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When shopping around for lending options for a major project or immediate financial need, a personal loan might be on your list. And besides the interest rates and terms, the loan amount is a large determining factor in which option you decide to go with.

So how much can you get for a personal loan? Whether you’re looking for a large personal loan or a small one, the lending criteria is the same. Let’s take a look at how much lenders typically offer, what factors play into the size of a personal loan that you can get, and when it makes sense to get a personal loan.

How Much Do Lenders Offer?

How much can you get for a personal loan? Amounts vary by lender, but typically start as low as $600 and go as high as $50,000. Some lenders, including SoFi, offer personal loans up to $100,000.

The amount you actually get approved for depends on a handful of criteria, which we’ll dig into below.

Recommended: Can I Increase My Personal Loan Amount?

What Determines How Big of a Personal Loan You Can Get?

The amount a lender offers and the amount you qualify for aren’t always one and the same. There’s a handful of financial and credit criteria that can impact the loan amount, rates, and terms. Let’s look at the main factors:

Credit Score

In general, the higher your credit score, the larger the loan amount, the more favorable the terms and interest rates. On the flip side, the lower your credit score, the smaller the loan amount, and the less favorable your terms and interest rates.

Lenders usually have credit score requirements. The minimum required credit score for a personal loan varies but can start at 580. To get the best terms and rates, you usually need a credit score of at least 640.

Recommended: Can a Personal Loan Hurt Your Credit?

Debt-to-Income Ratio

Your debt-to-income ratio (DTI) is your monthly debt payments divided by your gross monthly income. It’s expressed as a percentage. For example, let’s say your monthly income (before taxes, withdrawals, and other deductions are taken out) is $5,000, and your total debt obligations are $2,000. In that case, your DTI is 40%.

For the most part, lenders would like to see a DTI no higher than 35% to 40%. But if you have a high credit score, you might get approved with a slightly higher DTI.

Lender Amount Limits

The amount you can borrow may be limited by how much funding you can receive from your lender. Let’s say your credit is stellar, you have low DTI, steady employment, and a good income. But if the lender’s max personal loan amount is $50,000, then the most you can potentially borrow is $50,000.

Applying as An Individual or Jointly

If you’re applying for a personal loan with another applicant and their credit is strong, you might be eligible to borrow more money. However, not all lenders let you apply jointly, so you’ll want to check beforehand.

Income and Employment History

How much you can borrow also depends on your income and employment history. If you bring in a certain amount of money and have steady work for the last few years, that could boost the approval amount.

Some lenders may give more weight to your income and employment history. In turn, you might be able to get a higher loan amount with a lower credit score and a higher debt-to-income ratio.

Collateral

Not all personal loans require you to provide a valuable asset, such as your home or car, to back up the loan. But if you’re looking into a secured loan, you might be able to get a higher max amount on your personal loan than if you went the unsecured loan route.

Offering collateral and getting a secured loan means you could get a bump in your personal loan amount. Remember, not all lenders offer secured personal loans. If a lender does offer both secured and unsecured loans, you can compare quotes from the same lender for either option.

Loan Purpose

A lender might only allow you to use the loan for certain purposes. For instance, some lenders specialize in credit card debt consolidation loans. Lenders that offer greater flexibility might have limits on how much you can borrow depending on the loan purpose.

For example, the limit on using the loan proceeds for childcare expenses and large purchases might be different than if you’re planning to use the funds toward a major home improvement project.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi Personal Loans come with no-fee options, and no surprises.

Calculating How Much You Can Borrow

Determining how much you can borrow requires you to know your financial situation, how much you’d like to borrow, and what you can reasonably afford to pay off on a regular basis.

To start, jot down the repayment term and rate you anticipate receiving. If you get prequalified, that can give you a fair estimate on your loan amount.

Next, you’ll want to figure out the following numbers:

•   Income before taxes.

•   Additional income you get on a regular basis (i.e., rental property income, alimony, disability benefits).

•   If you’re filing jointly, you’ll also need to include the other applicant’s income.

•   Tally up your existing debt. This might include credit card debt, other personal loans, a car loan, or student loan debt.

That can help you figure out how much you can afford for your monthly payment.

How to calculate your borrowing power

If you’re mulling over the possibility of debt consolidation, you can use a handy personal loan calculator to gauge how much you’d save on interest or how much your monthly payment will be lowered by rolling over your existing debt to a new one.

Otherwise, you can punch in basic numbers, such as the loan amount, interest rate, and repayment term, to figure out what your monthly payment shakes out to.

Recommended: Pros and Cons of Personal Loans

Does a Personal Loan Make Sense?

Personal loans do have the word “personal” in them. So whether it makes sense for you to take out a personal loan depends on your unique situation and circumstances.

Here are some scenarios where getting a personal loan might be a good idea:

•   You need a large sum upfront. If you need a chunk of cash for a big-ticket purchase or to fund a home improvement project, a large personal loan can provide you with the money to cover a purchase.

•   You have a good credit score. The higher your score, the higher the loan amounts, and the better your rates and terms will most likely be.

•   You’re using the funds for something you really need. If you need the money to cover a financial shortfall, unexpected emergency, or much-needed home remodeling project, it could be a sound move to take out a personal loan.

