Kingsbury Wealth psychology expert and coach Kathleen Burns Kingsbury, founder of KBK Wealth Connection and host of the Breaking Money Silence podcast, is an internationally published author and speaker. As an expert on financial psychology, Kathleen is a regular on the television, and her work has been highlighted by The New York Times, The Wall Street Journal, "PBS NewsHour,"" Money magazine, Today Money, Forbes and CNBC. Kathleen served as an adjunct faculty member of McCallum Graduate School from 2009 to 2019. McCallum Graduate School at Bentley University from 2009 until the year 2019 and currently teaches for the Champlain College. Champlain College.

At NerdWallet our content is put through a thorough . We have such confidence in the accuracy and quality of our content that we let outside experts examine our work.

A majority of the items featured on this page are provided by our partners who compensate us. This affects the products we review and where and how the product appears on a page. But this doesn't influence our evaluations. Our views are our own. Here's a list and .

A prepaid debit card acts as an alternative to the bank account, and only lets you spend the money that you put into the card. Similar to credit cards, debit cards work at any merchant that accepts their payment network, like Visa as well as Mastercard. They're more secure and easier to use than cash.

The majority of prepaid debit cards do not need credit checks, which means they're easy to get. If you're one of the estimated seven million U.S. households without access to an bank account, prepaid cards can be a solution to spend money safely without having to make use of a bank. Find out how to obtain the prepaid debit card you want and how they work.

How can I purchase a debit card that is prepaid?

It is possible to purchase an prepaid debit card at banks, a retail store and credit card company, or another financial service provider. When you purchase one, your card funds are usually in an account managed by a bank or credit union. Note that they can also be referred to as stored-value cards, pay-as-you go cards, or more formal general-purpose reloadable prepaid cards.

>> Do you want to look at comparing prepaid cards? Check out our list of

Nerdy Tip

If you need to build credit or have been denied a bank account, a prepaid debit card may not be the best option: , and if you're not able to open an ordinary checking account Try . These accounts give you another chance at the mainstream banking system and the benefits that come with it.

Credit Card for Savings and Cash Management. Money Market

A savings account is an account that lets you store money securely with interest.

Savings accounts are an account where you can store money securely with interest.

Member FDIC

SoFi Checking and Savings

APR 4.00 percent SoFi customers who have direct deposit can earn up to 4.00 percent annually-percentage yield (APY) on savings balances (including Vaults) and 1.20% APY on checking balances. There is no minimum amount of direct deposit that is required to be eligible for 4.00 percent APY on savings. Customers who do not deposit direct deposits will earn 1.20 percent APY on their total account balances in checking and savings (including Vaults). The rates of interest are subject to fluctuation and are could change at any point. The rates listed are current as of 03/17/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet

Min. balance required for APY $0

Member FDIC

Marcus by Goldman Sachs Online Savings Account

APY 3.75% 3.75% Annual percentage yield (annual percent yield) with a minimum balance of $0 to earn the stated APY. Accounts must be in a positive balance to remain open. APY is valid until 02/14/2023.

Min. balance to APY $0

Member FDIC

CIT Bank Platinum Savings

APY 4.75%

Min. balance for APY $5,000

They combine the services and features that are similar to checking, savings and/or investment accounts in one package. These accounts for managing cash are generally offered by non-bank financial institutions.

These cash accounts combine features and services that are similar to savings, checking or investment accounts into one product. These accounts for managing cash are generally offered by non-bank financial establishments.

on the Wealthfront website.

Wealthfront Cash Account

APY 4.30%

Min. balance required for APY $1

on the Betterment website.

Betterment Cash Reserve - Paid non-client promotion

APY 4.20 Percentage of annual percent yield (variable) is at 03/27/2023.

Min. balance for APY $0

CDs (certificates of deposit) are a kind of savings account with a fixed rate and term generally, they offer higher rates of interest than standard savings accounts.

CDs (certificates of deposit) are a form of savings account with an interest rate fixed and a term generally, and offer higher rates of interest than regular savings accounts.

Member FDIC

Marcus by Goldman Sachs High-Yield 10-Month CD

APY 5.05 percent 5.05 5 % APY (annual percent yield) as of 03/28/2023. Special Offer Ends 09/15/2023.

