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There are several reasons why your credit card might get declined when trying to make a purchase. For instance, it could happen due to insufficient funds or because you’ve maxed out your card. Ultimately, the reason why your card is being declined depends on the particulars of your situation.

Awkward? Frustrating? Embarrassing? You bet. And in some instances, having your card get declined — especially when you have money — can be worrisome and costly. Let’s take a look at seven common reasons why your credit card may get declined and what you can do if it happens to you.

What Does It Mean for Your Credit Card to Be Declined?

When a credit card is declined, something went awry, and your transaction wasn’t processed. In turn, you won’t be able to make a purchase with that card. That’s because the credit card issuer did not provide authorization on your account — an essential component to what a credit card is and how credit card transactions function.

Sometimes, your credit card is declined due to what turns out to be an easy fix — for instance, a simple blunder like punching in the wrong ZIP code or a chip malfunction. In other cases, the reason might be something more complex and require steps to resolve before you can resume using a credit card.

7 Reasons Why Your Credit Card May Have Been Declined

Standing at the register wondering, ‘Why is my card being declined?’ Knowing the reason can help prevent the situation from happening again and ensure that future transactions go through smoothly.

1. You’ve Met Your Credit Limit

If you’ve maxed out your card — meaning you reached your credit limit — the issuer might block further purchases from going through.

Your credit limit is how much credit a card issuer extends you on a particular card. This amount varies from cardholder to cardholder, and it hinges on a handful of financial factors. You can find your credit limit on your credit card statement as well as in your cardholder agreement.

You’re more likely to reach your upper credit limit if you’re carrying an existing credit card balance. Beyond causing your credit card to get declined maxing out on your card — or getting close to it — can ding your credit. That’s because it increases your credit utilization rate, which is a factor in determining your credit score. It’s generally recommended to keep your credit usage below 30%.

What to do: Pay down your balance. You can also request a higher credit limit, but this could open the door to racking up more debt.

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

2. Your Transaction Was Flagged as Suspicious

Wondering ‘why is my card getting declined when I have money?’ In this scenario, it could be due to something entirely out of your control. For instance, the card issuer might block a transaction from going through to protect you from fraudulent activity.

Fishy purchases might include a transaction for a big-ticket item or a first-time purchase from a website or app. Or, it may raise a red flag to the card issuer if you use a card after a long dormant, or if there’s a cascade of purchases made in different locations within a short period of time.

What to do: Often, the card issuer will contact you to let you know that there’s been suspicious activity on your card and that your card has been temporarily blocked. You’ll be asked to review the last few transactions to make sure they’re indeed legitimate and that they were made by you. You can also reach out to the credit card company to see why your card has been blocked.

3. There’s a Large Transaction Pending

A merchant might request a credit card hold on your account if you make a large-ticket purchase. That’s because the merchant wants to ensure it will get paid what it’s owed. If there’s a hold on your card, that means that a portion of your credit limit is set aside, which could prevent further transactions from being authorized.

Holds are also common for transactions where the grand total might not be determined when you make an initial payment — think hotels, resort fees, purchases on cruise ships, and car rentals. The hold is usually lifted a few days after a transaction is cleared, if not sooner.

What to do: You can clear a hold by either reaching out to your credit card issuer or the merchant and requesting that it’s lifted. While there are no guarantees, it’s worth asking.

Recommended: What is the Average Credit Card Limit

4. You Provided Incorrect Payment Details

Punching in incorrect payment details — think your billing address, card number, credit card expiration date, or security code — can result in your card not going through. And when you’re trying to use your card at the gas pump or at a brick-and-mortar store, entering the wrong ZIP code on the keypad can also trigger a “card declined” message.

What to do: Double-check all information before attempting to resubmit payment. Or, if you’re making an in-store purchase, consider using a mobile payment platform.

5. You’ve Defaulted on Payment

One of the significant consequences of a credit card late payment is that your card issuer might block you from making further purchases. A single late payment usually won’t trigger this result, but if you’re late for several months in a row, you might default on your card. In turn, your transactions might not go through.

Not only does falling behind on your payments impact your ability to tap into your card to pay for things, but it also dings your credit. Plus, it can trigger late fees.

What to do: Make a credit card payment as soon as you can. Once your payment is posted, your card should be unblocked and you can start using it again.

Recommended: When Are Credit Card Payments Due

6. Your Credit Card Is Deactivated or Expired

Cards usually expire three to five years from its issue date, after which point you can no longer use the card. Because the period until expiration varies, don’t forget to glance at the expiration date on a credit card if it’s been some time since it’s gotten some use.