•   You need the money quickly. The processing and funding times for a personal loan can be a lot faster than other funding choices, such as a home equity loan or HELOC.

•   You want to consolidate high-interest debt. If you qualify for a lower interest rate, lower monthly payments, and more flexible repayment terms, it could make financial sense to take out a debt consolidation loan.

Now, let’s walk through instances when a personal loan may not make sound financial sense:

•   You can’t keep up with monthly payments. If you’ve looked at your situation, do the math, and realize that you’ll have a hard time staying on top of your monthly payments, then a personal loan might not be the right choice for you at the time.

•   You have time to save for your major purchases and goals. If you aren’t in a financial pinch and don’t need the money right away, you might be better off saving instead.

•   You don’t need to take out a large amount of money. Unless you have good reason to take out a sizable amount of cash, then it probably doesn’t make financial sense to get a personal loan. Other options, such as a personal line of credit, might be a better move.

Alternatives to Personal Loans

If you’re on the fence about taking out a certain type of personal loan, know that other options exist. Here are other routes to take:

Credit card. If you’re already shouldering a lot of credit card debt and are paying a lot in interest fees, this might not be the best choice for you. But if you need to borrow a small amount — and can reasonably pay off your balance in a short amount of time — then a credit card provides easy access to funding.

Personal line of credit. Don’t need a lump sum upfront and anticipate needing to tap into funds for different purposes? Then a personal line of credit, which is similar to a credit card, might be a better fit.

Peer–to-peer loan. If you’re struggling to qualify for a personal loan with a traditional lender, you might have better odds of getting approved for a peer-to-peer (P2P) loan. Instead of being funded by a financial institution, P2P loans are funded by individuals who serve as investors and are loaning the money. The lending criteria for P2P loans tend to be less stringent than traditional loans.

Home equity loan or home equity line of credit (HELOC). If you’re a homeowner who has built equity in your home, you could qualify for a home equity loan or home equity line of credit (HELOC). Because you are offering your home as collateral, you typically can qualify for higher loan amounts. Plus, home equity loans or HELOCs tend to have less stringent lending criteria.

If possible, consider waiting to take out a personal loan until you’ve worked on building your credit, reduced your debt loan, are earning a higher income, or have a more stable employment history.


💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

The Takeaway

How much of a personal loan you can get depends on a handful of factors, such as what’s available from the lender, your credit score, debt-to-income ratio, and employment history. Plus, it’s important to get your head around what you can reasonably afford to pay each month.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What is considered a large personal loan?

Most lenders offer a maximum personal loan amount of $40,000 to $50,000, and some lenders, including SoFi, offer lending amounts of up to $100,000. But just because a lender offers that doesn’t mean you’ll get approved for it. You’ll also want to be mindful about not taking on more than you need.

How much is too much to ask for a personal loan?

There’s no specific number that constitutes “too much” for a personal loan. That said, an amount might be considered too high if you don’t have a good reason to take out that much money and if you aren’t able to afford the monthly payments.

Does the size of a personal loan affect a credit score?

As your personal loan payments are reported to the three major credit bureau agencies, the size of your personal loan can impact your credit. Your payment history is the largest contributing factor, but loan size can also influence your score.

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Photo credit: iStock/Ridofranz

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Learning how to achieve and maintain a good credit score is a crucial part of your financial health. Not only can it be a badge that says your financial life is in good shape, it can also help you access credit and get approved for loans and insurance at more competitive rates. Being approved for lower interest rates and premiums can in turn save you tens of thousands of dollars over your lifetime.

A solid credit score can also have other perks, such as helping you get approved for products with better features, such as rewards credit cards.

While there’s no one size fits all solution on how to keep a good credit score, there are some best practices you can follow. Read on to learn more about this topic and actual tactics, including:

•   What is a credit score?

•   How can you maintain a good credit score?

•   What are tips to keep your credit score high?

•   How can new credit card users establish a credit score?

What Is a Credit Score?

A credit score is a three digit number ranging from 300 to 850 that is an indicator of your credit behavior. Your score is calculated based on your credit history from all three credit bureaus — Experian, Equifax, and TransUnion — and is based on how lenders may perceive your risk as a borrower.

What exactly does that mean? By reviewing your past use of credit, your score reveals if you are more or less likely to pay back your loans on time. If you are more likely to repay your debts in a timely manner, the less risky you are.

The higher your credit score, the more creditworthy you are in the eyes of lenders.

What Affects Your Credit Score?

Several factors can affect your credit score, such as your payment history, the number of loan or credit applications submitted, and the age of your accounts you hold. There are also different scoring models, such as FICO vs. VantageScore. Each weighs factors differently to arrive at a credit score. Meaning, there may be some differences in your credit score.

Lenders may look at one credit score or all of them, plus different qualification criteria when deciding whether to approve you for a loan and at what interest rate.

How Is Your Credit Score Calculated?

Though there are different credit scoring models, most use similar financial behaviors to calculate them.

They’re grouped in the following categories:

•   Payment history: This factor is one of the most important factors in your credit score as it assesses whether you’re likely to pay your loan on time. Credit scoring models will look into current and past account activity, including any late or missed payments.

