<p><a href="https://www.businessinsider.com/category/women-of-means"></a></p><div type="image" title="Kristin Burton's headshot." height="3024" width="4032" msid="90107748" hostid="261"></div><ul class="summary-list"><li>Due to the power of compound interest, your 20s are your prime <keyword id="11896289" type="UNKNOWN" weightage="60" keywordseo="investing" source="Orion">investing</keyword> years.</li><li>Kristin Burton, a physician assistant, missed out on her prime investing years, and she's not alone.</li><li>If you haven't started investing yet, it's not too late.</li></ul><p>Kristin Burton missed her prime investing years.</p><p>She graduated with $161,000 in student-loan debt after seven years of school, and for 16 months, Burton and her husband lived on his $40,000 annual salary in order to use hers exclusively for debt repayment. In addition to her regular hours as a physician assistant, she picked up extra shifts at her office and at four or five others.</p><p>She was free of student-loan debt by the time the pandemic started, but she continued to take extra shifts to pay off her mortgage. "I think at one point, I worked 15 12-hour night shifts in a row," Burton told Insider. "I was exhausted, but we needed people."</p><p>Even though she paid off her student loans and her mortgage completely, she regrets not <a href="https://www.businessinsider.com/how-to-invest-in-stocks" target="_blank" rel="noopener">investing in the stock-market earlier</a>. With undergrad and grad school combined, she spent most of her 20s in school or trying to figure out what to do with her student loans in the first place.</p><p>"I missed a lot of the time that other people are usually investing," Burton said. "Even with just smaller amounts of money, there could have been huge progress."</p><h2>Compound interest means investing sooner is better</h2><p>"The power of compound interest is why your 20s are prime investing years," said <a href="https://rkcapital.com/" target="_blank" rel="noopener">Hannah Whatley</a>, a financial planner at Rather &amp; Kittrell. </p><p>Compound interest is also known as "interest earned on interest." For example, if you have $1,000 in an account that earns 10% interest each year, you'll have $1,100 at the end of the year. If you keep it in the same account for another year, you'll earn 10% interest on the new balance of $1,100, which means you'll have $1,210 at the end of the year.</p><p>From there, your investment can grow exponentially over time. But compounding interest can work against you in the context of <a href="https://www.businessinsider.com/millennials-dont-understand-student-loan-terms-interest-2020-1" target="_blank" rel="noopener">student loans</a> or credit-card debt.</p><p>Burton, who coaches other <keyword id="12055589" type="UNKNOWN" weightage="60" keywordseo="healthcare-workers" source="Orion">healthcare workers</keyword> on navigating their personal finances at <a href="https://www.strivewithkristin.com/" target="_blank" rel="noopener">Strive Coaching,</a> has found she isn't alone. Since launching her business, over 350 healthcare professionals have enrolled in her courses, and another 800 have purchased her financial wellness e-books.</p><p>"Almost all of us have six-figure student-loan debt," Burton said of her clients in the healthcare field. "Many of us have debt-to-income ratios of 3-to-1, or 4-to-1, and it's emotionally crushing to have that experience and not have any idea what to do about it. On top of that, we're in training for a long time, and we missed our early investing years."</p><h2>It's better to start investing late than never</h2><p>Just because someone isn't able to invest in their 20s doesn't mean they shouldn't invest. Starting in your 30s or 40s, or even in your 50s, can be better than never starting at all. Remember that for most people, investing is a long-term strategy to build wealth for the future, like retirement, and 10 or 15 years is certainly still a long-term target.</p><p>For anyone just starting to think about investing, Whatley recommended starting with an <a href="https://www.businessinsider.com/personal-finance/what-is-an-emergency-fund" target="_blank" rel="noopener">emergency savings fund</a> first. An emergency savings fund is three to six months' worth of living expenses stored somewhere easily accessible, like a <a href="https://www.businessinsider.com/personal-finance/best-high-yield-savings-accounts-rates-right-now" target="_blank" rel="noopener">high-yield savings account</a>, in case of emergencies or job loss.</p><p>Once the emergency fund is set up, you'll be in a strong financial position to start investing. Regardless of how you invest — perhaps <a href="https://www.businessinsider.com/what-is-an-index-fund" target="_blank" rel="noopener">index funds</a>, <a href="https://www.businessinsider.com/what-is-an-etf" target="_blank" rel="noopener">exchange-traded funds</a>, or <a href="https://www.businessinsider.com/ira-vs-401k" target="_blank" rel="noopener">retirement accounts</a> — Whatley recommended automating your investments to make it even simpler. Set it, forget it (mostly!), and let compound interest do the rest.