You also won’t be able to use a credit card that’s been idle for a long stint or deactivated entirely. How long it takes for your card to be deactivated due to a lack of use will vary.

What to do: If you’re juggling multiple credit cards, remember to routinely check the expiration dates. You might also consider keeping a log of when each card expires, or when you last used it.

7. Your Purchase Was Attempted While Traveling

If a purchase was made in Prague and you live in Pittsburgh, this could alert the card issuer of potentially suspicious activity. In turn, a temporary freeze might be placed on your account.

What to do: Set a travel notification before you depart. Some card companies make it easy for you to set a notification on its mobile app. Otherwise, give the issuer a call to give them a heads-up of your travel dates and planned destinations.

What to Do if Your Credit Card Is Declined

The steps you’ll need to take to get to the bottom of a credit card getting declined largely depends on why it happened. In general, however, here are some moves you should make if your card was declined.

Contact the Credit Card Company

Reaching out to the credit card company can help you figure out exactly why your card was declined. If it was due to reasons such as suspicious activity or because you were traveling, you can verify the transactions. In turn, your hold can get lifted.

Verify Account Details

Incorrect information stored on retailer accounts, payment platforms, and your digital wallet could result in a failed transaction. Check to make sure the details on the cards on file are accurate.

Make a Card Payment

If you’re behind on your payments, make a credit card minimum payment as soon as possible. Once the payment goes through, the card issuer will likely unblock your card.

Preventing Your Credit Card From Being Declined

To avoid a declined credit card in the first place, mind these steps:

•   Set card alerts. Signing up for email or text alerts for your credit card transactions will help you stay on the lookout for suspicious activity. You can get notifications when purchases are made over a certain threshold or for any in-store, online, or over-the-phone purchases.

•   Keep tabs on your card balances. Monitor your spending and check how much of a balance you have on your cards. Stay below your credit limit to remain in the clear. As discussed previously, maxing out your cards — or nearing the threshold — will put you in danger of a declined credit card.

•   Stay on top of your payments. Make it a priority to stay on top of paying off your cards. Pay at least the minimum amount required by the credit card payment due date. Consider putting your card payments on autopay, which will help you ensure you make your payments on time. On-time payments will also help boost your credit score and avoid late or returned payment fees.

•   Set travel notifications. Some credit cards have a travel notification feature on their app. Before you depart, reach out to your card issuer to let them know when and where you’ll be traveling.

The Takeaway

Having your credit card declined while trying to pay for something can feel frustrating. It’s important to figure out why your card is being declined, whether it’s due to late payment or an expired card. From there, you’ll know what steps to take to prevent it from happening again and ensure that you can use your card when you need it.

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 a credit card be unblocked?

Yes, you can unblock a credit card. How you’ll do so depends on the reason it was blocked in the first place. As such, you’ll first want to get to the bottom of why your credit card was blocked. Then, you’ll need to take the necessary steps to release the block. For example, if your card was blocked due to suspicious activity, you’ll need to call the card issuer and confirm you made the last few purchases.

How long does it take to unblock a credit card?

It depends. If it’s a temporary block, your card can get unblocked immediately. But in other instances, it can take a couple days or even a couple weeks to unblock a credit card.

How can I check the status of my card?

You can check the status of your card by logging onto your account via a computer or mobile app. You can also check its status by calling the customer service number listed on the back of the credit card and inquiring.

How long does it take for a declined transaction to come back?

It depends on the card issuer and the reason why the transaction was declined. In some cases, it can take a few days. And in other cases, it can take longer.

Photo credit: iStock/bernardbodo

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.

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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Making on-time payments is not only financially responsible, but it can help you with building and maintaining a high credit score. But what about paying your credit card early? Far from being bad, paying your credit card before the due date, or even making extra payments each month, might offer some benefits — including a positive impact on your credit score.

To decide if you should pay your credit card early, consider the benefits and weigh whether it’s financially worth it for you to pay your credit card bill before the statement closing date.

What It Means to Pay Your Credit Card Early

In a nutshell, paying your credit card early means you’re making your monthly payment before your due date. Or, it could mean putting extra payments toward your credit card before the billing cycle ends.

For instance, let’s say you check your credit card transactions online a few days before your billing cycle ends. You decide you want to pay about half of the balance right then, so you make a bank transfer through your online account, constituting an early credit card payment. Then, once you received your credit card bill after the grace period, you’d pay off the remaining balance.

Recommended: Tips for Using a Credit Card Responsibly

Understanding Your Credit Card Billing Cycle

Your credit card due date falls on the same date every month. Once you reach the end of your billing cycle, your credit card issuer will send you a statement letting you know the total amount that’s due, the minimum amount you’ll need to pay, and the credit card payment due date.