•   Amounts owed or available credit: The percentage of the available balance you’re using is your credit utilization. The more you are using available credit in your revolving accounts (like your credit cards and lines of credit), the more it could appear you rely too much on credit. This can make you look like a risky person to whom to lend.

•   Age of credit history: The longer your credit history, the more a lender can look into your credit behavior. It’s usually considered good to have a long credit history vs. a very short or recent one.

•   Account types: Having a different mix of loans offers more insight into how you handle various accounts. Credit-scoring models may not, however, use this as a major factor when calculating your score.

•   New or recent credit: The more recent applications you submit for new loans or credit accounts, the more risky you may appear to be. That’s because it may look like you need to rely on credit; that you are quickly trying to acquire different forms of access to funds.

(There are some exceptions, such as shopping around for mortgages within a short span of time.)

8 Tips for Maintaining Your Credit Score

Understanding the importance of a good credit score and what goes into it can help you protect the one you have. The following are eight suggestions on how to maintain a good credit score.

1. Pay Your Credit Card Bills on Time

Ensuring you’re on top of your bills (not just your credit cards) will help keep a positive payment history in your credit reports. This is the single biggest contributing factor to your credit score at 30% to 40%. Consider setting up automatic payments or regular reminders to ensure you’re paying on time.

2. Keep Your Credit Utilization Low

Your credit utilization is the percentage of the available limit you’re using on your revolving accounts like credit cards. Basically, you don’t want to spend close to or at your credit limit. A good rule of thumb to follow is to now use more than 30% of your overall credit limit.

So if you have one credit card with up to $10,000 as the limit, you want to keep your balance at $3,000 or lower.

3. Maintain Credit History With Older Credit Cards

Even if you don’t use your older credit cards that often, keeping them open means you can maintain your long credit history. Consider charging a small or occasional amount, whether an espresso or gas station fuel-up, to ensure your account stays open. This can reassure prospective lenders that you have been managing credit well for years.

4. Apply for a New Card Only When Important

Consider this as you try to keep a good credit score: Go slow. Since credit-scoring models look at the number of times you apply for new credit, only open one when you really need it. Stay strong in the face of offers to get free shipping or 10% off if you sign up for a card that many retailers promote.

Spreading out your applications is a good idea rather than regularly or heavily putting in a lot of card applications. By moving steadily and choosing a credit card and other types of funding carefully, you likely won’t raise red flags, such as that you need to rely heavily on credit.

5. Frequently Check Your Credit Reports for Errors

Mistakes can happen, and errors in your credit reports could negatively affect your score. You can get your credit reports for free at AnnualCreditReport.com from all three credit bureaus.

It’s wise to check your credit scores regularly, which won’t impact your score. If you see an error — whether it’s an account you don’t own or a bill marked unpaid that you know you took care of — dispute it as soon as possible.

6. Make Payments in Full When Possible

Making payments in full will help you maintain a positive payment history and lower your credit utilization. Both of these can maintain your creditworthiness and save you money on interest charges.

7. Don’t Close Old Credit Cards

Closing your old credit cards could shorten your credit history. It could also increase your credit utilization because it will lower your available credit limit. Even if you make the same amount in purchases, your credit utilization would go up when your credit score updates.

For example, if you currently have an overall credit limit of $28,000 and you have $7,000 in credit card balances, your credit utilization is 25%. If you close a credit card which had a $7,000 limit, you then lower your total available credit to $21,000 your credit utilization will go up to 33%.

8. Live Within Your Credit Means

It can be hard to say no to an invitation to try a pricey new restaurant or not tap to buy when scrolling through social media. But when you let your spending get out of hand, you may use your credit cards too much. It can feel like free money in the moment — but you still have to pay it back. If you overextend yourself, you may find it hard to pay your balance on time and risk a late or missed payment.

Instead, spend only what you can afford and try to avoid lifestyle creep (having your spending rise with your pay increases or even beyond them). That can help provide some guardrails for using credit cards responsibly.

Establishing a Credit Score for New Credit Card Users

Trying to establish a credit score can be a challenge since, ironically enough, you need credit to build credit.

If you are in this situation, there are several options to pursue, such as the following:

•   Open a secured credit card: A secured credit card is one where you’ll put down a refundable cash deposit that will act as your credit line. You can use this to establish credit and apply for an unsecured credit card. Some issuers will upgrade you once you make consistent on-time payments for a predetermined amount of time.

•   Apply for a credit builder loan: These types of loans are specifically geared towards helping you establish and build credit over time. Instead of getting the loan proceeds like a traditional loan, the funds are held in an escrow account until you pay back the loan in full.

•   Become an authorized user: You can ask a loved one, like a parent or even a close friend, if they’re willing to add your name on their credit card account. Doing so means the credit account will go in your credit history. Of course, that doesn’t give you access to use their account without restraint. The guardrails can be established between you and the original card holder.

The Takeaway

Maintaining a good credit score (and keeping that score high over time) comes with perks such as increasing the likelihood of getting approved for loans at more favorable terms. You might qualify for lower interest rates, saving you a considerable amount of money over time.

Using a credit card wisely is one of the ways you can build and maintain your credit score. But that’s not all there is to opening a credit: You also likely want one with great perks.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How can I maintain my credit score?

