What is an Online Credit Card?
An online credit card is a traditional credit card that a cardholder can use without having a physical card. Such cards include virtual credit cards that can be obtained in physical form at the request of the borrower.
Online cards include instant approval credit cards that allow the borrower to have the necessary credit card numbers before receiving a physical credit card. Such cards can also include credit options that are available for receipt only using a desktop or mobile device. The cards can be used in digital wallets such as Samsung pay, Google pay, or Apple pay.
Pros and Cons of Online Credit Cards
Pros
- Detailed customization of the card. Online cards, especially those that can be configured using a mobile device, offer holders both a change in the external design of the card and a change in some of its details. This is useful, for example, for those borrowers who are buying a subscription to a streaming service for the first time for a trial. The cardholder can change the credit card number after the purchase of the trial period, and the service will not be able to withdraw money from the card.
- Many online cards have a 0% intro APR period. Many online cards offer holders an introductory period lasting from 12 to 15 months, during which the borrower has 0% APR on purchases and balance transfers. To maintain 0% APR, the borrower simply needs to make minimal deposits to the balance. Often during this period, the size of some fees also decreases. For example, foreign transaction fees in the introduction period can be reduced by a couple of percents.
- Availability of cash back, rewards, perks, and sign-up bonuses. A large number of online credit cards offer the borrower sign-up bonuses, special perks, rewards, and cash back on everyday purchases. Usually, holders are offered a certain amount of reward points as a sign-up bonus, provided that they spend a certain amount from the card in the first months after account opening.
- The cardholder can use the card immediately after receiving the approval. All online cards offer instant access to card details. This allows the borrower to use the card immediately after receiving the approval. Usually, a physical card is delivered by mail in 5-7 days. While waiting for delivery, the cardholder can use it for all the usual purchases.
Cons
- There may be difficulties with reservations. Hotel reservations or car rentals may be canceled after the borrower changes the credit card number. Moreover, some hotels and car rentals do not accept such cards because they cannot withdraw money for a reservation if the cardholder changes its details.
- Payments using digital wallets are not available everywhere. Not all offline stores have terminals that accept NFC payment, that is, payment using digital wallets. In such places, online cardholders may have problems. The borrower is advised to check the places where they often make purchases.
Major Types of Online Credit Cards
- Starter Credit Cards are cards that are specially created for people who want to build credit. Such cards are also suitable for helping with rebuilding credit. Lenders do not have credit requirements for borrowers who open such cards. All a potential borrower needs to open an account is a stable source of income. Starter cards send data about the cardholder's payment behavior to three major credit bureaus such as Equifax, TransUnion, and Experian.
- Co-branded credit cards that are issued jointly by two parties. The first party is a bank or other financial institution, and the second party is a brand that offers cardholders bonuses related to this brand. For example, retail stores can offer promotions and discounts on purchases in their stores.
- Cash back credit cards allow cardholders to earn cash rewards with combined purchases in all categories. Usually, such cards have up to 6% cash back on eligible purchases in special bonus categories and from 1% to 2% cash back on other purchases. Bonus categories can be travel and dining purchases, drugstore purchases, and others. Borrowers can redeem cash back in statement credit on checking or savings accounts.
- Business credit cards are designed for business owners of any size. They help business owners to separate business expenses and personal expenses. Moreover, such cards offer various perks specially created for businesses. Business online banking allows the cardholder to track business expenses and income, optimize the budget and receive financing using a credit line.
- A secured credit card is a card whose credit limit depends on the size of the borrower's security deposit. A borrower who contributes a large amount of security deposit has a higher credit line. Such a card does not require a credit check as it has collateral in the form of a borrower's deposit.
The best online credit cards
Chase Sapphire Preferred Card
The Chase Sapphire Preferred Card is a rewards credit card that offers a variety of benefits and rewards for cardholders. Some of the key benefits include:
- Points. Cardholders earn 2X points on dining and travel and 1X points on all other purchases. Points can be redeemed for travel, gift cards, merchandise, and more.
- Sign-up bonus. New cardholders can earn a sign-up bonus of 100,000 points after spending $4,000 on purchases in the first 3 months from account opening.
- Travel benefits. Cardholders receive travel benefits, such as trip cancellation and interruption insurance, baggage delay insurance, and more.
- No foreign transaction fees. There are no foreign transaction fees, making it a good option for international travel.
- 24/7 access to a dedicated concierge. Cardholders have 24/7 access to a dedicated concierge for help with travel, dining, and shopping.
The rates and fees for the Chase Sapphire Preferred Card include a variable APR for purchases and balance transfers, with a range from 14.99% to 23.99% based on creditworthiness. There is also a balance transfer fee of either $5 or 5% of the amount of each transfer, whichever is greater. Additionally, there is an annual fee of $95.
Amazon Prime Rewards Visa Signature Card
The Amazon Prime Rewards Visa Signature Card is a cash back rewards credit card designed specifically for Amazon Prime members. With this card, cardholders can earn rewards on their purchases and enjoy various benefits.
- Cash back. 5% cash back on Amazon purchases for Prime members, 2% cash back on gas stations, restaurants, and drugstores, and 1% cash back on all other purchases. Cash back is earned as a statement credit or can be redeemed for purchases at Amazon. The rewards do not expire, and there is no minimum redemption amount.
The card has an APR for purchases of 17.24% to 25.24% variable. There is no annual fee and no foreign transaction fee. The late payment fee is up to $39, while the returned payment fee is up to $29.
SoFi Credit Card
The SoFi Credit Card is a cash back rewards card offered by SoFi, a financial technology company. Here are the key benefits, rates, fees, and rewards associated with this card:
- Cash back. Cardholders can earn 1% cash back on all purchases, with the option to upgrade to 2% cash back on select categories, such as dining and travel.