Ten months of term

CIT Bank CD with no penalty

APY 4.80 percent

Term 11 months

The deposits are FDIC Insured

Current Account

APR N/A

Monthly fee of $0

Chime Checking Account

APY N/A

Monthly fee $0

Member FDIC

Axos Bank(r) Rewards Checking

APY 3.30% The annual percentage yield could be up to 3.30% depending on the following combination rate-rewards Direct deposits (not including transfers between banks from an account) that total more than $1500 each month will earn 0.40 percent. A direct deposit that is eligible for a qualifying amount is required for the remaining rates to be eligible. Ten (10) point-of-sale transactions per month , using your Rewards Checking Visa(r) debit card for normal everyday purchases with a minimum of $3 per transaction, or registering for Account Aggregation/Personal Finance Manager (PFM) will earn 0.30 percent; and maintaining an average balance per day of $2,500 per month in the Axos Self Directed Trading Invest account will earn 1.00 percent; and maintaining the average balance per day of $2,500 a month on An Axos managed Portfolio Invest account will earn 1.00 percent; and making a monthly installment for an existing Axos Consumer Bank loan (commercial as well as business loans excluded) via the Rewards Checking Account earns a maximum of 0.60 percent.

Monthly fee: $0

Money market accounts pay rates that are comparable to savings accounts. They also have certain features for checking.

The money market accounts have rates that are comparable to savings accounts and have some features for checking.

Member FDIC

The Discover Bank Money Market Account

APY 3.50 percent

Min. balance to APY $1

How do prepaid debit cards function?

Prepaid cards can be found in a variety of different designs, but they tend to include these features:

Fees: You might be required to pay for activating or obtaining a credit card, depositing money and using out-of-network ATMs. It's common to have a monthly cost however, it is sometimes reduced by making direct deposits, as an example. Some cards charge an amount for each purchase as well as ATM transaction.

Options for reloading: One can generally add money to a credit card in various ways, including creating direct deposits, loading cash at participating stores and depositing checks at ATMs. Some cards also let you transfer funds online or make mobile check deposits via smartphones.

ATM access: Some Prepaid cards can access the free national ATM networks, such as MoneyPass and Allpoint, or to bank networks that are branded for cards issued by banks.

Limits on amounts Certain cards limit the amount you can pay, withdraw, or spend for a particular time period, such as one day or a month.

Protections: Prepay cards that can be reloaded come with the liability and fraud protections required of debit cards by federal law. Certain cards provide protection against purchases, but it can be difficult to dispute unauthorized transactions or correct errors. One safeguard many cards have is federal deposit insurance. This means that your funds are covered in the event the issuer goes bankrupt.

Expiration dates: Prepaid cards have expiration dates. The funds on the card shouldn't expire, however you'll need to get a new card prior to expiring so that you can continue using it. In a report released in 2016 released by the Consumer Financial Protection Bureau, some users complained about having money on their cards when they expired, but the issuer didn't issue cards that included those balances. If this happens to you contact the prepaid card company to determine if the issue can be resolved. If not, you can go to the CFPB website.

Other features: Some prepaid cards offer checks, bill pay and multiple copies of a card for family members. There are a few that offer rewards like money back when you purchase similar to the credit cards with rewards do.

Are you thinking that you might need a debit card the answer you're looking for? Read more about

Prepaid debit cards have limitations

Prepaid debit cards are characterized by significant limitations when compared to bank account and credit card. Although they typically have online services, many prepaid cards lack standard banking features, including a way to withdraw cash or reload it without cost. The money you load onto a card isn't likely to earn interest, either.

If you're looking to store cash in a safe place, and don't plan to take many withdrawals It's a good idea to find a high-rate savings account to hold your money. Debit cards that are prepaid won't impact your credit, so they don't aid in building it either.

There is no impact on credit scores As the debit cards that you purchase aren't credit cards, you can't build credit with them. To do this, you'd have to .

Lack of bank services: Prepaid cards don't automatically have all the features you'd expect with an account with a checking account, such as access to an ATM or branch network, mobile or online banking or banking services such as wire transfers as well as the option to stop the payment.