</p><p>And remember: If you're feeling behind with your money, you aren't alone. "A lot of people in healthcare graduated, just like I did, with tons of student-loan debt, no idea how to invest, no idea about anything with money," Burton said. "Honestly, it's overwhelming." </p><ul class="read-more-links"><li>Read more from <keyword id="13329282" type="UNKNOWN" weightage="60" keywordseo="women-of-means" source="Orion">Women of Means</keyword>:</li><li><a href="https://www.businessinsider.com/personal-finance/busy-moms-investing-dominique-broadway-2022-3" target="_blank" rel="noopener">4 tips for busy moms who want to start investing, from an expert investor and mom of 2</a></li><li><a href="https://www.businessinsider.com/personal-finance/women-and-investing" target="_blank" rel="noopener">Women are underrepresented in investing — here are 4 ways we can close the gap and work toward equality</a></li><li><a href="https://www.businessinsider.com/personal-finance/women-of-color-invest-build-generational-wealth-2022-3" target="_blank" rel="noopener">I'm a financial planner and a woman of color, and I can tell you firsthand that investing is the way to build generational wealth</a></li><li><a href="https://www.businessinsider.com/personal-finance/started-investing-kid-2022-3" target="_blank" rel="noopener">My dad helped me buy my first stocks at age 8, and I remember what he taught me about money to this day</a></li></ul>

A 30-year-old physician assistant who spent 7 years in school missed her 'prime investing years,' and she's not the only one

<p><em>This page includes information about the <keyword id="45551" type="COMPANY" weightage="60" keywordseo="Discover">Discover</keyword> it® Cash Back product, which is currently not available on Business Insider and may be out of date.</em></p><p class="financial-disclaimer"><i>This article is brought to you by the <keyword id="9070397" type="UNKNOWN" weightage="60" keywordseo="personal-finance-insider">Personal Finance Insider</keyword> team. It has not been reviewed, approved, or otherwise endorsed by any of the issuers listed. Some of the offers you see on this page are from our partners, like Citi, but our coverage is always independent.</i></p><ul class="summary-list"><li>An array of popular <keyword id="6387037" type="UNKNOWN" weightage="60" keywordseo="credit-cards">credit cards</keyword> let you cash in your rewards for statement credits that reduce how much you owe on your card.</li><li>This option can be a good one if you don't find other possibilities, like travel redemptions, very appealing right now.</li><li>Some credit cards on this list, like the Citi® Double Cash Card and the <keyword id="9328947" type="UNKNOWN" weightage="60" keywordseo="chase-freedom">Chase Freedom</keyword> Unlimited®, don't charge an annual fee. Some of them also offer exceptional welcome bonuses you can earn after you meet a minimum spending requirement in the first three months.</li><li>If you want to "get ahead" with rewards, make sure you follow the golden rule of credit cards. Never carry a balance from month to month, and avoid credit card interest like the plague.</li></ul><p><a href="https://www.businessinsider.com/personal-finance/best-rewards-credit-cards" target="_blank" rel="noopener">Rewards credit cards</a> offer different types of incentives based on your spending, which can include airline miles, hotel points, <a href="https://www.businessinsider.com/personal-finance/best-cash-back-credit-cards" target="_blank" rel="noopener">cash back</a>, and flexible travel points. Some of the best rewards cards earn points that can be redeemed in more than one way, like <a href="https://www.businessinsider.com/personal-finance/guide-earning-using-chase-ultimate-rewards-points" target="_blank" rel="noopener">Chase points</a> and <a href="https://www.businessinsider.com/personal-finance/amex-membership-rewards-points-ways-to-use" target="_blank" rel="noopener">Amex points</a>, while others stick to basic options like letting you redeem your rewards for a check in the mail.</p><p>In today's financial climate, you may prefer cards that let you redeem for statement credits above all else. Statement credits let you reduce the amount of money you owe on your credit card bill, so you might even consider them a "discount" on your purchases.</p><p>Just remember that, to get ahead with credit card rewards, you have to pay your credit card balance in full each month and never, ever pay interest on a revolving balance.</p><p>If you're in the market for a credit card that lets you redeem rewards for statement credits, there are many options to consider. Here are some of the best credit cards that make redeeming points for statement credits a breeze.</p>Discover it® Cash Back<h2>Get cash back on rotating bonus categories: Discover it® Cash Back</h2><p>The Discover it® Cash Back earns 5% cash back on up to $1,500 spent in quarterly bonus categories (then 1%) as well as 1% back on all other purchases. Discover will also match all the rewards you earn the first year with no limits to what you can earn.</p><p>Discover has already announced <a href="https://www.discover.com/credit-cards/cashback-bonus/cashback-calendar.html" target="_blank" rel="noopener">all of its bonus categories for 2020</a>. These include gas stations, Uber, Lyft, and wholesale clubs (April - June), restaurants and Paypal (July - September), and Amazon.com, Walmart.com, and Target.com (October - December).</p><p>When it comes to redeeming your rewards, you can use them for gift cards or cash back, or for statement credits applied to your account.