From the point your billing cycle ends up until your payment due date, you’re in what’s known as a grace period. During the grace period, you won’t be charged interest, assuming you’re paying off your balance in full by the due date of each billing cycle. This is a big perk, given how credit card debt is hard to pay off.

To determine the length of your credit card’s billing cycle, you can check your cardholder agreement or contact your issuer. You can also calculate the number of days between the start and end dates of the billing cycle — you should be able to find that on your credit card statement. In general, however, billing cycles last around 28 to 30 days.

Recommended: What is a Charge Card

Potential Benefits of Paying Your Credit Card Early

If you’re wondering, ‘Is it bad to pay your credit card early?,’ there’s no need to worry.

In most cases, the decision to pay off your credit card bill early is beneficial to your credit.

Reduce Interest Charges

Credit card companies tend to charge their cardholders interest when they carry a balance from month to month. If you pay off your credit card early — especially if you pay off the balance in full before the end of the billing cycle — that means you could pay less in interest (or even no interest at all).

Every little bit can help, because the higher your credit card balance, the more interest you could end up paying. If you’re unsure of how much paying off your credit card early can help, consider using a credit card payoff calculator to help you determine your potential savings.

Recommended: How to Avoid Interest On a Credit Card

Reduce Credit Utilization

Credit utilization is the percentage of your total available revolving credit you’re using. A lower credit utilization means that you’re not using as much credit, which could signal to creditors that you’re financially stable enough that you don’t need to rely on credit. In other words, your credit score could go up when your credit utilization is low, and the opposite could happen when it’s high — it’s generally recommended to keep it below 30%.

By making an extra credit card payment earlier than when your current billing cycle ends, you may be able to lower your credit utilization ratio. Even if you’re making a payment before the due date, you could still lower your credit utilization which can positively impact your credit scores.

To calculate your current credit utilization, add up all of your current credit card balances and divide that amount by your total credit limit. For example, if you have three credit cards each with a limit of $5,000 — $15,000 in total — and respective balances of $1,500, $800, and $2,000 from using your credit cards. In this example, your credit utilization would be around 28%.

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

Avoid Late Fees

Paying your credit card early — even if you’re not paying off your balance in full — means you’ll reduce your chances of getting charged a late payment fee. However, if you have a balance remaining from the previous billing cycle, note that early payments could go toward those previous charges first.

To be clear, you need to pay at least the credit card minimum payment stated on your credit card balance to avoid late fees. For instance, if you make extra payments but still have a balance leftover by the end of the billing cycle, your credit card could mail a credit card statement with the remaining balance due, plus a minimum amount you’re required to pay. In this case, you’d need to pay that amount before the due date to avoid paying late fees.

To make sure you’re still making on-time payments, consider scheduling payments, setting up autopay, or putting reminders on your calendar to help yourself remember to pay your credit card bill.

Recommended: When Are Credit Card Payments Due

When Is the Best Time to Pay a Credit Card Bill?

There isn’t a best time to pay a credit card bill, but it’s not a good idea to pay your credit card bill late — meaning after your due date has already come and gone.

There are a number of consequences of credit card late payment. Paying late means that you’ll get hit with late charges, and it could have a negative impact on your credit score. Depending on how late you are with paying your bill, your credit card issuer could also enact a penalty APR, which is higher than your regular one.

The Takeaway

Paying your credit card early can offer plenty of benefits. This includes potentially lowering your credit utilization, avoiding late charges, and reducing your interest charges.

To help you save more money when using your credit card, consider using a credit card that offers a competitive interest rate and allows you to earn rewards.

FAQ

Will paying my credit card bill early affect my credit?

Paying your credit card bill early can help to boost your credit score because on-time payments are one of the major factors that affect your FICO score. Plus, it could lower your credit utilization ratio, another major factor that goes into calculating credit scores.

Is it ever bad to pay my credit card early?

It’s not bad to pay your credit card early since it shows that you’re a responsible cardholder. As long as you make at least the minimum payment, you won’t get hit with late fees or other types of consequences, such as a negative mark on your credit report.

What happens if I pay the credit card bill before it is billed?

If you pay your credit card bill before the end of your billing cycle, the payment will either go toward the previous month’s statement — if you carry a balance — or toward the current balance. In any case, paying a credit card early will lower your statement total and could boost your credit by lowering your credit utilization ratio.

Can I pay my credit card the same day I use it?

Yes, you can. However, you may want to wait until the payment has been posted to make sure the amount you’re putting toward your bill is correct.