Previous horror stories: A number of Prepaid cards were affected by technology outages that lasted days or weeks. When RushCard's parent company switched the processor for its payments to Mastercard during 2015, a glitch in the technology caused the accounts of tens of thousands of customers out of their RushCard accounts for several days. The Walmart MoneyCard was shut down in 2016. Netspend resolved with a federal regulator over allegations that customers were prevented from accessing their accounts, providing refunds to those who were eligible.

If you're looking to open an account that doesn't have monthly charges, check out our selection of . They also offer accounts for those who have bad credit or banking histories.

When used for budgeting or as an alternative method to bank the money, prepaid debit cards will assist you in storing and spending money.

Prepaid debit cards vs. debit and credit cards

Here's a quick summary of the differences:

Credit cards with prepaid cards -- make payments before the card is loaded with money the card via cash check, direct deposit or a transfer from an account prior to paying for transactions. No checking account is required.

Credit cards: Pay now Pay now: You can use the funds directly from a checking account when making purchases or withdrawing money through an ATM.

Credit cards -Pay later: You can borrow cash from a financial institution when you use your credit card. Then, you pay the money back later.

Are you ready to explore your options? Look through our selections for the

Prepaid debit card alternatives

If a prepaid debit card isn't quite right for you, you can choose a more suitable alternative using the option of a checking account with no fees. Although certain checking accounts are subject to monthly fees There are a lot of institutions online offer accounts with no monthly fees and minimum requirements for balance, and there are options for those who have had issues with your bank account previously. Check out these three accounts which include one that does not require your (ChexSystems is the company that banks use to monitor clients who've had problems with their earlier account openings with banks).

NerdWallet's ratings are made by the editorial staff. The scoring formulas consider multiple data points for each financial product and service.

Monthly cost: $0.

Access to ATMs for free: More than 60,000 ATMs.

Bonus benefits Free overdrafts. No ChexSystems records check.

More information from Chime

Chime claims: "Cash withdrawal and third-party fees can be charged. Chime is a technology-based financial company, not a bank. Services offered by banks debit card issued by, The Bancorp Bank or Stride Bank, N.A. • Members of FDIC."

NerdWallet's ratings are determined by our editorial team. The scoring formulas take into account several data points associated with every financial product or service.

Monthly cost: $0.

Free ATM access: More than 43,000 ATMs.

Bonus features: Account pays interest.

The ratings of NerdWallet are formulated by the editorial staff. The scoring formulas take into account several data points associated with each financial product and service.

Monthly fee: $0.

Access to ATMs for free: More than 70k ATMs.

Bonus features: Account pays interest.

Author bio Spencer Tierney is a writer, and NerdWallet's expert on certificates of deposit. The work of Spencer Tierney has been featured on USA Today and the Los Angeles Times.

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See NerdWallet's recommendations for the best checking accounts.

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My Ditched Debt Story My Shiny Nickels

Advertiser disclosure You're our first priority. Every time. We believe everyone should be able to make financial decisions with confidence. And while our site does not include every company or financial product available in the marketplace We're pleased that the guidance we offer, the information we provide as well as the tools we design are objective, independent, straightforward -- and completely free. How do we earn money? Our partners pay us. This could influence the types of products we write about (and where those products appear on our website) However, it in no way affects our suggestions or recommendations that are based on many hours of research. Our partners do not pay us to guarantee favorable reviews of their products or services. .

How I Ditched Debt: My shiny nickels

By Anna Helhoski Senior Writer | Consumer finance, economic news, trends, student loan debt Anna Helhoski is a senior journalist who covers economic news and trends in consumer finance for NerdWallet. Also, she's an expert regarding student loans. The company was founded by NerdWallet at the beginning of 2014. Her work has appeared in The Associated Press, The New York Times, The Washington Post and USA Today. She was previously a reporter for local news in The New York metro area for the Daily Voice and New York state politics for The Legislative Gazette. She holds a bachelor's diploma in journalistic studies from Purchase College, State University of New York.

Published Apr 4, 2017 at 6:00 AM PDT

The majority or all of the products we feature are from our partners who compensate us. This impacts the types of products we feature as well as the place and way the product is featured on the page. But, it doesn't affect our assessments. Our opinions are our own. Here is a list of and .