</p>Chase Freedom Unlimited®<h2>1.5% cash back on every purchase: Chase Freedom Unlimited®</h2><p>The Chase Freedom Unlimited® starts you off by letting you earn $200 in cash rewards after you spend $500 on your card within three months of account opening. You also earn a flat 1.5% cash back on every dollar you spend, and there's no annual fee.</p><p>This card comes with some of the most flexible redemption options available. You can cash in your points for statement credits or a check in the mail, but you can also opt for gift cards, merchandise and more.</p><p>This card also comes with 0% APR on purchases for the first 15 months after account opening, followed by a 14.99%–23.74% variable APR. This period with no interest can help you save money as you pay off a large purchase over time, or if you need to consolidate high-interest debt with a <a href="https://www.businessinsider.com/personal-finance/best-balance-transfer-credit-cards" target="_blank" rel="noopener">balance transfer</a>.</p>Chase Sapphire Preferred® Card<h2>Points for travel or cash back: Chase Sapphire Preferred® Card</h2><p>The Chase Sapphire Preferred® Card is frequently considered one of the <a href="https://www.businessinsider.com/personal-finance/best-travel-rewards-credit-cards" target="_blank" rel="noopener">top travel credit cards</a>, and this is largely due to the flexibility of <a href="https://www.businessinsider.com/personal-finance/guide-earning-using-chase-ultimate-rewards-points" target="_blank" rel="noopener">Chase Ultimate Rewards points</a>. This card starts you off with 60,000 points after you spend $4,000 on your card within three months of account opening, and you'll earn 2x points on travel and dining and 1x points on all other purchases.</p><p>This card does come with a $95 annual fee, but the first-year rewards are more than worth it. Also note that this card gives you many options for using your points. You can redeem your rewards for statement credits on your card or cash in the mail, but you can also use them for merchandise, experiences, and travel through the <a href="https://www.businessinsider.com/personal-finance/chase-ultimate-rewards-travel-portal-for-booking-activities-2018-10" target="_blank" rel="noopener">Chase Ultimate Rewards portal</a>.</p><p>Additionally, the Chase Sapphire Preferred® Card lets you transfer points at a 1:1 ratio to popular airline and hotel partners like Marriott Bonvoy, World of Hyatt, British Airways, Southwest Rapid Rewards, and United MileagePlus.</p>Citi® Double Cash Card<h2>Earn up to 2% back on everything: Citi® Double Cash Card</h2><p>The Citi® Double Cash Card offers the highest rate of cash back on purchases across the board at 2%. You'll get 1% when you make a purchase and another 1% when you pay it off. This card doesn't have an annual fee, either.</p><p>When it comes time to redeem your rewards, Citi lets you cash them in for statement credits, direct deposit, or a check. With that in mind, this credit card is ideal if you want to earn a high rate of cash-back rewards, then use them to reduce the amount of your credit card bill all at once or incrementally over time.</p><h2>Best rewards for dining: Capital One® Savor® Cash Rewards Credit Card</h2><p>Finally, don't forget to check out the Capital One® Savor® Cash Rewards Credit Card if you spend a lot on dining or entertainment. This card starts you out with a $300 cash bonus after you spend $3,000 within three months of account opening, and you also earn 4% cash back on dining and entertainment, 2% back at grocery stores, and 1% back on all other purchases.</p><p>A $95 annual fee applies, but you won't pay any foreign transaction fees. Fortunately, this card makes redeeming your rewards a breeze. You can cash them in for cash back or statement credits in any amount, and at any time you want.</p>Related Content Module: More Credit Card CoverageRead the original article on <a href="https://www.businessinsider.com/personal-finance/credit-card-rewards-save-money-on-your-bill">Business Insider</a>

5 credit cards that let you redeem rewards as cash back toward your billing statement

<p class="financial-disclaimer"><i>This article is brought to you by the <keyword id="9070397" type="UNKNOWN" weightage="60" keywordseo="personal-finance-insider">Personal Finance Insider</keyword> team. It has not been reviewed, approved, or otherwise endorsed by any of the issuers listed. Some of the offers you see on this page are from our partners, like Citi, but our coverage is always independent.</i></p><ul class="summary-list"><li>In the first quarter of 2020, the <keyword id="9249742" type="UNKNOWN" weightage="60" keywordseo="average-credit-card-interest-rate">average credit card interest rate</keyword> in the US was 15.09%, according to data from the Federal Reserve. </li><li>The type of <keyword id="6354680" type="UNKNOWN" weightage="60" keywordseo="credit">credit</keyword> card you plan to get and your credit score will affect the total amount of interest you could pay if you carry a balance on your credit card.</li><li>According to CFPB data, those with the best credit scores paid the least to borrow in 2018. Data from S&amp;P Global shows that rewards <keyword id="6387037" type="UNKNOWN" weightage="60" keywordseo="credit-cards">credit cards</keyword> have the highest interest rates.