Photo credit: iStock/andresr

¹See Rewards Details at SoFi.com/card/rewards.

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.

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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Getting out of credit card debt may be easier by taking advantage of balance transfers. Moving your high-interest debt to another credit card with a lower interest rate can save you on interest and also allow you to streamline multiple debt payments into one.

Before you take the leap, it’s important to know how to do a balance transfer on a credit card. It’s also critical to know what to look for when choosing a balance transfer card to help ensure that making this financial move pays off.

How Do Credit Card Balance Transfers Work?

Completing a balance transfer is one way that you can effectively pay a credit card bill with another card. A credit card balance transfer allows you to take the balance from one or multiple credit cards and transfer it to a new credit card.

Ideally, you’re transferring the balance to a credit card with a lower interest rate. Some balance transfer credit cards even offer a 0% introductory annual percentage rate, or APR, for a predetermined amount of time, which can allow you to focus on paying down your balance without accruing interest.

Balance transfers can also allow you to simplify your payment schedule by rolling all of your credit card debts onto one new card that you’ll then work on paying off. That way, you’ll only have to worry about one monthly payment rather than multiple due dates and minimum required payments. However, you’ll likely incur a balance transfer fee in order to move over your balance to the new card.

Keep in mind that while credit card balance transfers are helpful when it comes to potentially saving on interest and simplifying payments, they aren’t an instant way to get out of debt. You need to commit to using a credit card responsibly by making on-time payments and avoiding getting into more debt. You’ll also want to ensure that you can pay off your balance before any promotional APR offer ends, at which point the interest rate will increase.

What to Consider When Choosing a Balance Transfer Credit Card

Before opening a new credit card and requesting a balance transfer, you’ll want to know a few things. Specifically, make sure you know how long the introductory APR offer will last, if there is one, as well as the types of debt you can transfer and the fees you may need to pay. That way, you can ensure you choose a credit card that meets your needs.

Length of the Introductory APR Offer

Many credit cards, in an effort to gain your business, will offer introductory APRs for as low as 0% — though you’ll most likely need good or excellent credit to qualify for these cards. When doing your research, make sure to look at how long the introductory period is, as they can last anywhere from six to 21 months.

Due to how credit cards work, once the introductory period ends, the credit card issuer will charge you their normal APR — and it could be higher than your old credit card. That’s why it’s critical to assess whether the introductory period will provide enough time for you to pay off your balance in full.

Recommended: What is a Charge Card

Types of Debt You Can Transfer

Different credit card issuers will have varying policies on what types of debt you can transfer. Aside from credit card debt, you may be able to transfer other types of debt, such as:

•   Personal loans

•   Auto loans

•   Medical debt

•   Retail or store cards

•   Student loans

Additionally, keep in mind that issuers may not allow balance transfers from certain cards.

If you know there’s a certain type of debt you’d like to transfer, make sure to check with a credit card issuer to find out what is or isn’t allowed before signing up for a new card.

Balance Transfer Fees

Although you may not have to pay interest if you have a 0% APR introductory period, you may still have to pay a balance transfer fee. This fee is usually either a percentage of your transfer amount — typically 3% to 5% — or a flat fee, depending on the card issuer. For example, if you want to transfer $6,000 and the credit card issuer charges a 3% balance transfer fee, you’ll need to pay $180.

It’s important to factor this fee into the equation to ensure making a balance transfer will actually save you money. You should be able to find out what the balance transfer fee is by looking at the cardholder agreement for the credit card.

Timeline for Balance Transfers

Some credit card issuers have deadlines as to when you can conduct a balance transfer after opening a card. For instance, you may only have a matter of weeks from when you open the card to transfer over your balance.

The exact timeline will vary from issuer to issuer, so make sure to take a look at your issuer’s credit card rules, and be prepared to act when you get your new card.

How to Transfer A Credit Card Balance to Another Card: Step by Step

If you decide you want to transfer existing debt to another credit card, you’ll first need to take stock of your current debts and their interest rates. Also determine how much of your debt you want to transfer. From there, here’s how to do a credit card balance transfer.

1. Apply for a Balance Transfer Card

Once you’ve picked the balance transfer credit card you want, it’s time to apply for it. To do so, you’ll need to submit the required information, which may include your name, address, Social Security number and income.

Additionally, you may be subject to a hard credit inquiry, which could temporarily affect your credit score. If you’re approved, you can take the next steps.

