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When a cash-back rewards credit card features a 2% cash back feature, that means you receive a flat 2% back on all purchases. This can be a solid way to reap rewards.

Read on to learn the ins and outs of what 2% cash back actually means, as well as the pros and cons of a 2% cash-back credit card, to help you determine whether it’s worth your while.

What Is Cash Back?

Cash back is a form of reward that cash-back credit cards offer that allows you to earn money back on purchases you make. Other examples of credit card rewards include points or travel miles.

With a flat-rate cash-back card, all of your purchases earn the same amount in cash back. Other credit card issuers might offer higher cash-back rates on certain spending categories, such as on gas or groceries.

Meanwhile, some may feature rotating bonus categories to give your rewards-earning abilities a boost. For example, you might earn 5% cash back in the fall months on purchases made at restaurants and on gas.

You can redeem the cash-back rewards you earn in the form of a check, bank transfer, or gift card, or as a statement credit. Other options might include making a charitable donation or making a purchase through the issuer’s online portal. Depending on the credit card, there might be a spending threshold you need to meet before you can redeem your cash-back rewards.

What Is 2% Cash Back?

Earning 2% cash back simply means that for every $100 you spend on your credit card, you’ll get $2 back. So if you were to spend $1,000, that’s $20 back in your pocket — though you’ll then have to redeem that cash back in order to make the rewards usable.

How 2% Cash-Back Credit Cards Work

As mentioned previously, having a 2% cash-back credit card means you’ll earn two cents back for every $1 you spend using the card, or $2 for every $100, and so forth.

There might not be a limit to how much you can earn in cash back. However, in other cases, the card may cap the amount of cash-back rewards you can earn for either regular spending or spending in bonus categories.

Pros and Cons of 2% Cash Back

While a 2% cash back card does come with some advantages, there are some drawbacks as well. Take a look at both:

Pros

•   Easy to use: A major benefit of a 2% cash-back credit card is that the rules are simple: You spend money, and get a certain amount back. Plus, redeeming rewards is usually pretty straightforward, and you have a choice of how to do so.

•   Can rack up rewards quickly: If you use your credit card for everyday purchases, you’ll accrue rewards fairly fast. Of course, only put everyday purchases on your card if you can afford to pay them off, and always use your card responsibly, considering what a credit card is and the implications overspending can have for your credit score.

•   Often no annual fee: Many cash-back cards don’t have an annual fee. That means you won’t need to worry about spending enough to offset the fee.

Cons

•   Higher APRs compared to non-rewards credit cards: While your annual percentage rate (APR) on a card partly depends on your credit and other financial factors, rewards credit cards like cash-back cards tend to carry higher interest rates. If you keep a balance on your account, you can expect to pay a pretty penny in interest, given how credit cards work.

•   Earning caps may apply: While some credit cards allow you to earn unlimited cash-back rewards, others place a limit on how much you can earn. If you’re looking to max out your rewards potential, a cap could make that harder to do.

•   Don’t often offer travel rewards or perks: If you’re hoping to earn rewards that apply to travel, such as airline trips or hotel stays, a cash-back credit card likely isn’t the form of rewards credit card for you. While some cards may offer travel redemption options, most don’t, and many also charge foreign transaction fees.

Recommended: When Are Credit Card Payments Due?

Is a 2% Cash Back-Credit Card Worth It?

Whether a 2% cash-back credit card is worth it really depends on how you’ll use the credit card. This includes what types of purchases you’d like to make, and if you plan on using your card for bills and everyday expenses, such as gas and groceries. If you use the credit card regularly, you’ll be able to earn a greater amount of cash-back rewards.

However, you’ll also want to balance that spending with sticking to important credit card rules, like not spending more than you can afford to pay off. Because rewards credit cards tend to have higher interest rates, it’s important to avoid carrying a balance so you don’t cancel out the cash back you earn.

A cash-back rewards card might not be worth it if you prefer to use your credit card rewards for travel. In that case, a travel rewards credit card typically will offer more lucrative ways to earn points or miles to use on trips.

Recommended: How to Avoid Interest On a Credit Card

Guide to Using a 2% Cash-Back Credit Card

If you get a 2% cash-back card, here are some tips to keep in mind to use it effectively:

•   Read the redemption rules. Familiarize yourself with credit card requirements, and see if there are any limits on how much cash back you can earn. Similarly, check if you need to hit a minimum amount in cash-back earnings before you can redeem those rewards.

•   Be intentional with your purchases. Devise a plan for how you intend to use your cash-back credit card. Perhaps you would prefer to use it on big-ticket items, or maybe on seasonal purchases, such as during the holidays or back-to-school season. This will help you make the most of your card.

•   Choose how you’ll receive your rewards. YYou’ll also want to decide whether you plan on receiving the cash-back in the form of an ACH transfer to your account, as a statement credit, or as a check dropped in the mail. You also might be able to use your rewards by making online purchases through the credit card’s shopping portal, or by purchasing gift cards or donating to charity.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Maximizing 2% Cash-Back Earnings

If you have a cash-back credit card, it’s worth your while to take the time to determine how to maximize your earnings. Here are several ways to do so.