</li><li>If you plan to pay off your credit card in full each month, your <keyword id="37018" type="PERSON" weightage="60" keywordseo="interest-rate">interest rate</keyword> shouldn't be a concern. You'll only pay interest if you don't pay your card in full. </li></ul><p>The average credit card APR in 2020 is 15.09%, according to data from the <a href="https://www.federalreserve.gov/releases/g19/current/default.htm" target="_blank" rel="noopener">Federal Reserve</a>. But, your own credit card interest rate is likely to be different. </p><p>Credit cards come with a cost of borrowing: an annual percentage rate, or APR. This is the amount you'll pay for credit. With a credit card, you'll only pay interest on an unpaid balance after your billing cycle is over. Pay off your card in full each month, and you won't pay any interest. </p><p>However, if you don't pay off your balance in full each month, it can get expensive. It's not unusual for a card to carry an APR in the 20% range, which means a balance can continue to grow and snowball for each month it stays on your card. According to Experian, consumers had a total of <a href="https://www.experian.com/blogs/ask-experian/research/consumer-debt-study/" target="_blank" rel="noopener">$829 billion of credit card debt</a> in 2019. </p><p>Outside of paying off your card, there are a few factors that can influence the rate attached to your card, including your credit score and the type of card you have. Here's how these factors influence your interest rate.</p><h2>Average interest rates by credit score</h2><h3>Higher credit scores get lower interest rates</h3><p>Like getting a loan, the interest rate attached to your credit card largely depends on your credit score. <a href="https://www.businessinsider.com/personal-finance/what-affects-credit-score" target="_blank" rel="noopener">Credit scores</a> evaluate your past credit activity on a <a href="https://www.businessinsider.com/personal-finance/which-factors-determine-your-fico-score-payment-history-is-key" target="_blank" rel="noopener">scale of 300 to 850</a> based on past borrowing, repayment history, available credit, and your mix of credit accounts. Lenders use them to evaluate how trustworthy you are as a borrower, and whether they should lend to you, so generally the higher your credit score, the lower your credit card's interest rate. Those with higher credit scores will also be more likely to <a href="https://www.businessinsider.com/personal-finance/intro-apr-credit-card-offers-buffer-against-financial-uncertainty-2020-4" target="_blank" rel="noopener">qualify for cards with 0% introductory interest rates</a>. </p><p>According to data from the <a href="https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2019.pdf" target="_blank" rel="noopener">CFPB's Consumer Credit Card Market Report</a>, the average total interest paid by consumers increases with lower credit scores. The CFPB measures this with an effective interest rate — calculated as the total amount of interest charged per year divided by the total balance at the end of the cycle — to create a metric of how much interest was actually paid by consumers at each credit level. Data from 2018 showed that consumers with the best credit paid the lowest effective interest rates, and vice versa.</p><table style="height: 140px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10px"><tbody><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;"><strong>Credit score category</strong></td><td style="width: 50%; height: 20px; text-align: center;"><strong>Effective interest rate </strong></td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Deep Subprime (579 or lower)</td><td style="width: 50%; height: 20px; text-align: center;">21.0%</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Subprime (580 - 619)</td><td style="width: 50%; height: 20px; text-align: center;">20.5%</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Near Prime (620 - 659)</td><td style="width: 50%; height: 20px; text-align: center;">19.0%</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Prime (660 - 719)</td><td style="width: 50%; height: 20px; text-align: center;">16.5%</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Super Prime (720 or greater)</td><td style="width: 50%; height: 20px; text-align: center;">13.5%</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Overall </td><td style="width: 50%; height: 20px; text-align: center;">15.6%</td></tr></tbody></table><h2>Interest rates only apply to unpaid balances</h2><p>If you pay your credit card in full each month, credit cards can be valuable tools to <a href="https://www.businessinsider.com/personal-finance/best-airline-credit-cards">earn airline miles</a>, <a href="https://www.businessinsider.com/personal-finance/best-cash-back-credit-cards">earn cash back</a>, and build your credit history, with no interest involved.