You can maintain your credit score by consistently making on-time payments, keeping a low credit utilization, and limiting applications for new credit.

Why is it important to maintain a good credit score?

Maintaining a good credit score can help increase the chances of getting approved for loans with more favorable rates and terms. It can also mean lower insurance premiums.

How can I maintain a good credit score without debt?

You can maintain a good credit score by paying off all your credit card balances each month so you don’t carry that kind of debt. Keeping older accounts open and using them occasionally can also contribute to a good credit score.

What can I do to build a good credit rating?

You can build a good credit rating by ensuring you’re making payments on time, not using all your available credit limit, and being careful in applying for new loans (that is, don’t apply for too many lines of credit too quickly). These are some of the best ways to achieve and maintain a good credit rating.

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Photo credit: iStock/PeopleImages

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .


External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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If you’re like many Americans, you swipe and tap your way through your day, using your credit card for everything from that morning latte to that late-night movie download. And, of course, for other purchases and services, from plane tickets to Pilates classes. That spending can add up, but using a rewards credit card can help make those expenditures pay off.

How rewards credit cards work: They pay the cardholder back with bonuses based on a small percentage of the amount spent. You’ll find different offers from credit card issuers in terms of how you can earn and redeem rewards, so you may want to review a variety of programs to see which ones best suit your style and needs.
In this guide, you can get a good grounding in how these programs work, including:

•   What are different types of credit card rewards?

•   How can you make the most of credit card rewards?

•   How do you redeem credit card rewards?

Types of Credit Card Rewards

What credit card rewards are, specifically, depends on the type of rewards your specific credit card pays out. The credits earned for making purchases can come in the form of cash back, points, or airline miles.

By reviewing the options below, you can better understand what kind of rewards might suit you best. This can help you get ready to apply for a new credit card.

Cash Back

For cash back rewards cards, reward earnings are based on a percentage of the amount charged to the card. The rate of earnings can typically range from 1% to 5%. In some cases, you’ll earn a higher rate for an introductory period or on a particular category of spending for a specific period of time.

Calculating what the rewards rate equals as money back can be simple for cash rewards: Just apply the cash-back percentage to total spending on the card.

•   Example: If you had a credit card that offered 2% cash back on all purchases, you’d earn $2 back for every $100 you spent using your card.

In some cases, cardholders will earn a flat rate across all purchases made with the card. But a rewards credit card may offer tiered earnings, as briefly noted above. This means the percentage back will vary depending on the category of purchases or the total amount spent during the year.

Recommended: What is a Charge Card

Travel Miles

As the name suggests, this type of rewards credit card allows you to earn airline miles in exchange for your spending responsibly with a credit card. You can either get a card affiliated with a specific airline or a more general travel rewards credit card.

It’s possible to earn a fixed rate of miles for every dollar spent, or you might earn more miles through spending in certain categories.

•   For instance, you might earn a mile per every dollar spent. Or you could get one mile per $1 in all purchase categories with the exception of travel costs, where you’d earn three miles per every dollar spent.

While they’re called miles, these rewards don’t necessarily translate to airline miles traveled. Rather, you typically redeem the miles you’ve earned to help cover the cost of flights or other travel-related expenses, such as hotel stays.

Unlike cash back rewards, where the value is pretty straightforward, the valuation of airline miles can vary by card. This is worth evaluating when deciding between credit card miles or cash-back rewards. The value of an airline mile can usually range from just under one cent per mile up to around two cents.

Points

Another way to earn credit card rewards is by getting a certain number of points for every dollar spent using the card. You can then redeem those points in a variety of ways, such as in the form of cash back, merchandise, travel purchases, gift cards, and even events.

Credit cards that reward cardholders through credit card points will pay out a certain number of points for every dollar spent on the card. Some considerations:

•   They might offer bonus categories, where cardholders can earn more points for every dollar spent in that particular category.

•   For some cards, earned rewards points may have a set redemption value — for example, every 10,000 points might be worth $100 in flight or merchandise redemptions. However, redemption rates can depend on the type of reward you choose. For instance, there might be different points requirements for flights as opposed to merchandise.

Given these scenarios, cardholders may have to be strategic. They may want to consider the type of reward they select and the actual cost of their selections to get the best bang for their buck.

How to Optimize Credit Card Rewards

It’s clear that the returns you can earn when using a rewards credit card can vary tremendously. But in addition to choosing a rewards card with the best earnings rate, there are other ways to take maximum advantage of credit card rewards.

Find the Best Card Based on Individual Spending Habits

Some rewards cards accrue points on a flat-rate basis. This means points or miles are awarded at the same rate regardless of what an individual charges to their credit card.

Others, however, offer higher levels of earning for different spending categories. For instance:

•   Some cards may offer more points per dollar spent on groceries or gas.

•   Other rewards credit cards may provide more miles back when an individual spends on flights or hotels.

For people who tend to concentrate spending on specific categories, some cards may offer added value back. Before signing up, it’s worth taking the time to assess the different types of credit cards you may qualify for and which will be most valuable given your spending habits and the kind of rewards that would be most beneficial.