- Flexible payments. Cardholders can choose to pay off their balance in full each month or make partial payments.
- Credit reporting. The card reports to all three major credit bureaus, helping cardholders build or improve their credit score.
- Customer service. SoFi offers 24/7 customer support and free access to financial advisors for all cardholders.
The card's interest rate is a Variable APR on purchases and balance transfers ranging from 14.24% - 25.24% and is determined by the Prime Rate. Cardholders should be aware that interest charges may apply if they carry a balance on their card. A balance transfer fee of either $5 or 3% of the transfer amount, whichever is greater.
Virtual Credit Card by Standard Chartered Bank
The Virtual Credit Card by Standard Chartered Bank is a type of credit card that can be used for online transactions, offering customers a convenient and secure way to make purchases. The key benefits of the card include:
- Security. With the virtual card, you can generate a unique virtual card number for each online transaction, reducing the risk of fraud and unauthorized purchases.
- Convenience. You can use the virtual card to make purchases at any online merchant that accepts Mastercard, making it easy and convenient to shop online.
- No physical card is required. As the card is virtual, you don't need to carry a physical card with you, making it easy to access and use anywhere, anytime.
To get the fees and interest rate on this credit card, you need to apply.
Juni Mastercard
The Juni Mastercard is a credit card designed for children and teens between the ages of 8 and 18. The card offers a number of benefits aimed at helping young people learn how to manage money responsibly. Some of the key benefits of the Juni Mastercard include:
- No credit check is required. There is no credit check required to get a Juni Mastercard, so it is a good option for kids who have not yet established a credit history.
- Parental controls. Parents can monitor their child's spending through the Juni app and set spending limits to help teach financial responsibility.
- Rewards program. The Juni Mastercard offers a rewards program that rewards kids for making smart financial choices. For example, kids can earn rewards for paying bills on time or for staying within their spending limits.
- No fees. There are no annual, monthly, or overdraft fees associated with the Juni Mastercard, making it a cost-effective option for families.
- Accepted worldwide. The Juni Mastercard can be used anywhere Mastercard is accepted, giving kids the flexibility to use it when they need it.
In terms of rates and fees, the Juni Mastercard has an annual percentage rate (APR) of 19.99%. There is also a one-time $5 activation fee associated with the card.
How to Choose an Online Credit Card?
When choosing a suitable credit card, the borrower needs to pay attention to several important factors.
The most important aspect that is recommended for the borrower to consider is APR. Online credit cards often offer an introductory period during which the cardholder has 0% intro balance transfer APR and 0% APR on purchases. To maintain such an APR during the intro period, the borrower simply needs to make a minimum payment every new billing cycle. Usually, the APR after the end of this period is from 12% to 28%, depending on the borrower's credit history.
It is also important for a potential borrower to study what fees an online card requires. The most profitable online cards do not have an annual fee and have a low balance transfer fee and foreign transaction fee. However, some cards that require annual fee payment offer additional perks to borrowers. Some cards may have a cash advance fee.
To find the most profitable online card, the borrower also needs to consider which perks and rewards are suitable for their needs. For example, travel rewards cards that offer cardholders discounts on airline tickets, additional free luggage, and discounts in hotels are perfect for those who travel often.
How to Apply for an Online Credit Card?
Potential borrowers who apply for a cash back card also need to study the terms of how to redeem rewards. The best condition will be to receive a statement credit on a checking or savings account.
Main Requirements
For account opening of any type of credit card, the borrower must be at least 18 years old and must be a citizen or permanent resident of the United States. To confirm the identity of a potential borrower, landers are usually asked to upload a driver's license, passport, or state-issued ID.
Different types of online credit cards have different minimum credit score requirements. Starter cards do not require a credit report and, therefore, can be taken by young people without a credit history. Online cards that have the most offers for rewards, perks, and other bonuses usually require good credit and can rarely accept fair credit. To qualify for the most profitable card, the borrower must have a high credit score of at least 700. Some lenders can accept a 650 credit score.
In addition to the credit score requirements, lenders also have requirements for other aspects of the loan. The borrower should not have a bankruptcy in the last 7 years and should not have more than 30 days of late payments on previous loans.
The future cardholder must have a stable source of income and a debt-to-income ratio below 45%. To confirm the borrower's income, lenders may ask to download pay stubs, tax returns, W-2s, or bank statements.
Application Procedure
For account opening, the borrower needs to go to the bank or lender's website and click on the "Get Started" or "Apply Now" button.
- Fill in personal information, namely name, email, phone number, residential address, and zip code.
- Choose whether you own real estate or rent a house and how much you pay per month for it.
- Fill out expenses for other loans if they have any. After that, enter information about employment status or other sources of income and the amount of annual income.
- Employed borrowers must also fill in the employer's phone number and the position they occupy.
Filling out the application with all the necessary information takes only 5-10 minutes. The bank will review the information and gets in touch with you within a week.
The Ways to Use an Online Credit Card
Online cards are suitable for both online purchases and in-store purchases, as well as traditional credit cards. Online shopping is quite simple if the cardholder connects the online card to the digital wallet. Such cards can be used for large purchases since, unlike a personal loan, if the borrower pays the entire amount for the purchase during the period in which the intro purchase APR is 0%, they will pay $0 for interest.
The borrower can also use online credit cards with a low-interest rate to balance transfer an existing loan. Debt consolidation can help lower the APR and the amount of debt. This is especially beneficial during the intro APR period when the intro balance transfer APR is 0%.