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

2. Transfer the Balance

Contact your new credit card issuer to ask what the exact steps are to conduct a balance transfer, and to find out whether it’s possible to transfer the amount you want to. When it comes to how to transfer a balance from one card to another, there may be several methods available to you, including:

•   Online transfer: You may be able to log into your online account and request a transfer by filling out a form. In some cases, you may be able to request a balance transfer online when you fill out your credit card application.

•   Phone transfer: You may be able to call the number on the back of your credit card and make a transfer over the phone. Make sure you have all the required details on hand before calling.

•   Balance transfer checks: Some credit card companies issue you checks to make the balance transfer. You’ll make the check payable to the credit card company from which you want to make the transfer. Just make sure to ask whether this will be considered a cash advance (that’s what you’d do if you were trying to transfer money from a credit card to a bank account, and it generally has a higher interest rate).

3. Wait for the Balance Transfer to Go Through

After you’ve made your request, you’ll need to wait for your new credit card to finish processing the balance transfer. In the meantime, keep your old credit card open and continue to make payments on any amount that’s due. That way, you’re not on the hook for a late payment, which could lead to late fees and have an effect on your credit.

Recommended: When Are Credit Card Payments Due

4. Pay Off Your Balance

Once the balance transfer is complete, you can start paying it down. Follow the terms stated on your cardholder agreement to ensure that you continue to qualify for the introductory APR — for instance, some issuers may revoke your rate if you make late payments.

Aim to pay off the entire balance before the introductory period is over and a higher interest rate kicks in.

Recommended: How to Avoid Interest On a Credit Card

Credit Card Balance Transfer vs Personal Loans: What’s the Difference?

Both credit card balance transfers and personal loans give you the opportunity to save on high-interest debt, but there are key differences between the two. For one, personal loans are a type of installment loan, where you borrow a lump sum of money and pay it back over time. Meanwhile, a credit card is a type of revolving credit that allows you to keep borrowing money up to your credit limit as long as you pay down your balance.

Personal loans tend to charge interest right when the loan is disbursed, whereas with a credit card, you may be able to take advantage of an introductory APR, if you qualify for one. However, balance transfers tend to have lower limits compared to personal loans. Plus, personal loans may offer lower interest rates compared to a credit card’s purchase APR, which is what will kick in after the promotional period ends.

Recommended: What is the Average Credit Card Limit

Doing a Credit Card Balance Transfer: What to Know

Getting a credit card balance transfer can help you manage your debt, but isn’t the answer for everyone. To decide whether it’s right for you, determine the amount of debt you want to transfer and see whether it’s likely the amount will be within the credit limit of your new credit card. If you have a high amount of debt, a personal loan may be a better choice.

In addition, a balance transfer only makes sense if you can qualify for a lower interest rate than you have with your current credit card. If your credit score isn’t that great, you may not qualify for an introductory APR offer. In this case, it may be better to seek alternatives, such as taking out a personal loan or sticking with your current credit card until you can raise your credit score and qualify for a better card.

Recommended: Can You Buy Crypto With a Credit Card

The Takeaway

Knowing the specifics of how to transfer a credit card balance can help you determine if doing so is financially smart. Take the time to calculate the fees you may be paying for a balance transfer, and compare that amount to how much you’d be saving on interest charges. If the fee you’d pay is much lower than the interest charges, transferring a balance from one card to another may be worth it.

Looking for a new credit card?

FAQ

Do balance transfers affect your credit score?

Balance transfers can affect your credit score since you’re applying for new credit, which may result in a hard credit inquiry. This can cause a temporary drop in your score.

How long does it take to transfer a balance from one credit card to another?

Typically, a balance transfer takes anywhere from five to seven days. However, it may take up to a few weeks to complete depending on your credit card issuer.

How do you qualify for a balance transfer?

You typically need a good or excellent credit score — meaning 670 or above — to get approved for a balance transfer credit card.

Photo credit: iStock/CentralITAlliance

¹See Rewards Details at SoFi.com/card/rewards.

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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In a perfect world, you’d be able to zap away debt in a flash. But the reality is, sprinting through payments on high-interest debt isn’t exactly easy to do. That’s because you’ll still need to juggle staying on top of bills and covering daily expenses, among other financial obligations.

If you’re wondering whether it’s better to pay off your credit card or keep a balance, the answer largely depends on your particular set of circumstances. Let’s take a look at the pros and cons of paying off credit cards in full vs. over time to help you determine if you should pay off your credit card in full or space payments out a bit.

Recommended: When Are Credit Card Payments Due

Does Paying Down Credit Cards Slowly Affect Your Credit Score?