Use Your Card For Everyday Purchases and Bills

Consider using your cash-back card on major spending categories to earn the most on rewards. For example, if you spend $4,500 a year on food for you and your family and put all of your groceries and dining expenses on your card, you’ll get $90 in cash-back on just that spending alone.

You might also consider putting your recurring bills and subscription services on your credit cards. This will allow you to scoop up points in areas you already spend.

Just make sure you aren’t spending beyond your means. Keep an eye on your expenditures, and commit to paying off your balance in full each month.

Put Big-Ticket Buys on Your Card

If you’ve been saving up for a sleek new laptop or coveted designer shoes, consider putting that cost on your 2% cash-back card. That way, you can get the item and earn a bit of cash back on the purchase.

Your card may even come with added perks, such as purchase protection or an extended manufacturer’s warranty.

Look for a Card With No Annual Fee

A card without an annual fee means you won’t need to spend as much to make the cash-back rewards worthwhile. Case in point: If you get a card with a $40 annual fee, you’ll need to put $2,000 in purchases to break even at a 2% cash-back rewards rate.

Pay Off Your Balance in Full Each Month

As cash-back credit cards tend to have higher APRs, make it a point to pay off your card in full. This will help you avoid racking up interest charges, which can cut into the cash-back rewards you earn.

Strategize When You’d Like to Redeem Your Cash Back

To maximize your 2% cash-back rewards card, it helps to be intentional with how you choose to redeem your cash-back rewards as well as when you do so. For instance, if you tend to dig a debt hole during the holidays, use your rewards to pay for gifts and other related expenses. Or, you can put the rewards you’ve accumulated toward a statement credit, or redeem it for a gift card for your loved one.

The Takeaway

Whether a 2% cash-back credit card is right for you may depend on a few considerations, such as how often you plan to use the card, whether you may purchase higher-priced items with it, and if you plan to pay off the balance in full each month. It’s also important to understand all of the rules that apply to the credit card. Some cards have limits on how much you can earn in cash back or have annual fees that could cut into the value of your rewards.

A 2% cash-back credit card that’s used regularly, however, can provide you with a steady stream of extra cash that could benefit your budget, and you can also be strategic about how you redeem the rewards depending on your needs at a given time.

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

Is 2% cash back good for credit cards?

A 2% flat-rate, cash-back credit card can be a strong choice as a go-to credit card if you intend to use your card for everyday spending. Earning rewards at a flat rate and in this manner is simple and straightforward, as you don’t have to worry about keeping track of rotating categories or figuring out point conversion values.

Is 2% cash back better than points?

A 2% cash back credit card is a no-hassle, straightforward way to earn rewards. While you might earn more points on a travel card, redemption values and ways to redeem points on a travel rewards card can be more complicated. A flat-rate cash-back card can be a good choice to use as a foundation. Then, you can also open a travel card if it makes sense for your needs.

Photo credit: iStock/LaylaBird

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Despite the saying, “cash is king,” there are pros and cons to using cash over credit cards in everyday transactions. Likewise, credit cards have their own share of advantages and disadvantages when it comes to making purchases.

Here’s what you need to consider when choosing cash vs. credit cards, and when you might opt for using one method of payment over the other.

Defining Cash and Credit Cards

Cash is the legal tender — whether coins, paper bills, or other notes — that you can exchange for goods and services. According to Merriam-Webster dictionary, cash is considered “ready money.” Translation: You actually own the value of the cash and can use it immediately during a transaction.

Credit cards, on the other hand, can also be used to purchase goods and services. However, you’re borrowing the funds from a third party (i.e. a bank) to make your purchase today with the promise that you’ll pay the credit card balance back later.

When to Consider Using Cash

Deciding whether to use cash vs. credit depends on your purchasing situation and preferences. Situations when paying with cash is preferred might include:

•  Buying goods or services from merchants who only accept cash

•  When your credit or income doesn’t qualify for a credit card

•  Limiting your spending to a specific amount

•  Keeping your personal information private during a transaction

•  Avoiding credit card-related fees

•  Avoiding credit card debt

You can also use cash to grow your money through an interest-bearing deposit account, instead of spending it. If you’d like to build your savings fund, you can only do so using cash.

Recommended: How to Avoid Interest on a Credit Card

Benefits of Using Cash

Here are some benefits of using a credit card:

•  Since cash represents the monetary value you actually have, it makes budgeting simple. If you have $100 in cash to spend for the weekend, for instance, you’re focused on making careful decisions about how you spend that finite cash amount. After you’ve depleted your cash, you can’t make additional purchases until you have more cash.

•  Cash provides some convenience despite its additional physical bulkiness in your wallet. 

•  For merchants, the benefit of cash vs. credit cards is that they save money on credit card processing fees. To avoid this, some merchants only accept cash payments, while others offer a small discount as an incentive for customers to pay using cash.

•  Cash can also be used widely by any consumer, regardless of their credit score. This makes cash a more accessible payment method for everyday purchases. 