</p><p>If you don't pay your credit card bill in full each month, the interest rate will apply, and add to the total amount you owe. It can get out of hand quickly, and the debt your card accumulates negates any of the rewards you could earn. </p><p>Paying your credit card in full means you'll never have to worry about paying more for your purchases than you need to, and can help you earn rewards to enjoy as well. While <keyword id="8486805" type="UNKNOWN" weightage="60" keywordseo="credit-card-interest-rates">credit card interest rates</keyword> can seem high, they're non-existent if you pay your account in full each month and use your card responsibly. </p><h2>Average interest rates by type of credit card</h2><h3>Premium credit cards tend to carry higher APRs</h3><p>The type of card you have can affect the amount of interest you could pay if you carry a balance. Data from <a href="https://platform.marketintelligence.spglobal.com/web/client?auth=inherit&amp;overridecdc=11&amp;#industry/researchLibraryhLibrary" target="_blank" rel="noopener">S&amp;P Global</a> shows that for three main types of credit cards, a higher interest rate comes with bigger perks. </p><table style="height: 100px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10px"><tbody><tr style="height: 20px;"><td style="width: 33.3333%; height: 20px; text-align: center;"><strong>Credit card type</strong></td><td style="width: 33.3333%; height: 20px; text-align: center;"><strong>APR</strong></td></tr><tr style="height: 20px;"><td style="width: 33.3333%; height: 20px; text-align: center;">Classic credit card</td><td style="width: 33.3333%; height: 20px; text-align: center;">11.74%</td></tr><tr style="height: 20px;"><td style="width: 33.3333%; height: 20px; text-align: center;">Platinum credit card</td><td style="width: 33.3333%; height: 20px; text-align: center;">12.65%</td></tr><tr style="height: 20px;"><td style="width: 33.3333%; height: 20px; text-align: center;">Rewards credit card</td><td style="width: 33.3333%; height: 20px; text-align: center;">13.25%</td></tr></tbody></table><p>Some of the name-brand rewards cards you may be familiar with may also have higher interest rates. Here are a few favorites, and the interest rates they carry. Remember that credit card companies can change interest rates, and that only people with the best credit scores will qualify for the lowest interest rates. </p><h3>Travel credit cards</h3><p><a href="https://www.google.com/search?ei=iee-Xpe2BIWd-gTb4KfYDg&amp;q=airline+credit+cards+business+insdier&amp;oq=airline+credit+cards+business+insdier&amp;gs_lcp=CgZwc3ktYWIQAzIHCCEQChCgAToECAAQRzoCCAA6BggAEBYQHjoICAAQCBANEB46CAghEBYQHRAeOgUIIRCgAVCICFisKmCsK2gFcAF4AIABaogBoQ2SAQQyMS4xmAEAoAEBqgEHZ3dzLXdpeg&amp;sclient=psy-ab&amp;ved=0ahUKEwjXns3Dx7bpAhWFjp4KHVvwCesQ4dUDCAw&amp;uact=5vwCesQ4dUDCAw&amp;uact=5">Airline and travel credit cards</a> can have higher interest rates than the typical card because they offer valuable rewards if used correctly. These credit cards are good options for anyone who wants to earn perks like miles to book award flights, but doesn't plan to keep a balance on their card.</p><table style="height: 110px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10 px"><tbody><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;"><strong>Credit card</strong></td><td style="width: 50%; height: 20px; text-align: center;"><strong>APR range</strong></td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Delta SkyMiles® Blue American Express Card</td><td style="width: 50%; height: 20px; text-align: center;">15.74% to 24.74% variable APR</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Chase United℠ Explorer Card</td><td style="width: 50%; height: 20px; text-align: center;">16.49% to 23.49% Variable </td></tr><tr style="height: 10px;"><td style="width: 50%; height: 10px; text-align: center;"><p>American Airlines AAdvantage MileUp℠ Card</p></td><td style="width: 50%; height: 10px; text-align: center;">15.99% - 24.99% (Variable)</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Capital One® Venture® Rewards Credit Card</td><td style="width: 50%; height: 20px; text-align: center;">17.24% to 24.49% variable </td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Southwest Rapid Rewards® Plus Credit Card</td><td style="width: 50%; height: 20px; text-align: center;">15.99% - 22.99% Variable</td></tr></tbody></table><h3>Cash-back cards</h3><p>Cash-back cards offer the most flexible reward of all: cash. Generally, these cards earn a percentage back of total purchases, around 2%. The money can then be applied back to your balance, or even cashed out and <a href="https://www.businessinsider.com/personal-finance/use-cash-back-cards-pay-off-student-loans" target="_blank" rel="noopener">put toward other goals.</a></p><p>The interest rates for cash back credit cards tend to start a little bit lower than airline credit cards. Here are the interest rates on some of the <a href="https://www.businessinsider.com/personal-finance/best-cash-back-credit-cards" target="_blank" rel="noopener">top rated cash back credit cards</a> on the market today. </p><table style="height: 120px; width: 0%; border-collapse: collapse;" border="1" cellpadding="10px"><tbody><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;"><strong>Credit card</strong></td><td style="width: 50%; height: 20px; text-align: center;"><strong>APR range</strong></td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Bank of America® Cash Rewards credit card</td><td style="width: 50%; height: 20px; text-align: center;">13.99% - 23.99% variable</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Wells Fargo Propel American Express® card</td><td style="width: 50%; height: 20px; text-align: center;">13.99% to 25.99% variable</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Chase Freedom Unlimited®</td><td style="width: 50%; height: 20px; text-align: center;">14.99%–23.74% variable APR</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Blue Cash Preferred® Card from American Express</td><td style="width: 50%; height: 20px; text-align: center;">12.99% to 23.99% variable APR</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Capital One® Savor® Cash Rewards Credit Card</td><td style="width: 50%; height: 20px; text-align: center;">15.99% - 24.99% variable APR</td></tr></tbody></table><h3>Student credit cards</h3><p>Created specifically for college students, these cards are best for young adults who haven't <a href="https://www.businessinsider.com/personal-finance/how-credit-cards-can-improve-credit-score" target="_blank" rel="noopener">built much credit yet</a> and can be secured with a cash deposit up front. Slightly more forgiving, these student credit cards can be a great way to build credit while still in school, but can have high interest rates. While some borrowers with the best credit scores will see rates around 12.99%, interest rates could be as high as 26%. </p><table style="height: 120px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10 px"><tbody><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;"><strong>Credit card</strong></td><td style="width: 50%; height: 20px; text-align: center;"><strong>APR range</strong></td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Journey® Student Rewards from Capital One®</td><td style="width: 50%; height: 20px; text-align: center;">26.99% variable APR</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Citi Rewards+ Student Card</td><td style="width: 50%; height: 20px; text-align: center;">14.49% - 24.49% variable APR based on your creditworthiness</td></tr><tr><td style="width: 50%; text-align: center;"><p>Deserve® EDU Mastercard for Students</p></td><td style="width: 50%; text-align: center;">18.74% Variable</td></tr></tbody></table><h3>Balance transfer cards</h3><p><a href="https://www.businessinsider.com/personal-finance/best-balance-transfer-credit-cards">Balance transfer cards</a> allow you to consolidate credit card debt onto one card. They can also be used to finance large purchases for a short amount of time. One popular type of these cards is a 0% interest credit card, which allows borrowers to finance large purchases or consolidate credit card debt with no interest for several months. But, these cards won't be interest-free forever: Rates go up after the introductory period is over. </p><p>During the introductory period, interest won't accrue on your balance. If you pay off your card in full by the time the offer is up, it can be a good alternative to a personal loan. After that intro period is over, you'll pay a fairly typical interest rate. </p><p>Here are a few examples of how this works with a few popular cards that have them. </p><table style="height: 102px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10px"><tbody><tr style="height: 20px;"><td style="width: 33.3333%; height: 20px; text-align: center;"><strong>Credit card</strong></td><td style="width: 33.3333%; height: 20px; text-align: center;"><strong>Introductory APR</strong></td><td style="width: 33.3333%; height: 20px; text-align: center;"><strong>Permanent APR</strong></td></tr><tr style="height: 42px;"><td style="width: 33.3333%; height: 42px; text-align: center;">Chase Freedom®</td><td style="width: 33.3333%; height: 42px; text-align: center;">0% APR for the first 15 months on both purchases and balance transfers</td><td style="width: 33.3333%; height: 42px; text-align: center;">14.99%–23.74% variable APR</td></tr><tr style="height: 20px;"><td style="width: 33.3333%; height: 20px; text-align: center;">Citi Simplicity® Card</td><td style="width: 33.3333%; height: 20px; text-align: center;">0% APR for the first 21 months for balance transfers made within the first four months</td><td style="width: 33.3333%; height: 20px; text-align: center;">14.74% - 24.74% (Variable)</td></tr><tr style="height: 20px;"><td style="width: 33.3333%; text-align: center; height: 20px;">Citi® Double Cash Card</td><td style="width: 33.3333%; text-align: center; height: 20px;">0% APR for the first 21 months for balance transfers made within the first four months</td><td style="width: 33.3333%; text-align: center; height: 20px;"><p>13.99% - 23.99% APR (Variable)</p></td></tr></tbody></table><ul class="read-more-links"><li>Related Content Module: More Credit Card Coverage</li></ul>Read the original article on <a href="https://www.businessinsider.com/personal-finance/average-credit-card-interest-rate">Business Insider</a>

The average credit card interest rate by credit score and card

<p class="financial-disclaimer"><i>This article is brought to you by the <keyword id="9070397" type="UNKNOWN" weightage="60" keywordseo="personal-finance-insider">Personal Finance Insider</keyword> team. It has not been reviewed, approved, or otherwise endorsed by any of the issuers listed. Some of the offers you see on this page are from our partners, like Citi, but our coverage is always independent.</i></p><ul class="summary-list"><li>In the first quarter of 2020, the <keyword id="9249742" type="UNKNOWN" weightage="60" keywordseo="average-credit-card-interest-rate">average credit card interest rate</keyword> in the US was 15.09%, according to data from the Federal Reserve. </li><li>The type of <keyword id="6354680" type="UNKNOWN" weightage="60" keywordseo="credit">credit</keyword> card you plan to get and your credit score will affect the total amount of interest you could pay if you carry a balance on your credit card.