The best cheap credit card is Chase Freedom Unlimited® because it has a $0 annual fee, an introductory APR of 0% for 15 months and ongoing rewards of 1.5 - 5% cash back on purchases. The Chase Freedom Unlimited card also offers an extra 1.5% cash back on everything you buy, up to $20,000 spent in the first year. That could result in up to $300 in additional cash back. Just bear in mind that the card does have a high regular APR, so you should try to avoid carrying a balance from month to month after the introductory promotion expires.
Overall, the cheapest credit cards – those with no annual fee, good ongoing rewards and long 0% APR offers – are reserved for people with good credit or better. If you don’t qualify, one of the cheapest credit cards for limited credit history is the Petal® 2 Visa® Credit Card, which has a $0 annual fee. Similarly, one of the best cheap credit cards for bad credit is the Capital One Quicksilver Secured Cash Rewards Credit Card because it has a $0 annual fee and great rewards.
The best credit card for low income applicants is the Upgrade Credit Card because it has a $0 annual fee and offers 1.5% cash back on all purchases. You might also receive a cash back bonus if you get an Upgrade Rewards checking account around the same time as the credit card and then make a few debit card purchases. The Upgrade Credit Card requires fair credit or better for approval and guarantees a credit limit of at least $500.… read full answer
There is no official minimum income requirement for getting a credit card, though most credit card issuers impose their own limits. The goal is to ensure that you have enough income or assets to afford the card’s monthly payments. Your assets are anything of value that you own, such as a car or real estate. In general, you should be able to get a credit card with an income as low as $10,000 per year if your debt-to-income ratio is low enough.
If you have a low income, you might only be approved for a modest credit limit. Credit card issuers determine spending limits based on what minimum monthly payment you can comfortably afford given your annual income. For example, if you have around $100 of disposable income per month and you apply for a credit card with a 5% minimum monthly payment, then your credit limit will likely be around $2,000, since 5% of $2,000 is $100.
A 5% APR is good for pretty much all types of borrowing, except for mortgages. On personal loans, credit cards, student loans, and auto loans, 5% is much cheaper than the average rate. You probably won’t be able to get a rate this low unless you have excellent credit, though - and it’s unlikely to even be offered in the case of credit cards.… read full answer
5% Is a Good APR For:
A 5% APR is very good for a credit card. You’re unlikely to find an ongoing rate this low, though. The average credit card APR is 20.16%.
A 5% APR is very good for a personal loan. APRs on personal loans tend to range from around 4% to 36%.
A 5% APR is very good for auto loans. APRs on auto loans tend to range from around 4% to 10%, depending on whether you buy new or used.
5% Is NOT a Good APR For:
A 5% APR is not great for a mortgage. The average 30-year fixed mortgage rate is around 3%.
A 5% APR is not great for federal student loans, which tend to have rates from around 3% to 5%. It’s decent for private student loans, whose rates range from 1% to 12%.
Your credit score could increase by 10 to 50 points after paying off your credit cards. Exactly how much your score will increase depends on factors such as the amounts of the balances you paid off and how you handle other credit accounts. Everyone’s credit profile is different.
How Paying Off Credit Cards Affects Your Credit Score
Your total debt goes down, helping your credit score.
Paying off your credit cards reduces your overall debt, which puts you in a more stable financial position and thus typically leads to credit score improvement. If you go from having a lot of credit card debt to having no credit card debt, it will likely result in a more significant increase in your credit score.
Your credit utilization goes down, which raises your credit score.
The general rule is to maintain a credit utilization ratio below 30%, so going from very high utilization to 0% in a single payment could give a considerable boost to your credit score. On the other hand, someone who hasn’t used much of their credit limit might see only a minimal credit score gain when they pay in full.
Neglecting other bills while you’re paying off your cards could negate your progress.
The plan to pay off your credit cards should include a budget that leaves enough money for you to pay your other bills every month. Late or missed payments for things like your rent or car loan could be reported to the credit bureaus and quickly erase any credit score progress.
Closing a paid-off credit card could hurt your credit score.
An open credit card with a $0 balance can still help your credit. On the other hand, closing the account reduces your total available credit and could decrease the average age of your credit accounts, which in turn will likely negatively affect your credit score. This is especially true for credit cards you’ve had for a long time.
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