•  Cash also doesn’t contain any of your personal data, so if a private purchase is important to you, cash is beneficial.

Recommended: When Are Credit Card Payments Due?

Drawbacks of Using Cash

Here, some downsides of using cash:

•  The biggest drawback to using cash vs. credit, however, is that it caps your buying power to only the amount of cash you have. Although this can be a benefit, as mentioned above, when you’re on a budget, it can restrict your ability to make larger purchases today.

For example, if your car unexpectedly needs a repair that costs $800 but you only have $500 in cash to pay upfront, you’ll have to make a tough decision. You might be forced to shop around for a cheaper car repair shop, spend time negotiating a lower price with the current mechanic, or possibly wait to complete the repair until you have the additional funds necessary. All of this can cost you extra time and can possibly impact your earnings if you rely on your car to drive to work.

•  Physical cash is harder to trace between transactions. Your personal information isn’t tied to cash bills in your pocket. This means that if you lose it or it gets stolen and it’s used by someone else, it’s harder to get back.

When You Might Consider Using a Credit Card

There are many use cases for credit cards, if you qualify for one. Some situations when a credit card might make sense include:

•  Making a larger purchase now and paying it off later

•  Breaking down a large purchase into smaller installment payments

•  Earning points, miles, or cash back on purchases using a rewards credit card

•  Unlocking additional purchase protections

•  Building your credit profile

Recommended: What Is a Credit Card Advance?

Benefits of Using a Credit Card

Using a credit card as a payment method for daily transactions offers various benefits when managed responsibly. 

•  If you don’t have enough cash for a purchase, a credit card lets you buy it now and pay it back the following month.

•  You can also choose to take out a credit card cash advance (though typically at a higher APR,or annual percentage rate, than your standard purchase APR), or even send money with a credit card.

•  With a credit card, you get to choose how you’ll repay your purchases, whether in full when your billing statement is due, or incrementally over multiple months. The caveat is that letting a balance roll over to the next month incurs interest charges.

•  Since all credit card activity is reported to the credit bureaus, on-time payments and other factors can be favorable to building your credit history and credit score. A high credit score can help you qualify for competitive interest rates and terms on other consumer credit products, like other credit cards and loans.

•  Credit cards also offer benefits and rewards that cash doesn’t provide. Rewards credit cards let you earn points or miles that you can then redeem for travel, cash back, gift cards, merchandise, special experiences, and more.

Different credit cards can also offer benefits like travel cancellation protection, warranty insurance, and more. For example, some cards feature purchase protection, which replaces an item that was lost, stolen, or damaged if it was purchased using the card.

•  Using a credit card limits your liability when unauthorized or fraudulent purchases or activity occurs on your account. Depending on when you report the unusual activity, you might only be liable for up to $50 of those charges. Some credit cards even have zero-liability policies.

Recommended: What Is a Charge Card?

Drawbacks of Using a Credit Card

Here are some downsides to using a credit card:

•  Interest charges, expressed as an APR, are one of the biggest disadvantages to using credit vs. cash. With how credit card payments work, unless you make full, on-time credit card payments each month, interest charges will likely apply to balances that roll over from one month to the next.

If you roll over a balance, you’ll not only pay more money toward your purchases, but your outstanding debt can snowball quickly. This can prove financially damaging to your everyday finances and to your credit if you fall behind on payments while amassing growing debt.

•  Certain credit cards also incur annual fees for the privilege of using them. This is money that you’ll pay out-of-pocket upfront. You can also incur other fees, such as foreign transaction fees, late payment fees, balance transfer fees, and more.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Is Using a Debit Card the Same Thing as Using Cash?

Using a debit card is similar to using cash. In fact, one of the biggest differences between a credit card and debit card is that debit cards draw funds from the cash that you already have in your personal checking or savings account. Still, a debit card provides the convenience of swiping or tapping a card on a payment processing machine, like a credit card, to process a digital transaction between your bank and the merchant’s bank.

However, debit cards carry many of the same disadvantages as cash. For one, a debit card limits your purchasing power to the amount that’s in your checking or savings account. Additionally, debit cards don’t offer the same level of protection against unauthorized or fraudulent activity as credit cards do.

Recommended: What Is the Average Credit Card Limit?

Understanding Your Spending Habits Is Key to Picking Which to Use

Taking stock of your buying habits can help you decide whether cash vs. credit is a better option for you. When considering these two payment options, think about the following:

•  How much do you spend each month?

•  How much discretionary income do you have?

•  Where do you typically make purchases — online or in a brick-and-mortar store?

•  Do you tend to overspend or stay within a budget that you can afford?

•  If you’re thinking about a credit card, what’s your goal?

By answering these questions, you will likely be able to tell which payment method will be more convenient for you. For instance, if you’re trying to curb your spending, then cash might be the better bet, given how credit cards work. On the other hand, if you’re primarily an online shopper or you’re trying to build your credit history, a credit card could be worth exploring.