This series by NerdWallet talks to individuals who have overcome debt using a combination of commitment, budgeting and wise financial decisions. The stories of these people may encourage you to .

My Shiny Nickels blogger Laura Dobbins and her husband, Randy, on a trip to Paris and a trip that they could afford following their getting out of debt.

In 2011, Sacramento, California-based IT manager Laura Dobbins, her husband and kids lived in a luxurious home that had all the trappings of wealth -but their finances revealed a different picture. They were in close to $40,000 debt and had billed so much on their credit card accounts that Dobbins was unable to pay for the cost of a plane ticket to an upcoming business trip.

Dobbins recognized that they had to alter their lifestyle. Dobbins and her husband, Randy started saving instead of spending and paying down their balances. They even reduced the size of their house and within less than 2 years they had become debt-free. She has since shared money-saving advice and details her debt payoff techniques on her blog . Here's the story.

What was your total debt before you started your repayment journey?

Laura Dobbins: 2011: $39,685 total, including $17,000 in credit card debt, $15,000 of auto loan debt and $8,000 of personal loan debt.

What is your total debt today?

In 2013, became debt-free. Today, still zero.

How did you end up in the position of being in

Ironically, it started in the year that I received my first major promotion and a salary increase. This doesn't sound like logical thinking from the outside, but do you make more money, and you end up in debt? Although it may sound odd it's "yes." We suddenly were able to accumulate all this extra money, and even though we were in an excellent home in a gorgeous middle-class neighborhood, we decided to put that extra income towards a bigger and better home in an upscale neighborhood. With that came the "need" for more furniture and a professionally-designed new backyard and an SUV just like the neighbors had, a gardener, and ... well, you get the idea. Instead of becoming wealthy we were funding the look of it. Every month. The downward spiral of debt had begun.

What triggered your decision to get out of debt?

It was a realization to realize that we couldn't get the $400 airfare to a business trip I was planning. For a long time, we had paid off the credit card only to have some credit for any unexpected expenses that occurred. That pattern finally ended when my boss instructed me to fly from St. Louis to St Louis for work. I looked over our credit card accounts to discover that we had credit of $90 (and the balance was $52 on our bank account). We'd managed to hide our financial status from the world for a really long time, and now it was finally bubbling to the surface. It was a nightmare.

What steps did you take to lessen your debt? What resources or services did you use?

We knew the first thing we had to do was break the cycle of having debt "rescue" our. So before we paid down any debt, we saved up a $1,000 emergency fund.

We also knew that in order to pay down the debt we accumulated in the shortest time, we needed to make more money. It was not the moment to relax and only throw $50 at our debt each month. This was an "hair's-on-fire and call the firemen" financial crisis, so we took a huge leap. Literally. We sold our huge home in the suburbs and relocated to a small 1,000 square foot house in a neighborhood that is primarily working class. The move alone has saved us more than $2,500 per month. (I'll calculate the numbers on your behalf: It's a savings of nearly $30,000 annually.)

We also started eating out less and found cheaper ways to enjoy ourselves as a family. With the extra cash each month we paid down the debt by using what's known as the "snowball technique." We began with the smallest credit card balance of $1,500 to gain a quick mental victory immediately and followed by paying the rest of our balances, starting with the smallest and ending with the most expensive. When we paid each debt off, the amount that used to go toward paying off those monthly debts was applied to the next one on the list. This "snowball" of cash which was going to the debt each month increased like insane.

What has changed in your life to the better after you have gotten out of debt?

We're happy. Truly, wonderfully, down-in-your-soul happy. When the debt was paid off and our house expenses were low that we had enough money to spend on things that mattered the most. It turns out that the massive suburban house didn't make us happy and we enjoyed traveling around the world does. We have saved a significant portion of money, yet enjoy the luxury of spending it when it's needed.

A several many years back, my husband was unhappy with his job as a toxic manager. With the money we'd saved, we bought our first business , which was the one of his lifelong desires. He quit his job and is now his own boss and is awed by it.

The freedom from debt offers more than just an euphoria of freedom It opens up possibilities you've never imagined.