Paying off credit cards slowly can impact your credit score because it can affect your credit utilization, which makes up 30% of your consumer credit score. When you’re slow to pay off your credit card balance, your credit utilization — or how much of your total credit you’re using — can be higher. A higher credit utilization rate can adversely affect your credit score.

What Is Credit Utilization?

Credit utilization measures how much credit you have against how much credit you’ve used. This ratio is expressed as a percentage. You can find your credit utilization ratio by dividing your total credit card balances by your total credit limits across all of your cards.

How Credit Utilization Works

As we discussed, credit utilization is expressed as a percentage, and you can find it by dividing your credit card balances by your credit limits. As an example, let’s say you have three credit cards, and your total credit limit across those cards is $30,000. The total of your credit card balances on all three cards is $9,000.

In that case, your credit utilization is 30%, as demonstrated by the math below:

Credit limit on Card 1: $8,000
Credit limit on Card 2: $12,000
Credit limit on Card 3: $10,000

Total credit limit: $8,000 + $12,000 + $8,000 = $30,000
Total balances across Cards 1, 2, and 3: $9,000

$9,000 / $30,000 = 0.30, or 30%

Recommended: What is the Average Credit Card Limit

How Credit Utilization Can Affect Your Score

The lower your credit utilization, the better it is for your credit score. It’s generally recommended to keep your credit utilization ratio under 30% to avoid negative effects on your score. Keeping your score below this threshold indicates to lenders and creditors that you aren’t stretched financially, are a responsible user of credit, and have available credit that you can tap in to.

If you’re wondering, do credit card companies like it when you pay in full? The answer is that it certainly helps with your credit score, as a low credit utilization ratio can positively impact your credit score, and credit card companies generally look more favorably upon higher credit scores.

Recommended: Tips for Using a Credit Card Responsibly

Differences Between Paying a Credit Card in Full vs Over Time

Trying to determine whether you should pay off your credit card in full? Here are some of the key differences between paying off credit cards in full compared to making payments over time:

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Reasons to Always Pay Off Your Credit Card in Full

When it comes to paying off your credit card in full, there are a handful of reasons why it could be a good idea:

•   Helps with your credit score: As we talked about, paying off your card balance means keeping a lower credit utilization, which can help keep you maintain a solid score.

•   Frees up money for other goals: By paying off your credit card bill sooner than later, you’ll free up that money you were putting toward debt payments. In turn, you’ll have “extra” cash to put toward savings, retirement, and your short-term and long-term goals.

•   Allows you to save on interest: The longer you stretch out your payments, the more you’ll end up paying in interest. By paying off your credit card in full each statement cycle, you won’t owe interest, given how credit card payments work.

Reasons to Pay Down Your Credit Card Over Time

While it may be ideal to pay off your credit card all at once, credit card debt is hard to pay off — especially when you’re spinning a lot of plates money-wise. Let’s take a look at why you might opt to pay down your credit card over time instead:

•   Allows for a more manageable debt payment schedule: Paying down your credit card over time won’t put pressure on you to cut back on your living expenses, or find ways you earn more so you can pay off your credit card balance more quickly. Depending on your situation, gradually making payments might feel like the more reasonable route.

•   Frees up money now: By not focusing on aggressively paying off your credit cards, you can potentially work on other money goals, such as saving for retirement or creating an emergency fund. Still, you’ll want to at the very least make your credit card minimum payment to avoid the consequences of credit card late payment.

Strategies for Paying Off Credit Card Debt

If the idea of paying off your credit card debt feels overwhelming, here are a few popular strategies to consider for crushing your debt.

Debt Avalanche Method

With the debt avalanche method, you focus on paying off the card with the highest interest rate first. Meanwhile, you’ll continue making the minimum payments on all of your other accounts.

Once your account with the highest interest rate is paid off, you’ll move on to focusing on the account with the next highest rate, continuing to make minimum payments on the others. You’ll continue this cycle until all of your debt is paid off.

The major benefit of this method is that you’ll save on interest payments.

Recommended: How to Avoid Interest On a Credit Card

Snowball Method

In this strategy, you make the minimum payments on all your cards by the credit card payment due date. Then, you put any remaining funds toward paying off the card with the lowest balance. Once that’s paid off, you move on to the card with the next lowest balance.

The main advantage of the snowball method is that it keeps you motivated to continue to pay off your debt. That’s because it feels good to get a card paid off, which is easier to do with a card that has a lower balance.

Debt Consolidation

With debt consolidation, you take out a new loan that you then use to pay off all of your outstanding debts. This effectively rolls all of your credit card payments into a single fixed payment each month.