The Takeaway

Cash can help you contain your spending to the money you actually own. This can potentially limit the amount of debt you’d take on through credit. It can also offer convenience when it comes to shopping through cash-only merchants. The caveat is the risk you’re taking on if the cash is lost or stolen since it can be difficult to get back.

Credit cards can offer greater protection against unauthorized activity, and they can enhance your spending power. However, access to borrowed funds could get you deeper into debt if you’re unable to repay your balance on time each month. With responsible borrowing habits, however, credit cards can be a handy way to make purchases and may offer rewards, like cash back.

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

Which is better when traveling, cash or credit?

When traveling, credit cards are typically a safer option to carry than cash. It can be difficult and near impossible to trace and verify whether lost or stolen cash belongs to you. If a credit card is lost or stolen, the card issuer can freeze new transactions on the account, and your maximum liability for fraudulent charges can be $50 or nothing at all.

Are credit cards safer than cash?

Yes, credit cards can be safer than cash. Credit cards typically reduce your liability in the event of unauthorized or fraudulent activity.

What is the difference between cash and credit cards?

Cash is a physical currency and liquid asset that provides you with purchasing power. When you use cash toward a purchase, you don’t owe that amount to another entity. Conversely, a credit card is a physical tool that lets you increase your purchasing power using borrowed money. You’ll need to repay purchases made to your credit card, possibly plus interest charges.

Cash or credit, which is more convenient?

Whether cash or credit is more convenient is subjective. For example, while many merchants accept credit cards, some only accept cash payments. However, as more businesses accept digital payments and transition to cashless transactions, a credit card might be more convenient.

Photo credit: iStock/Ridofranz

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 .

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In general, there’s no “right” number of credit cards to have. Some might suggest having at least two credit cards, preferably from different networks — say, a Visa and an American Express, or a Mastercard and a Discover card — and strategically choosing them for the best combination of rewards. Others will recommend making this determination based on how many credit cards you can effectively handle, or how many is optimal for your credit score.

At the end of the day, the ideal number of credit cards depends on your personal financial situation. Learn more about how many credit cards you should have, and whether it will be good for you to have multiple credit cards.

How Many Credit Cards Does the Average Person Have?

Cardholders in the U.S. have an average of 3.9 credit card accounts, according to a review of national credit card data by the credit bureau Experian®.

The data also found that the number of credit cards someone has tends to increase the older they get. For instance, Baby Boomers (ages 59-77 currently) and Gen Xers (currently ages 43-58) held an average of 4.3 credit cards, whereas Millennials (ages 27-42 currently) had just 3.5 credit cards on average.

How Many Credit Cards Are Too Many?

There isn’t a set number of credit cards that tips you over into the territory of having “too many.” As long as you can stay on top of all of your accounts and manage them responsibly, having a number of credit cards won’t negatively affect your credit.

That being said, even just two credit cards could be too many if it becomes challenging for you to remember to make on-time payments on both accounts or you’re overspending. The more credit cards you have, the more credit card terms you’ll have to keep track of, which can get complicated. You may also run into paying multiple annual fees, and costs can add up quickly there — especially if you’re not using a credit card enough to justify the cost.

Even if you do think you can manage having multiple credit cards, you’ll want to watch out for applying for too many new cards within a short window of time. Doing so can lower your credit score temporarily, and that in turn could raise a red flag for lenders. Issuers have even begun to introduce rules to prevent cardholders from attempting credit card churning, which is when you repeatedly open and close credit cards to earn welcome bonuses.

Does Having Too Many Credit Cards Affect Your Credit Score?

Having multiple credit cards can either help build or hurt your credit score, depending on how responsibly you use your cards and how well you understand how credit cards work. However, if you’re in a situation where you’re starting to feel like you have too many credit cards, this could lead to negative effects on your credit score.

Multiple credit cards mean multiple due dates to juggle, which can make it easier to miss payments or make them late. Because payment history accounts for 35% of your FICO® score, this can have big implications for your credit.

Secondly, opening a number of new accounts can lower the average age of your credit, which matters since credit history length accounts for 15% of your score. Applying for a credit card also requires a hard inquiry, which can temporarily ding your score.

On the flipside, having multiple credit cards does offer you more access to credit. If you don’t increase your current outstanding balances, this could positively impact your credit utilization rate, which compares your outstanding balances to your total credit limit. Further, a new credit card could benefit your credit mix, which comprises 10% of your FICO score.

Recommended: When Are Credit Card Payments Due?

Potential Reasons to Apply for Another Credit Card

Trying to figure out what is a good amount of credit cards to have? Here are some potential reasons you might consider applying for an additional card.

Potentially Raise Your Credit Score

Getting an additional card can help build your credit. This might be the case if your newly opened card increases your overall credit limit. If you keep your total credit card balances the same, your higher limit will lower your credit utilization rate, which is one of the factors that affect your credit score.

Other ways that getting another credit card can have a positive impact on your credit is if the new card adds to your existing credit mix and if you consistently make on-time payments.