How to approach your debts and begin paying it off

The method Dobbins recommends is the best option for those who need small victories to pay off bigger debts. But, the strategy where you prioritize paying off debts with high interest such as credit cards and payday loans before lower-interest ones such as mortgage, student and auto loans will assist you in paying off your debts quicker and reduce interest. This tells you how long it will be to eliminate one debt at a time.

To better manage your debts, consider debt consolidation, which combines multiple debts into one new one with a lower interest rate. Two possible methods for consolidation are a and a . Use a to estimate your interest rate.

Anna Helhoski is a staff writer for NerdWallet Personal Finance website. Email: . Twitter: .

About the author: Anna Helhoski is a writer and NerdWallet's authority in the field of student loans. Her writing has been featured in The Associated Press, The New York Times, The Washington Post and USA Today.

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Can I Apply for a credit Card If I'm unemployed?

Advertiser disclosure You're our first priority. Everytime. We believe everyone should be able make financial decisions without hesitation. While our website doesn't feature every company or financial product on the market, we're proud that the advice we provide, the information we provide and the tools we develop are objective, independent easy to use and cost-free. So how do we make money? Our partners pay us. This may influence which products we review and write about (and where those products appear on our site) However, it doesn't affect our recommendations or advice that are based on many hours of research. Our partners are not able to be paid to ensure positive ratings of their goods or services. .

Can I Apply for a Credit Card If I'm not employed?

Yes, provided that you still have access to income, but it does not have to be an annual fixed salary. Even when you don't have a source of income, you're not out of possibilities.

Written by Melissa Lambarena Lead Writer | Credit cards credit cards, debt Melissa Lambarena is a lead writer on the credit cards team at NerdWallet. She has been enthusiastically covering credit card related topics for more than six years. Her previous experience includes nine years as a content creator for several publications and websites. In her writing, she aims to assist readers in extracting the value of credit cards to meet financial goals like expanding their budgets, building credit, traveling to their dream destinations, and repaying debt. She explores these issues along with others in The Millennial Money column featured in The Associated Press. Her work has also been published on The New York Times, Chicago Tribune, The Washington Post, USA Today and Yahoo Finance, among others. Melissa holds a bachelor's degree of sociology, earned from the University of California, Los Angeles.

as well as Erin El Issa Senior Writer Personal finance, data analysis credit card Erin El Issa writes data-driven studies about personal finances, credit cards travel, investing, banking and student loans. She is a fan of numbers and hopes to simplify data sets in order to help people improve the quality of their lives financially. Prior to becoming the Nerd during 2014, Erin worked as an accountant for tax purposes and freelance personal financial writer. Erin's writing has been featured as a result by The New York Times, CNBC, The "Today" show, Forbes and elsewhere. In her free moments, Erin reads voraciously and tries in vain to keep on top of her two kids. Erin is from Ypsilanti, Michigan.

Updated Sep 23, 2021 8:29AM PDT

Edited by Kenley Young, the Assigning Editor Credit scores, credit cards Kenley Young oversees the daily coverage of credit cards on NerdWallet. Before that, he was a homepage editor and digital content producer for Fox Sports, and before being a front-page editor at Yahoo. He has decades of experience in both digital and print media, with stints as the chief of the copy desk as well as a wire editor as well as a metro editor for the McClatchy newspaper chain.

The majority or all of the products we feature are from our partners who pay us. This affects the products we feature as well as the place and way the product appears on the page. But, it doesn't influence our evaluations. Our opinions are our own. Here's a list and .

MORE LIKE THIS

In the event of unemployment, it doesn't automatically exclude you from applying for credit cards. Credit card companies are more interested in the amount of money you earn than your employment. They also take a look at your credit score, as well as existing debt.

You may be able to satisfy the income requirement without having a job by putting on your application any income you can access. If your earnings come to a halt, relax. You still have options to improve or maintain your credit.

>> MORE:

Find the most suitable card for your credit

You can check your score at any time, and NerdWallet will tell you which credit cards make the most sense.

In your application, you can list income from the applicant.