Max Out Available Promotions

Some rewards credit cards offer higher introductory earning rates, as noted above. This means you can earn more points than usual for a set amount of time or up to a specific spending threshold.

Other promotions may be offered as well, such as greater earnings during a specified time period. Enjoying credit card bonuses like these is key to making the most of credit card rewards.

For instance, you may want to time big-ticket items and other purchases to take advantage of those greater returns.

One important caveat: While offers to earn more rewards certainly seem attractive, it’s wise to ensure that spending is within your budget. That’s because carrying a credit card balance may incur interest and/or penalties that can cancel out the value of any increased earnings. Avoiding interest on credit cards requires paying off your balance in full.

Be Strategic About Redemptions

Given the variability in the value of rewards points, it’s a good idea to crunch the numbers before redeeming. This is especially true because fluctuating prices and redemption promotions can help to stretch earned rewards further. And who doesn’t want to squeeze as much value as possible from their rewards?

•   Get the timing right for your needs. For example, using points to book a $200 short-haul flight may not optimize the value of your reward. But booking that same route at the last minute may be considerably more expensive. In such a case, if you have to travel ASAP, using those points may yield considerably more value.

•   You might also use points for a statement credit redemption. This means the points can be translated into cash that is applied to your credit card balance.

This can be especially helpful if there’s a month where money is tight and you are concerned about meeting your minimum payment. Applying your rewards could help you keep your account in good standing.

•   Be aware that rewards programs may have redemption minimums. This could mean that, say, you need to accrue a certain dollar amount or number of points so you can use your reward. For instance, maybe you have $20 in rewards that you want to use to help meet your credit card statement’s minimum payment. If your card only allows you to redeem rewards when you reach a threshold of $25 or 2,500 points available, you will be out of luck. You’ll need to earn more rewards before you can use them.

•   Also look for redemption promotions or opportunities to redeem for the highest-value choices. This can help you get the most out of a rewards credit card.

Redeeming Credit Card Rewards

Once you’ve racked up some credit card rewards, it’s time to redeem them. Here’s how:

1.    Log into your credit card app or portal. You can usually find your rewards listed somewhere on the main page, though the exact placement depends on your credit card issuer.

2.    Click on your rewards balance. You should be able to see your total available rewards, as well as your options for redemption.

3.    Choose how you want to redeem your rewards. Options for redemption may include a statement credit, a check, merchandise, gift cards, or travel, depending on your specific credit card.

4.    Move ahead with redeeming your rewards. Once you select the option to redeem your rewards, that amount will get deducted from your balance. How long it takes to receive your rewards will depend on how you chose to redeem them.

Do Credit Card Rewards Expire?

It is possible for credit card rewards to expire. However, whether your rewards will expire — and how soon their expiration date will arrive — depends on the type of credit card rewards and your credit card issuer.

•   Airline miles and hotel points often expire (though not always).

•   Points or cash back earned through your issuer’s program are less likely to expire.

•   In some cases, your rewards might even get automatically credited to your account if you forget to redeem them or haven’t used your account in a while.

Check your credit card’s terms and conditions to find out how your credit card works and what the rules are for your credit card rewards.

Once you know the details, you will likely want to stay aware of any expiration date, just as you probably pay attention to when your credit card payments are due.

The Takeaway

Getting rewards — whether in the form of cash back, points, or travel miles — when you spend money is an attractive proposition. However, when it comes to how to take advantage of credit card rewards, you’ll need to do more than just swipe your card. You’ll want to be strategic about earning and redeeming your points to get the most benefit. You’ll also likely want to make sure to max out any promotions that are available.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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There is a sinking feeling in your gut that comes with credit card debt, especially when it starts to feel unmanageable. While negotiating a credit card settlement might not sound like a fun solution, there are scenarios when it may make sense. Let’s dive in.

The Difference Between Secured and Unsecured Debt

First, let’s talk about the type of debt a credit card typically is. When a credit card company issues a credit card, it’s taking a big chance on getting its money back, plus interest. It’s more than likely that the credit card you have is considered “unsecured.”

All that means is that it isn’t connected to any of your assets that a credit card company can seize in the event that you default on your payments. Essentially, the credit card company is taking your word for it that you are going to come through with the monthly payments.

Secured debt works a bit differently. They’re backed by an asset, like your car or home. If you default on a secured debt, your lender could seize the asset and sell it to pay off your debt. Mortgages and auto loans are two common types of secured debt.


💡 Quick Tip: With lower fixed interest rates on loans of $5K to $100K, a SoFi personal loan for credit card debt can substantially decrease your monthly bills.

Credit Card Debt Negotiation Steps

The process of negotiating credit card debt usually begins when you have multiple late or skipped payments — not just one. A good first step is to find out exactly how much you owe, and then research the different options that may be available to you. Examples include a payment plan, an increase in loan terms or lowered interest rates.

Once you have that information, you’re ready to negotiate. You can start by calling your credit card company and asking for the debt settlement department. Or, you can send a note by email or regular mail.

You may have to go through a number of customer service reps and managers before striking a deal, but taking the initiative can show creditors that you are handling the situation honestly and doing what you need to do.

When you do reach an agreement, be sure to get the agreed-upon terms in writing.