Maximize Rewards

Perhaps the top reason that people open multiple credit cards is to maximize the rewards they can earn. For instance, another card might be worth adding to your arsenal if it optimizes rewards in a category in which you don’t currently earn much. Or, for example, you might pair a basic cash-back rewards credit card for your everyday spending with a travel rewards card that can help you cover the cost of flights and enjoy perks while traveling.

Ensure You Can Pay If One Card Is Lost or Stolen

Having more than one credit card in your wallet can also act as an insurance policy of sorts. Say one of your cards gets stolen or is unexpectedly frozen due to fraudulent activity. That can leave you in a lurch at checkout if you don’t have any cash on you. By applying for an additional credit card, you’ll ensure that you always have a backup in case anything were to happen.

Pay Off a High-Interest Card with a Balance Transfer

You also might opt for an additional credit card if you have debt to pay off and qualify for a 0% APR introductory offer. These promotional offers allow you to move over a balance and pay it off interest-free within a certain period of time.

Just keep in mind that you’ll usually need solid credit to qualify for these offers, and a balance transfer fee will apply. Other pros and cons of no-interest credit cards include the fact that you’ll likely want to ensure you can pay off your debt before the promo offer ends — and a higher interest rate kicks in.

Secure a Higher Overall Credit Limit

Another possible benefit of opening an additional credit card account is that doing so can increase your available credit limit. Even if this card’s credit limit isn’t that different from those of your other cards, adding another card can help you keep your credit utilization rate from getting too high, as your overall credit limit will go up.

Recommended: What Is the Average Credit Card Limit?

Potential Drawbacks of Getting Another Credit Card

As mentioned, opening multiple credit cards within a short period of time can lower your credit score. But even if you don’t do that, there are possible issues that can arise when you have multiple cards — in other words, it isn’t always better to have more credit cards.

Potential to Lower Credit Score

Perhaps the biggest potential issue of having multiple credit cards is the possibility of harming your credit score. If you’re missing payments because you’re finding it hard to juggle multiple due dates, or are overspending and driving up your credit utilization ratio, your credit score will likely suffer.

Plus, even if you’ve paid off your accounts, having a large number of credit cards open can make you look risky to lenders, possibly lowering your score.

Fees

Another possible downside to having a number of credit cards is the fees you could face. Depending on the credit cards you have, you could end up paying multiple annual fees. These could become harder to manage. You might have a harder time keeping track of which cards charge which fees. This can make it more challenging to dodge unnecessary fees.

Harder To Keep Track Of

It’s likely that all of your credit cards could start off with a different due date, which can make it that much easier for a payment to slip through the cracks. Plus, you’ll have multiple different websites or mobile apps to check in on and visit in order to make your payment.

To make it easier on yourself, consider automating your payments or changing your due dates so they all fall on the same day. This can make it easier to adhere to one of the cardinal credit card rules of always making on-time payments.

Could Get Into a Cycle of Debt

When you have an array of credit cards in your wallet to choose from, it can feel easy to keep swiping. Plus, by using a number of different cards, you’ll be spreading your charges out, which can make it more challenging to track how much you’re actually spending in total.

To keep your spending in check, don’t spend more on your credit cards than you can actually afford to pay off in cash. Ideally, you’ll be able to pay off all of your credit card balances in full each month. Otherwise, interest charges can add up quickly, which is one of the reasons why credit card debt is hard to pay off.

More Difficult to Spot Fraudulent Activity

When you have just one credit card, checking your credit card balance regularly is pretty easy to do. But once you start growing your number of cards, it will take more legwork and effort to stay on top of your statements and check for any suspicious charges. This can make it harder to spot any potentially fraudulent activity and report it in a timely manner.

Determining How Many Credit Cards to Have

Now that you know the potential upsides and drawbacks to having multiple credit cards, you’re left with the question: How many credit accounts should I have? As mentioned before, the ideal number of credit cards varies from person to person. Here’s what to consider as you make this determination for yourself:

•   Do you have a history of responsible spending? If you think that applying for another credit card will lead to spending beyond your means, you might be better off skipping an additional card.

•   What’s your reason for getting another card? Opening up another card can help you maximize rewards, increase your purchasing power, or even assist in building credit. However, if you’re seeking another card because you’re low on funds and want to be able to fund more purchases, that could lead to a cycle of debt.

•   Are you confident you’ll be able to pay off your balances in full each month? Credit card interest can add up quickly if you’re not paying off your balances in full on a monthly basis (just check out our credit card interest calculator for proof). Before taking on an additional credit card, ensure you’re in a good financial position to pay off your balances regularly and in full.

•   Have you built your credit score since you last applied? A better credit score generally translates to better rates and rewards and higher credit limits. To make applying for a new card worth your while, it generally helps if you’ve done work to positively impact your credit since you last applied.

•   Do you have any other upcoming loan applications? If you know you’ll need to apply for a loan — whether that’s a car loan, a personal loan, or a mortgage — consider whether a credit card application is necessary right now. Applying triggers in a hard inquiry, which temporarily dings your score, making you a potentially less competitive applicant for the loan you need.