In turn, debt consolidation can simplify your payments, and potentially lower your payments. However, depending on the new payment schedule and terms, you might end up paying more in interest over the course of the loan. Also keep in mind that you’ll generally need a decent credit score to qualify for debt consolidation.

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

When Carrying a Balance Hurts Your Credit Score

Carrying a balance on your credit card hurts your score if it pushes your credit utilization too high. You’ll want to keep your credit utilization under 30% to avoid adverse effects.

Keeping a low balance, which decreases your credit utilization, can help your credit score. Besides paying off your cards, other ways to lower your credit utilization are to open a new credit card or request a credit limit increase. Both of these actions will increase your overall credit limit, thus potentially improving your credit utilization rate.

Recommended: Can You Buy Crypto With a Credit Card

The Takeaway

While paying a credit card in full can help with your credit utilization, which also can improve your score, it’s not always realistic. You’ll want to weigh the pros and cons of both paying off credit cards in full and making payments over time to see which one is right for your current situation.

While making credit card payments is one way to lower your credit utilization, another option is opening a new credit card.

If you’re looking for a new credit card, you might apply for a credit card with SoFi.

FAQ

Is it better to pay off your credit card or carry a balance?

While paying off your credit card in full can help with your credit utilization ratio and save you on interest, spreading out your payments over time might make debt payoff more manageable. Which approach is best depends on your financial situation and preferences.

Does completely paying off a credit card raise your credit score?

Paying off a credit card can lower your credit utilization, which can positively affect your credit score.

Why did my credit score go down when I paid off my credit card?

Paying off your credit card doesn’t usually bring down your credit score. However, your credit score may drop if you closed your account after paying it off, as that can impact your credit mix or the average age of your accounts. It could also decrease your available credit, which can drive up your credit utilization.

Do credit card companies like it when you pay in full?

Paying in full shows creditors that you’re a responsible cardholder and that you have the financial means to pay off what you owe. It can also help to improve your credit score, which credit card companies look upon favorably.

Photo credit: iStock/Foxyburrow

¹See Rewards Details at SoFi.com/card/rewards.

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.

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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If you’re currently without a job — either temporarily or permanently — you may be wondering: ‘Do you need a job to get a credit card?’ While the answer will depend on your unique financial situation, know that it is possible to get a credit card with no job.

But even if you can get a credit card with no job, there are potential risks in borrowing money without a steady source of income. Here’s how you can get a credit card with no job, as well as the pros and cons to consider before you do.

Can You Get a Credit Card With No Job?

If you don’t have a full-time or regular job, you may still be able to get approved for a credit card. However, you may need to show other means of being able to pay your credit card obligations due to how credit cards work.

When applying for a credit card, credit card issuers are required to consider your ability to repay your debts when considering whether to approve your application. To determine whether you meet this credit card requirement, they’ll typically look at your income from a job or other sources. If you’re attempting to get a credit card with no job, this could include unemployment benefits, self-employment income, shared household income or retirement income.

What Does the Credit Card Act of 2009 Say?

The Credit Card Accountability Responsibility and Disclosure Act of 2009 (also known as the Credit CARD Act) is the federal law that governs many interactions between credit card issuers and applicants. One thing that the Credit Card Act of 2009 did was prevent credit card companies from issuing new cards to applicants under 21 years of age unless they have an adult cosigner or have proof of income. This makes it more difficult for young adults without a job to get their own credit card.

Guide to Listing Income on Your Credit Card Application

One of the biggest credit card rules is that you should always be completely truthful on your credit card application. If you don’t have a job or income, you should state that rather than inflating or lying about your total income.

If your issuer finds out that your application was not completely accurate, they may close your account. In turn, this could damage your credit.

Types of Income That You Can Report on a Credit Card Application

Now that you know the answer to the question, ‘can you apply for a credit card without a job?’, you’ll need to know how to fill out your application. You can use a variety of different types of income on your credit card application. Here are a few of the most common:

•   Employment income: Money you earn from employment is the most common source of income on credit card applications. This can include money from a seasonal or irregular job.

•   Self-employment income: If you have your own business, you can also include that on a credit card application. This can include money from contract or freelance work.

•   Unemployment benefits: Another potential source of credit card application income is unemployment benefits. If you’re temporarily out of work and receiving unemployment insurance benefits, you can include that on a credit card application.

•   Shared household income: The Credit CARD Act of 2009 states that you can include as income any money that you would reasonably expect to have access to. This could include a spouse’s income or an allowance provided by a family member.

•   Retirement income: Retirement benefits like a pension or Social Security are also considered an acceptable form of income for credit card applications. This also includes distributions from a retirement account.