Types of Credit Card Debt Settlements

Lump Sum Settlement

This type of agreement is perhaps the most obvious option. Essentially, it involves paying cash and instantly getting out of credit card debt. With a lump sum settlement, you pay an agreed-upon amount, and then get forgiveness for the rest of the debt you owe.

There is no guarantee as to what lump sum the credit card company might go for, but being open and upfront about your situation could help your cause.

Workout Agreement

This type of debt settlement offers a degree of flexibility. You may be able negotiate a lower interest rate or waive interest for a certain period of time. Or, you can talk to your credit card issuer about reducing your minimum payment or waiving late fees.

Hardship Agreement

Also known as a forbearance program, this type of agreement could be a good option to pursue if your financial issues are temporary, such as the loss of a job.

Different options are usually offered in a hardship agreement. Examples include lowering interest rate, removing late fees, reducing minimum payment, or even skipping a few payments.

Why a Credit Card Settlement May Not Be Your Best Option

Watching your credit card balance grow each month can be scary. Depending on your circumstances, a settlement may be the best solution for you.

However, it’s not without its drawbacks. For starters, a settlement may result in your credit card privileges being cut off and your account frozen until a settlement agreement is reached between you and the credit card company.

Your credit score could take a hit, too. This is because your debt obligations are reported to the credit bureaus on a monthly basis. If you aren’t making your payments in full, this will be noted by the credit bureaus.

That said, by negotiating a credit card settlement, you may be able to avoid bankruptcy and give the credit card company a chance to recoup some of its losses. This could stand in your favor when it comes to rebuilding your credit and getting solvent again.

Solutions Beyond Credit Card Debt Settlements

Personal Loan

Consolidating all of your high-interest credit cards into one low-interest unsecured personal loan with a fixed monthly payment can help you get on a path to pay off the credit card debt. Keep in mind that getting a personal loan still means managing monthly debt payments. It requires the borrower to diligently pay off the loan without missing payments on a set schedule, with a firm end date.

For this reason, a personal loan is known as closed-end credit. A credit card, on the other hand, is considered open-end credit, because it allows you to continue to charge debt (up to the credit limit) on a rolling basis, with no payoff date to work towards.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.

Transferring Balances

Essentially, a balance transfer is paying one credit card off with another. Most credit cards won’t let you use another card to make your payments, especially if it’s from the same lender. If your credit is in good shape, you can apply for a balance transfer credit card to pay down debt without high interest charges.

Many balance transfer credit cards offer an introductory 0% APR, but keep in mind that a sweet deal like that usually only lasts about six to 18 months. After that introductory rate expires, the interest rate can jump back to a scary level — and other terms, conditions, and balance transfer fees may also apply.

Credit Consumer Counseling Services

Credit consumer counseling services often take a more holistic approach to debt management. You’ll work with a trained credit counselor to develop a plan to manage your debt. Typically, the counselor doesn’t negotiate a reduction in debts owed. However, they may be able to have your loan terms increased or interest rates lowered, which would lower your monthly payments.

A credit counselor can also help you create a budget, offer guidance on your money and debts, provide workshops or educational materials, and more.

Many credit counseling agencies are nonprofit and offer counseling services for free or at a low cost. You can search this list of nonprofit agencies that have been certified by the Justice Department.

The Takeaway

When credit card debt starts to become unmanageable, negotiating a credit card debt settlement may be an option to consider. There are different types of settlement options to consider. Understanding what’s available to you — and what makes sense for your financial situation and needs — can help you make an informed decision. If a settlement isn’t right for you, there are other solutions, such as a personal loan or credit counseling services, that may be a better fit.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.


External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Think for a moment about all the personal information floating around online: We chronicle our activities on Insta and TikTok, send payments to keep the lights and WiFi on, and order up a storm of gifts, groceries, and impulse buys with a few quick clicks.

Sure, our digital lives are fast and fun, but there’s a downside — you might say a dark side. Many of us have online habits that can leave us wide open to the growing ranks of hackers and scammers. Cybersecurity is becoming an increasingly common concern, and getting hacked — or just the fear of it — can be one more stressor in an already anxious world.

SoFi took on the topic with a survey of 1,000 U.S. adults who self-identified as credit card holders, conducted online in February 2023. It revealed some surprising statistics about who’s been hacked, how worried people are, and what steps they are (and aren’t) taking to avoid becoming a victim.

Over Half of People Believe They’re Doomed to Be Hacked

With the average person spending more than 6.5 hours per day online, there’s a lot of sharing going on of ideas, feelings, funny memes… And highly personal data.

Perhaps you’ve made a flurry of purchases on social media or discussed embarrassing symptoms via text and then thought, Uh-oh, I hope that was secure.

You aren’t alone. According to SoFi’s survey, 59% of people believe their credit card information or personally identifiable information will be stolen at some point, if it hasn’t been already.

That means the majority of people who participated in our survey expect to be hacked or already have been. When you consider how the number of data breaches is rising, it makes sense. Cybercrime is projected to almost triple between 2022 and 2027. No wonder we’re worried!

Less Than Half of Respondents Say They Know How to Outsmart Hackers

Frankly, most of us don’t have a clue as to what is really involved when you fall victim to cyber crime. Less than half of respondents in SoFi’s study believe they understand the risks of credit card fraud and different types of identity theft very well. In fact, only 45% of respondents said they understand very well how to protect themselves from online crime.