Recommended: Tips for Using a Credit Card Responsibly

The Takeaway

How many credit cards you should have largely depends on your personal financial situation and how many credit cards you feel you can responsibly manage. In the big scheme of things, how you use your credit cards may be more important than how many you have. To determine the ideal number of credit cards for you, you’ll want to weigh the pros and cons of adding another card to your wallet.

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

Is 5 credit cards too many?

The answer is: It depends. Five credit cards is not too many if you are managing your debt responsibly, paying on time, and not being overwhelmed by interest charges. If, however, you are having trouble handling the debt and the various balances and due dates, those could be signs that five cards are too many for you.

How many cards should I have for good credit?

There is no specific number of cards you need to have for good credit. What can be most important is to manage your cards wisely and not have your debt go too high nor your credit score too low while using them. Some financial experts recommended having several cards ideally so that your credit file isn’t too thin. 

Does canceling a credit card help or harm your credit?

Canceling a credit card could harm your credit score. It could reduce the length of your credit history, which is a negative, as well as lower your overall credit limit and therefore potentially decrease your score. If you have a card you don’t use often, you might keep it open and use it occasionally, once every few months, to avoid these potential issues.

Photo credit: iStock/Drs Producoes

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 .

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Pulling a metal credit card out of your wallet was once considered a status symbol. Today, however, more card issuers have added credit card metal options to their card offerings for customers who prefer a sleek — and heavier — alternative to plastic.

But beyond being metal instead of plastic, you may wonder what is a metal credit card exactly and are they better? Here, learn the similarities and differences between plastic and metal credit cards, as well as how to get a metal credit card if you’re looking to add some heft to your wallet.

What Is a Metal Credit Card?

A metal credit card functions much in the same way as its plastic cousin. You can swipe a metal card at a point-of-sale terminal, or if the card is chip- or RFID-enabled, you can insert or tap it for payment.

Additionally, cardholders who have a metal credit card but prefer to use their digital wallets, can use their digital metal card the same way as other credit cards in their digital wallet. To use a credit card in this manner, simply tap your device toward the card reader to activate the transaction.

A key distinction with metal credit cards, however, is the material that the physical card is made of. They’re typically composed of some type of hard, durable metal.

Recommended: When Are Credit Card Payments Due?

A Brief History of Metal Credit Cards

The credit card issuer to spark buzz with its metal credit card was American Express. In 1999, it launched the Centurion Card — colloquially called the Black Card — which was the first metal card of the time.

The innovative, invite-only card was offered to the highest spenders of AmEx’s Platinum Card. Its exclusivity, coveted benefits, and unique credit card metal material set an impressive bar for the luxury credit card market moving forward.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

What Are Metal Credit Cards Made Of?

The transition from traditional, lightweight plastic to various metals is why some credit cards are heavy. Specific materials that are used for metal credit cards vary across card issuers, with many companies keeping information about their credit card metal materials under lock and key.

As an example, the metal used for the Apple Card is titanium, while some cards use stainless steel, metal alloys, 24 karat gold, palladium and other metals, as well as hybrid cards that have a metal exterior with a plastic core.

Why Metal Credit Cards Are Popular

Since AmEx launched its metal Centurion Card, metal cards have oozed a sense of luxury and prestige. This premium metal card phenomenon went mainstream when Chase announced its metal Sapphire Reserve credit card in 2016.

The heavier material of metal credit cards has a noticeable in-hand feel that some cardholders prefer. Metal credit cards are also generally associated with elite status. For some, the perk of carrying a card that feels and looks special can be attractive.

Differences Between Metal and Plastic Credit Cards

Although metal credit cards have grown in popularity in the market, traditional credit cards made out of plastic are still commonly available. Below are the main differences to know between a metal versus plastic card:

Similarities Between Metal and Plastic Credit Cards

As mentioned earlier, how a credit card works doesn’t vary whether it’s metal or plastic. You can add both metal and plastic cards into a digital wallet for convenience and use them in the same way to make purchases.

Further, both options offer the same bank-level security features you’ve come to expect from a credit card since encryption isn’t dependent on the material of the card. Rather, it’s contained within other features of the card, like the magnetic strip or chip-and-PIN technology.

Finally, despite the noticeable added weight of a metal credit card, their dimensions are roughly the same as those of a plastic credit card. Both a metal and plastic credit card fit into a standard wallet’s card slot, although metal cards might be slightly thicker.

How to Get a Metal Credit Card

Various card companies offer credit card products that issue a metal card, if you qualify. A good credit card rule of thumb to find the right card — whether metal or otherwise — is to compare various features, such as annual fees, rewards programs, sign-up bonus incentives and minimum required spend, and other card benefits.

Here are some examples of where to get a metal credit card and its specific card product name(s):

•   Amazon: Amazon Prime Visa Card

•   American Express: Gold Card, Platinum Card, Centurion Card

•   Apple: Apple Card

•   Capital One: Savor, Venture X

•   Chase: Sapphire Preferred, Sapphire Reserve

•   Citi: Citi / AAdvantage Executive World Elite MasterCard

•   HSBC: Elite Credit Card

•   JP Morgan: Reserve Credit Card

•   MasterCard: Gold Card, Titanium Card, Black Card

•   U.S. Bank: Altitude Reserve Visa Infinite Card

You may also find other credit cards, such as travel rewards cards, that offer metal versions.