Think about the income you depend on to make it by while you're unemployed. If you're older than 21 it is possible to declare any income from your household to which you have the "reasonable expectation of having access." This can include income from your spouse or partner as well as other sources of nonwage income such as investment returns and Social Security payments. If you've lost your job, you may include unemployment benefits on your application.

>> MORE:

" It is the Credit Card Act of 2009 allows you to list any household income to which you have a reasonable expectation of access.' "

Getting approved for credit card approval is contingent upon your income, credit score and your , which is your current debt payment in percentage of your income. If you're approved, the credit limit will depend on your income and the debt-to-income ratio.

The Credit Card Act requires lenders to consider your ability to make your payments before you can apply for credit cards. That's why some also look into your obligations to pay like rent, mortgage, alimony or other debts.

>> MORE:

When your income isn't enough

If you're not earning enough money to be eligible for credit on your own but you're not shut out completely. Three options are available:

1. Request a secured credit card

A security deposit is required as collateral in case you fail to pay your bill. The amount you deposit will determine the credit limit. Due to the deposit, it's typically simpler to qualify for secured cards as opposed to a normal, unsecure card, and the income requirements may be less strict. You get your deposit back when you shut down the account or switch to a regular credit card.

>> MORE:

2. Recruit a co-signer with a excellent credit and a steady income

It's not common these days, but some -- a friend or family member who is willing to pay even if you aren't able to. It's still your responsibility for the payment The co-signer acts as a fallback. It's a huge gesture to request from someone. You'll want to keep up with your payments so that you don't harm the credit score of your co-signer as well as yours.

3. Become an authorized user on the credit card of someone else

A friend or family member is able to make you an account on their account. You'll get a card bearing your name on it that's linked to the account. They'll be the ones responsible for the payment. It is possible to negotiate the terms with them to decide on a spending limit and payment plan. Stick to the plan to not harm the credit score of the cardholder who is primary. You're now tied to the credit rating of their card, so it could impact you, too.

>> MORE:

Nerdy Tip

In recent times, a variety of"so-called" cards have been introduced to the market, promoting nontraditional underwriting policies to assess creditworthiness (aside from evaluating FICO scores on their own). While these cards may be good options for those who have a limited or no credit, you'll still have to meet income requirements, like traditional credit card issuers.

You may be able to apply for credit cards while you are employed, but is it a good idea?

It all depends on your personal situation.

If you're seeking access to credit merely in order to pay for your important expenses, exercise be cautious. Credit card debt is notoriously expensive. If you have savings that you can access or a friend who is willing to give you a loan until you get a new job, these could be more viable options.

If you're attempting to apply for a credit card in order to purchase a product, and you have the funds to cover the cost each month, it could make sense for you. Here are some types of cards to consider first:

Some cards provide 12 to 18 months of interest-free credit card swiping however you'll likely require at minimum to be eligible (typically at least 690 or more). Keep in mind that you still need to pay at least the minimum monthly payment. True 0% APR offers, by the way differ from those where retroactive interest will be assessed if you don't pay the balance in full prior to the time the time that your 0% rate ends.

If you are (FICO scores of at minimum 630) or have good credit, but it will take you longer than the typical APR of 0% to repay your debtyou should consider a credit card that has an interest rate that is low every day could be a viable option. "Low rate" credit cards are still expensive when compared to other kinds of credit, but they can save you cash when compared to .

A credit card balance isn't the best option, especially if you don't earn a steady income. But if you need one to pay for essentials consider low-interest alternatives and ensure you are able to make at least the minimum monthly payment until you find an opportunity to work.

Bottom line

The fact that you're unemployed doesn't need to be a barrier to credit card approval if you have a good credit score and an income source that you can use to pay the bills. But whether you're unemployed or you have a job and a credit card, make sure to use it prudently. Don't spend more than you're willing to pay, and aim to pay off your balance in full each month to avoid paying interest. If this isn't feasible given your current employment status, make a plan to pay off the balance as soon as possible after you return to work.

Authors' Bio: Melissa Lambarena is a credit cards writer at NerdWallet. The work she writes for has been featured by The Associated Press, New York Times, Washington Post and USA Today.

Erin El Issa is a credit cards expert and studies writer at NerdWallet. Erin's work was featured in USA Today, U.S. News and MarketWatch.

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