Most Respondents Are Working Hard to Defend Their Data and Assets

No one wants their most personal info kicking around on the dark web. Nor does anyone relish checking their credit card bill and seeing that someone charged $600 worth of baby clothes to their account when they are most definitely not a parent.

Here’s what SoFi’s research found about how people are playing defense. Check out how many people use these protective tactics to avoid becoming an identity theft or credit card fraud statistic:

•   82% of people check their credit reports regularly.

•   82% use multi-factor authentication, or MFA. (A good sign: Only 3% of people don’t have a clue what MFA is.)

•   63% avoid using public WiFi.

•   41% use a VPN, or virtual private network. That said, 8% don’t know what a VPN is.

•   61% use a password manager.

•   86% avoid sharing personal information online.

•   60% use a credit monitoring service.

More of Us Should Be Monitoring Our Credit

That last move, using a credit monitoring service, is an important one. It can make mobile banking safer and help protect other aspects of a person’s digital life.

“Credit monitoring and identity theft protection work. If you don’t have this in place, do it now. With the size of the last few mega breaches and the companies they have affected, assume your data is exposed and you’re at risk. Everyone is required to purchase insurance for their car and house. Why not have the same for your most critical asset: your identity?” —Steve Tcherchian, CISO and Chief Product Officer at XYPRO, a cybersecurity solutions company

In addition to using the tactics above, the SoFi survey respondents have also deployed these moves to protect themselves from credit card fraud and other cybercrimes:

•   Using strong passwords

•   Clearing browser cookies and cache frequently

•   Not sharing their location in browsers or apps

•   Checking their account activity frequently

Most people (90%) check their credit card statements at least once per month. 44% of people check their statements at least once a week.

More Than Half of Respondents Admit to Recycling Passwords

Most people have good intentions when it comes to protecting themselves from the bad guys trying to swipe their financial or personal data. But hello, we’re all human. And that can mean sometimes recycling passwords because it’s just too complicated to come up with a new one. Or logging onto WiFi at a cafe or in a hotel because those Taylor Swift tickets are about to go on sale and you cannot, cannot live without them.

More Than 1/3 of Respondents Use Public WiFi Without a VPN

Here, the SoFi survey respondents admit to risky online behavior:

•   53% have used the same passwords for multiple accounts.

•   34% have used public WiFi without a VPN.

•   29% have stored credit card information in their browser.

•   27% have provided credit card info over the phone.

•   26% have stored confidential information on a cloud server, such as Google Drive or Dropbox.

•   20% have shared credit card information with others (either in person or not secured online).

•   18% have downloaded software from unsecure websites.

•   13% have left their phone or computer unattended in a public space.

•   11% have responded to emails from unknown senders that asked for personal information.

“When logging onto public WiFi that doesn’t require a password for access, know that hackers can track your internet activity and intercept passwords and other sensitive data that is exchanged. If you must use an unprotected public WiFi network, avoid entering your social media, email, or bank credentials while connected.” —Brandon King, founder of Home Security Heroes, an identity-security advisory service

Not everyone realizes the very real risks of playing fast and loose with their personal data. More warnings about the consequences of getting hacked or scammed could be a huge help.

“Education and awareness campaigns need to be implemented at all levels, including schools, workplaces, and public forums. Financial institutions can play a significant role in providing customer education on safeguarding personal information. And social media platforms can spread awareness and provide tips on preventing fraud and identity theft.” —Andrew Lokenauth, founder of Fluent in Finance, a financial education platform

With the right information, many people might avoid becoming an identity theft statistic.

14% of Respondents Are Using Their Birthday or Their Pet’s Name as Their Password

You don’t need to confess, but many people are guilty of using shockingly simple passwords. One like your first name plus the digits of your birthday. Or your phone number. Or even the dreaded password1234.

And, making matters even worse, lots of busy people reuse their passwords with abandon. It’s easy to understand why: You might be prompted to create an account when shopping online so you can unlock a discount or free shipping, so you fall back on your old favorite. Or perhaps you need to create a password to access info on your vet’s website, so of course your doggo’s name is an easy to remember password, right?

Whatever the reason, there’s no doubt that there are plenty of people who aren’t following password security best practices. Here are some of the missteps the SoFi survey revealed:

•   14% use passwords that include their pets’ names or birthdays

•   13% use passwords that include their childrens’ names or birthdays

•   11% use passwords that include their significant other’s name or birthday

•   10% use use passwords that relate to a band or song they like

•   7% use something easy to remember like “12345” or “password”

•   7% use something easy to type like “QWERTY”

On the flip side, 16% use auto-generated, secure passwords provided by a password manager. High-five to those folks!

No More Lame Passwords: Pro Advice

Some advice from experts on this super-important subject:

•   Buckle down and “use different passwords for each login or account. If you reuse passwords, hackers can access your accounts more easily” in the event of a security breach. “By using separate passwords for each account, you can rest easy knowing that even if one of your accounts is compromised, the rest will remain secure.” —Brandon King, Home Security Heroes

•   “Keep a close eye on credit card balances, and immediately report any discrepancies to the bank or credit card company” to minimize your liability. —Andrew Lokenauth, Fluent in Finance

•   “Don’t write down passwords!” —Monica Eaton, founder of Chargebacks911, a chargeback management company

And need we mention that writing your PIN on the back of your debit card is a real no-no?