Factors to Consider Before Getting a Metal Credit Card

Flashing a metal credit card might feel like an ego boost, but the bells and whistles of a premium metal card will also cost you. And, at the end of the day, a credit card’s material doesn’t affect what a credit card is and how it serves you.

Generally, credit card companies offer a metal credit card for its premium card products that charge steep annual fees. For example, for the privilege of using a swanky metal card, you might have to pay an annual fee of $95, with some cards charging up to a $550 annual fee or even higher.

If that’s within your budget, take a closer look at the benefits and incentives that the metal card offers, compared to non-metal cards. Whichever card you get next should serve your needs, whether that’s preference for high bonus reward categories in your top monthly spending categories or unique travel benefits and protections.

Also, consider that getting rid of your metal card takes a bit more effort than a standard plastic card. Whether you close your account or you’re issued a replacement for an expired card, you’ll usually have to mail your old metal card to the issuer for disposal. They’ll issue you a dedicated envelope to do so, but it’s an extra step that doesn’t exist with a plastic card.

Recommended: What is a Charge Card?

Pros and Cons of Metal Credit Cards

As you can see, there are both upsides and downsides to metal credit cards. Here are the pros and cons to take into consideration before you get a metal credit card:

How to Destroy a Metal Credit Card

If your existing metal credit card has passed its credit card expiration date, you won’t be able to destroy it using a standard pair of scissors, nor can you put it in a shredder that could typically handle your plastic cards.

To effectively destroy a metal credit card, you must either:

1.    Return it to your card issuer by mail. Your issuer will provide you with a prepaid mailing envelope.

2.    Drop it off at a local branch. If your issuer has a brick-and-mortar location, it might be able to dispose of it or mail it to the correct department.

Since the card is made of metal, it requires industrial-grade tools to dispose of securely. Additionally, shredding it yourself might result in injury. Consider relinquishing the metal card to your issuer for safe disposal.

The Takeaway

Metal credit cards might add panache to your credit card rotation, but their aesthetic appeal shouldn’t be the only reason to seek one out. A plastic card that has a generous rewards program might be more valuable in the long run than a metal credit card that has limited perks. Always consider your own credit card habits, the types of purchases you make, and the benefits that are most valuable to you when shopping for a new credit card.

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

FAQ

Can anyone get a metal credit card?

Everyday consumers who meet a card issuer’s lending criteria can be eligible for a metal credit card. Unlike decades prior when metal credit cards were accessible to a select few by invitation only, today more card issuers offer their own metal credit card. That said, there are a number that are still invitation-only for high net worth individuals.

Are metal credit cards safe?

Yes, metal credit cards are safe to use. They have the same security features as their plastic credit card counterparts. The main difference is that the credit card metal material is more durable.

Can I request a metal credit card?

No, generally, a metal credit card is not a feature you can choose, although a few issuers may allow you to choose between plastic or metal. Instead, metal credit cards are more often offered for specific credit card products that you can apply for.

Why are some metal credit cards heavy?

Credit card metal materials vary depending on the card. Some card companies use materials like stainless steel, aluminum, titanium, or a blended mix of metals to create the card. Different metals have different weights, some of which may feel heavier.

Are metal credit cards generally better?

No, metal credit cards aren’t better than plastic cards in terms of how the card functions or its features. Metal credit cards do have an edge when it comes to durability, however.

Photo credit: iStock/VioletaStoimenova

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.

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Typically taking between five and 14 days, credit card refund timing can vary based on a number of factors. This includes the speed at which the merchant processes the refund, how soon you requested the refund, and the length of time it takes for your credit card issuer to credit the amount to your account.

If you’re feeling antsy about how long it takes for a refund to appear on your credit card, however, there are ways that you can speed up the process.

How Do Credit Card Refunds Work?

When you make a purchase on a credit card, your credit card issuer pays the merchant and the amount will go onto your account for repayment. Since the issuer technically paid for the purchase, any requests for a refund will go back to the credit card account. In other words, you won’t receive other forms of payment like cash for refunds when you use a credit card since you didn’t directly pay for the purchase.

There are two types of refunds — one for purchases and ones due to fraud.

•   In the case of purchases, you’ll deal with the merchant with whom you made the purchase. Once the merchant approves the refund, the credit card company will process it. Then, the amount refunded will show up on your credit card statement. The credited amount may not appear in the current billing cycle if you made a return in between billing cycles (the end of a billing cycle also tends to be when credit card companies report to credit bureaus).

•   As for fraud, these are charges to your account that you didn’t authorize. Most credit card companies will offer some form of fraud protection as long as you notify them within a certain period of time, usually 60 days. Once the issuer is notified of the fraudulent transaction, it will reverse the charges. You’ll then receive a credit for the amount charged, or the charge will get taken off your account completely, assuming you’re not falsely disputing a credit card charge.

Do All Credit Card Refunds Take the Same Amount of Time?