Guide to Getting a Credit Card With No Job

If you don’t have a job and your other sources of income aren’t enough to get a standard credit card, then you do have a few other options you can consider.

Opt for a Secured Card

One option to consider is applying for a secured credit card. With a secured credit card, you generally make a refundable initial deposit. This deposit then serves as your total credit line. It is generally easier to get approved for secured credit cards than traditional, or unsecured, credit cards.

Become an Authorized User

Another possibility is to become an authorized user on a credit card. When you’re an authorized user on someone else’s account, only the primary account holder is legally and financially responsible for all purchases on the account. And if the primary account holder uses the card responsibly, it can help raise your credit score, even if you’re only an authorized user.

Consider a Cosigner

If you have a trusted friend or family member, you might also look at getting a credit card cosigner. Some credit card companies may not approve you for a new credit card on your own, but they may approve you if you have someone who will co-sign your application.

Keep in mind that a cosigner will be legally and financially on the hook for your purchases, so it may be difficult to find someone willing to cosign for you.

Look Into a Student Credit Card

Many card issuers offer a type of credit card marketed toward students. If you’re a student with a limited credit history and no income, you may stand a better chance of getting approved for a student credit card than a traditional credit card. Plus, these cards may have low fees and offer rewards tailored to students’ typical spending habits.

Pros and Cons of Getting a Credit Card When Unemployed

It is possible to get a credit card if you’re unemployed since you can list unemployment benefits, among other income sources, in your application. While there are certainly upsides to securing a credit card, you should carefully consider the downsides as well before applying for a credit card without a job.

Tips for Using a Credit Card Without a Job

While the answer to whether you have to have a job to get a credit card is technically no, there are some caveats attached to swiping your card without a steady income. Still, just because you don’t have a job doesn’t mean you can’t build your credit in your meantime. Here are some tips to keep in mind to use your credit card wisely:

•   Shop around for a card with a competitive rate: Especially if your financial situation has some uncertainty, you may end up carrying a balance at some points. To avoid paying any more than you need to in interest, make sure to take your time to shop around for the card that offers you the lowest rate.

•   Don’t spend more than you can afford to pay back: Before you use your credit card for any purchases, make sure that you’ll have the money to pay your bill off at the end of the month. If you won’t, you may need to reevaluate your overall spending habits to make sure you don’t fall into debt.

•   Pay each month in full to save on interest: One of the best things that you can do for your overall financial health is to reliably pay your bills in full, each and every month. If you do this, you won’t end up paying interest on your purchases.

•   Set alerts so you don’t miss your monthly payments: If you’re already tight on funds because you’re without a job, the last thing you want to deal with is late fees. Plus, aside from this cost, your credit score will also suffer. To make sure you remember to make payments on-time, consider setting an alert to remind yourself, or even autopay.

The Takeaway

It is possible to get a credit card with no job, but it may not be easy. And many premium or luxury credit cards may not be available to you. Make sure to account for all sources of income on your credit card application. Remember that in addition to income from employment, you can consider other forms of income like self-employment, retirement, or household income. Alternatively, you can consider options like a secured card, a student card or becoming an authorized user on someone else’s account.

If you do have good credit and a reliable source of income, you might consider the SoFi credit card.

FAQ

Can you get a credit card if you have no income?

Yes, it is possible to get a credit card if you have no income, but it may not be easy. Credit card issuers are required to consider your ability to pay your bills before approving you for a card. Keep in mind that you can use more than just money from employment as income. You can also use retirement, self-employment, or shared household income.

Do credit card companies know if you are unemployed?

Credit card companies do not directly know if you are unemployed, but your employment status is usually asked as a question on most credit card applications. However, if you already have a credit card account and then later become unemployed, that information is not generally shared directly with your credit card company.

Can you get a credit card when you’re on unemployment benefits?

Yes, it is possible to get a credit card if you’re on unemployment benefits. Credit card companies are legally required to consider your ability to pay all of your bills when deciding whether to approve you for a card. But this consideration can include income from many sources, not just income from employment.

What is the minimum income required to get a credit card?

There is not a set minimum income credit card requirement. Instead, different credit card issuers will consider your overall financial situation (including income) when deciding whether to approve you for one of their cards. While it is possible to get a credit card with no or low income, you may not be able to get approved for all credit cards.

Does unemployment affect credit?

If you lose your job and start receiving unemployment benefits, it won’t directly affect any credit cards that you already have. However, if your job loss starts to impact your ability to make your payments on-time, your credit card issuer may charge fees and/or raise your interest rate.

Photo credit: iStock/damircudic

¹See Rewards Details at SoFi.com/card/rewards.

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.

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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