44% of Respondents Have Had Bogus Credit Card Charges

Sometimes, you get lucky, and your bank or credit card company pings you asking whether that’s really you trying to pay for a lavish dinner in SoHo, NYC, when you are actually sitting on your couch in Santa Cruz. Fraud protection can be a wonderful thing, but it doesn’t catch every scammer. Learn more about threats to credit card security:

Older Respondents Are More Than 2x As Likely to Endure Credit-Card Fraud

Here’s what SoFi survey participants told us about experiencing examples of credit card fraud in the form of unauthorized charges:

•   44% of people have experienced fraudulent charges on their credit cards.

◦   Nearly two-thirds of this group (63%) have experienced fraudulent charges more than once.

◦   For most people (84%), the unauthorized charges were less than $500.

◦   6% of people said their most recent fraudulent charge was $1,000 or more.

•   4% of respondents have experienced fraudulent charges five or more times.

•   53% of respondents ages 55 and older have experienced fraudulent charges on their credit cards, showing that older age seems to correlate with being scammed more often.

◦   Perhaps that’s why confidence in one’s credit card security seems to wane with age: 26% of those aged 55 or older said they had been or expected to be hacked, versus 10% of those aged 18 to 24.

•   Almost three-quarters (74%) of those who experienced fraudulent charges said their credit card company notified them of suspicious activity.

Who Knew? Where Scammers Shop

Curious about where credit card scammers go shopping? People who experienced fraudulent charges and knew where their stolen credit card numbers were used said the purchases were made in these types of environments:

•   Big box retailers and grocery stores like Walmart, Target, Sam’s Club, Costco, Whole

•   Foods

•   Online retailers like Amazon and eBay

•   Smaller ecommerce sites

•   Gas stations and convenience stores

How can you better protect yourself?

“Opt for the latest payment innovations. Contactless payments, for example, can protect you against credit card ‘shimming’ [in which scammers insert a thin device into the slot of card readers to steal your data], as can digital wallets like Apple Pay, which deploy tokenization technology just like an EMV [which stands for Europay, Mastercard, and Visa] chip card does.” —Monica Eaton, Chargebacks911

Ouch: 15% of Respondents Have Been Victims of Identity Theft

It’s a scary fact that identity theft is on the rise. It can be deeply upsetting to have someone steal your personal information and credentials and use them for nefarious purposes, opening accounts and making purchases that you would never dream of. It can be similarly troubling to have to unravel the damage done and reclaim what is rightfully yours.

34% of Victims Lost Money Due to Identity Theft

Unfortunately, the SoFi survey revealed the following identify theft statistics:

•   15% of respondents have been victims of identity theft.

•   Most often, this group found out about identity theft because they noticed fraudulent charges on their bank statements (21%).

•   Other common ways people found out:

◦   12% said they were getting suspicious emails, calls, and text messages.

◦   12% said their tax return was incorrect or filed by someone else.

◦   12% said there were inaccuracies on their credit report.

◦   10% said they were unexpectedly denied credit.

•   The most common impacts that people described as a result of identity theft were:

◦   52% said it made them angry or frightened.

◦   36% had to set up new online accounts.

◦   34% lost money that was never recovered.

◦   26% said their social media accounts were hacked.

◦   25% reported that their credit scores were hurt.

•   More than half of all respondents (51%) said they know someone who has been a victim of identity theft.

Those who are concerned about the possibility of identity theft can subscribe to services designed to help protect one’s information and send alerts about any evidence of this kind of activity. It can help provide peace of mind as this kind of crime increases.

92% of Respondents Are Confident Companies Can Protect Their Data

Learning about all the risks of credit card and identity theft out there can be troubling and make a person feel as if they have a big bullseye on their back, tempting hackers to target them.

But of course, that’s not the case. Steps are being taken to protect consumers from identity and money scams and new techniques are emerging. Most people recognize that it’s not all doom and gloom out there.

In general, people are cautiously optimistic about how well their information is and can be safeguarded.

•   92% of people are somewhat confident or very confident in companies’ abilities to protect their personal information.

•   8% of respondents said they’re not confident at all in companies’ abilities to protect their information

◦   However, people realize there is only so much that can be done to protect information. 69% of this group believe all systems are vulnerable to hacking, regardless of the security measures that are implemented.

◦   On the flip side, 25% of this group believe companies don’t spend enough resources on cybersecurity.

Yes, we all may be at risk, but by adopting smart strategies and partnering with top-notch, security-focused financial institutions and other businesses, we can minimize the odds of falling prey to cybercriminals.

The Takeaway

As SoFi’s survey reveals, credit card fraud and identity theft are growing concerns for Americans. But there are proven and emerging ways to stay ahead of the scammers. By doubling down on smart tactics and taking steps to safeguard your personal information, you can protect yourself from serious damage.

To learn more about options for protecting your credit cards and tips for managing your accounts, explore our credit card guide.

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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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