Not all credit card refunds will take the same amount of time. To get an idea of how a particular merchant accepts and processes returns, you can look at the merchant’s refund policy. Some items to note in this statement include:

•   Types of refunds offered: Some merchants may be lenient on their return policies, while others may only offer store credit for returns, for instance.

•   Refund times: Merchants typically state when they’ll issue a refund, such as within a few business days or weeks.

•   How to make a return: Check to see whether you can make a return in person or if you can ship back the item. If you’re shipping, make sure to see if you or the merchant pays for shipping.

After the refund is processed, you’ll need to wait for your credit card company to post the refund or credit to your account. How long this takes will also vary depending on the issuer.

How Long Does a Credit Card Refund Take?

A credit card refund usually takes between five and 14 days after the customer makes the request.

Keep in mind that the rules for refunds can vary depending on your credit card issuer and how long it takes the merchant to process the refund. The faster the merchant processes the refund, the faster it will hit your account.

However, the above timeframe assumes that the merchant agrees to process the refund. If you were to dispute a credit charge, the process of getting a refund could take much longer. Notifying your credit card company as soon as you can is helpful because it could take some time for them to complete their investigation — they have up to 90 days to do so.

Recommended: What is a Charge Card

Factors That Determine How Long a Credit Card Refund Takes

The two main factors that determine how long a credit card refund takes is the type of refund you’re requesting and where you made the purchase.

The Type of Refund It Is

As mentioned before, credit card disputes — whether for fraud or a credit card chargeback request for a product you never received — may take longer compared to refunds for purchases. Plus, you’ll need to make sure you contact the credit card company within 60 days of the billing or fraud dispute. From there, the issuer should have the dispute resolved within two billing cycles, or up to 90 days.

Where You Made Your Purchase

Different merchants have varying refund policies — the longer it takes the merchant, the longer it will take for the refund request to reach your credit card issuer. Here’s a sampling of some of the refund policies at popular retailers:

•   Amazon: It can take up to 30 days to process a refund. After an item arrives at the fulfillment center, credit card refunds are typically processed within three to five days. Once a return is processed, the funds will appear in your account, usually within three to five business days.

•   Square: Any merchant that uses Square to accept purchases will take two to seven business days to process a refund. It can then take an additional two to seven business days for the refunded amount to appear in your account, resulting in a total credit card refund time of nine to 14 business days.

•   Walmart: Refunds tend to take up to 10 business days to process.

How to Speed up the Refund Process

The good news is that there are some ways you can help to speed up the refund process.

Get It There Faster

Some retailers have multiple ways to return items, and certain methods have faster processing times than others. For instance, many major retailers process refunds faster (in some cases, immediately) if you make a return in-person at one of their store locations instead of mailing back the item.

Make Use of Loyalty Benefits and Store Credit

You may be able to receive expedited shipping for returns or faster refund processing times if you belong to a merchant’s loyalty program. Often, you also may be able to get a refund faster if you opt to receive a store credit instead of getting a refund issued to your credit card.

How Does a Refund Affect Your Credit Card Account?

Refunds are typically treated as an account credit. There’s no credit card refund issued in the form of cash since you borrowed the money from the credit card issuer to make the purchase in the first place.

While the purchase is still billed to your account, you’re technically responsible for payment. If you made the purchase, paid it off once the billing cycle ended, and then requested a refund, you’d get a credit to your account. Due to credit card rules, the refund does not count as a partial payment.

No matter how long you wait for a refund, it’s important to manage your account wisely and make sure you’re using a credit card responsibly so you don’t end up overextending yourself. As long as you pay your bill by the due date, you won’t risk hurting your credit score while you’re waiting for your refund.

Recommended: When Are Credit Card Payments Due

Refunds on Rewards and Fees

Credit card companies usually won’t refund any interest or fees you may have paid because you carried a balance for a purchase that you’re now trying to get a refund for. Similarly, if you made a purchase while you were overseas and were charged a foreign transaction fee, you most likely won’t get a refund for that either.

When it comes to rewards, whatever you earned for the purchase will get deducted from your earnings after the refund is processed and posted to your account. You end up with a negative rewards balance if you redeemed all of your points before requesting a refund.

The Takeaway

Credit card refunds typically take between five and 14 days. Being aware of how credit refunds work helps you to understand how to keep better track of your credit card statements and rewards earnings. It can also help you to determine which credit cards are better used for certain situations.

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

What happens to my rewards if I request a refund?

Your rewards will be deducted from your current balance after your request for a refund is processed.

How long does it take for a refund to appear on a credit card?

A refund may take up to seven or even 14 days to appear on your credit card statement. This timeframe can vary depending on your card issuer, the merchant, and what type of refund request it is.

Are credit card refunds instant?

Credit card refunds typically aren’t instant. This is because it takes time for the merchant and credit card company to process it.

Will a delayed refund hurt your credit?

A delayed refund typically won’t hurt your credit as long as you continue to make on-time payments and are generally responsible with your credit card usage.

Photo credit: iStock/MBezvodinskikh

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.

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