</li><li>According to CFPB data, those with the best credit scores paid the least to borrow in 2018. Data from S&amp;P Global shows that rewards <keyword id="6387037" type="UNKNOWN" weightage="60" keywordseo="credit-cards">credit cards</keyword> have the highest interest rates.</li><li>If you plan to pay off your credit card in full each month, your <keyword id="37018" type="PERSON" weightage="60" keywordseo="interest-rate">interest rate</keyword> shouldn't be a concern. You'll only pay interest if you don't pay your card in full. </li></ul><p>The average credit card APR in 2020 is 15.09%, according to data from the <a href="https://www.federalreserve.gov/releases/g19/current/default.htm" target="_blank" rel="noopener">Federal Reserve</a>. But, your own credit card interest rate is likely to be different. </p><p>Credit cards come with a cost of borrowing: an annual percentage rate, or APR. This is the amount you'll pay for credit. With a credit card, you'll only pay interest on an unpaid balance after your billing cycle is over. Pay off your card in full each month, and you won't pay any interest. </p><p>However, if you don't pay off your balance in full each month, it can get expensive. It's not unusual for a card to carry an APR in the 20% range, which means a balance can continue to grow and snowball for each month it stays on your card. According to Experian, consumers had a total of <a href="https://www.experian.com/blogs/ask-experian/research/consumer-debt-study/" target="_blank" rel="noopener">$829 billion of credit card debt</a> in 2019. </p><p>Outside of paying off your card, there are a few factors that can influence the rate attached to your card, including your credit score and the type of card you have. Here's how these factors influence your interest rate.</p><h2>Average interest rates by credit score</h2><h3>Higher credit scores get lower interest rates</h3><p>Like getting a loan, the interest rate attached to your credit card largely depends on your credit score. <a href="https://www.businessinsider.com/personal-finance/what-affects-credit-score" target="_blank" rel="noopener">Credit scores</a> evaluate your past credit activity on a <a href="https://www.businessinsider.com/personal-finance/which-factors-determine-your-fico-score-payment-history-is-key" target="_blank" rel="noopener">scale of 300 to 850</a> based on past borrowing, repayment history, available credit, and your mix of credit accounts. Lenders use them to evaluate how trustworthy you are as a borrower, and whether they should lend to you, so generally the higher your credit score, the lower your credit card's interest rate. Those with higher credit scores will also be more likely to <a href="https://www.businessinsider.com/personal-finance/intro-apr-credit-card-offers-buffer-against-financial-uncertainty-2020-4" target="_blank" rel="noopener">qualify for cards with 0% introductory interest rates</a>. </p><p>According to data from the <a href="https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2019.pdf" target="_blank" rel="noopener">CFPB's Consumer Credit Card Market Report</a>, the average total interest paid by consumers increases with lower credit scores. The CFPB measures this with an effective interest rate — calculated as the total amount of interest charged per year divided by the total balance at the end of the cycle — to create a metric of how much interest was actually paid by consumers at each credit level. Data from 2018 showed that consumers with the best credit paid the lowest effective interest rates, and vice versa.</p><table style="height: 140px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10px"><tbody><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;"><strong>Credit score category</strong></td><td style="width: 50%; height: 20px; text-align: center;"><strong>Effective interest rate </strong></td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Deep Subprime (579 or lower)</td><td style="width: 50%; height: 20px; text-align: center;">21.0%</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Subprime (580 - 619)</td><td style="width: 50%; height: 20px; text-align: center;">20.5%</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Near Prime (620 - 659)</td><td style="width: 50%; height: 20px; text-align: center;">19.0%</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Prime (660 - 719)</td><td style="width: 50%; height: 20px; text-align: center;">16.5%</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Super Prime (720 or greater)</td><td style="width: 50%; height: 20px; text-align: center;">13.5%</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Overall </td><td style="width: 50%; height: 20px; text-align: center;">15.6%</td></tr></tbody></table><h2>Interest rates only apply to unpaid balances</h2><p>If you pay your credit card in full each month, credit cards can be valuable tools to <a href="https://www.businessinsider.com/personal-finance/best-airline-credit-cards">earn airline miles</a>, <a href="https://www.businessinsider.com/personal-finance/best-cash-back-credit-cards">earn cash back</a>, and build your credit history, with no interest involved.</p><p>If you don't pay your credit card bill in full each month, the interest rate will apply, and add to the total amount you owe. It can get out of hand quickly, and the debt your card accumulates negates any of the rewards you could earn. </p><p>Paying your credit card in full means you'll never have to worry about paying more for your purchases than you need to, and can help you earn rewards to enjoy as well. While <keyword id="8486805" type="UNKNOWN" weightage="60" keywordseo="credit-card-interest-rates">credit card interest rates</keyword> can seem high, they're non-existent if you pay your account in full each month and use your card responsibly. </p><h2>Average interest rates by type of credit card</h2><h3>Premium credit cards tend to carry higher APRs</h3><p>The type of card you have can affect the amount of interest you could pay if you carry a balance. Data from <a href="https://platform.marketintelligence.spglobal.com/web/client?auth=inherit&amp;overridecdc=11&amp;#industry/researchLibraryhLibrary" target="_blank" rel="noopener">S&amp;P Global</a> shows that for three main types of credit cards, a higher interest rate comes with bigger perks. </p><table style="height: 100px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10px"><tbody><tr style="height: 20px;"><td style="width: 33.3333%; height: 20px; text-align: center;"><strong>Credit card type</strong></td><td style="width: 33.3333%; height: 20px; text-align: center;"><strong>APR</strong></td></tr><tr style="height: 20px;"><td style="width: 33.3333%; height: 20px; text-align: center;">Classic credit card</td><td style="width: 33.3333%; height: 20px; text-align: center;">11.74%</td></tr><tr style="height: 20px;"><td style="width: 33.3333%; height: 20px; text-align: center;">Platinum credit card</td><td style="width: 33.3333%; height: 20px; text-align: center;">12.65%</td></tr><tr style="height: 20px;"><td style="width: 33.3333%; height: 20px; text-align: center;">Rewards credit card</td><td style="width: 33.3333%; height: 20px; text-align: center;">13.25%</td></tr></tbody></table><p>Some of the name-brand rewards cards you may be familiar with may also have higher interest rates. Here are a few favorites, and the interest rates they carry. Remember that credit card companies can change interest rates, and that only people with the best credit scores will qualify for the lowest interest rates. </p><h3>Travel credit cards</h3><p><a href="https://www.google.com/search?ei=iee-Xpe2BIWd-gTb4KfYDg&amp;q=airline+credit+cards+business+insdier&amp;oq=airline+credit+cards+business+insdier&amp;gs_lcp=CgZwc3ktYWIQAzIHCCEQChCgAToECAAQRzoCCAA6BggAEBYQHjoICAAQCBANEB46CAghEBYQHRAeOgUIIRCgAVCICFisKmCsK2gFcAF4AIABaogBoQ2SAQQyMS4xmAEAoAEBqgEHZ3dzLXdpeg&amp;sclient=psy-ab&amp;ved=0ahUKEwjXns3Dx7bpAhWFjp4KHVvwCesQ4dUDCAw&amp;uact=5vwCesQ4dUDCAw&amp;uact=5">Airline and travel credit cards</a> can have higher interest rates than the typical card because they offer valuable rewards if used correctly. These credit cards are good options for anyone who wants to earn perks like miles to book award flights, but doesn't plan to keep a balance on their card.</p><table style="height: 110px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10 px"><tbody><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;"><strong>Credit card</strong></td><td style="width: 50%; height: 20px; text-align: center;"><strong>APR range</strong></td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Delta SkyMiles® Blue American Express Card</td><td style="width: 50%; height: 20px; text-align: center;">15.74% to 24.74% variable APR</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Chase United℠ Explorer Card</td><td style="width: 50%; height: 20px; text-align: center;">16.49% to 23.49% Variable </td></tr><tr style="height: 10px;"><td style="width: 50%; height: 10px; text-align: center;"><p>American Airlines AAdvantage MileUp℠ Card</p></td><td style="width: 50%; height: 10px; text-align: center;">15.99% - 24.99% (Variable)</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Capital One® Venture® Rewards Credit Card</td><td style="width: 50%; height: 20px; text-align: center;">17.24% to 24.49% variable </td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Southwest Rapid Rewards® Plus Credit Card</td><td style="width: 50%; height: 20px; text-align: center;">15.99% - 22.99% Variable</td></tr></tbody></table><h3>Cash-back cards</h3><p>Cash-back cards offer the most flexible reward of all: cash. Generally, these cards earn a percentage back of total purchases, around 2%. The money can then be applied back to your balance, or even cashed out and <a href="https://www.businessinsider.com/personal-finance/use-cash-back-cards-pay-off-student-loans" target="_blank" rel="noopener">put toward other goals.</a></p><p>The interest rates for cash back credit cards tend to start a little bit lower than airline credit cards. Here are the interest rates on some of the <a href="https://www.businessinsider.com/personal-finance/best-cash-back-credit-cards" target="_blank" rel="noopener">top rated cash back credit cards</a> on the market today. </p><table style="height: 120px; width: 0%; border-collapse: collapse;" border="1" cellpadding="10px"><tbody><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;"><strong>Credit card</strong></td><td style="width: 50%; height: 20px; text-align: center;"><strong>APR range</strong></td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Bank of America® Cash Rewards credit card</td><td style="width: 50%; height: 20px; text-align: center;">13.99% - 23.99% variable</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Wells Fargo Propel American Express® card</td><td style="width: 50%; height: 20px; text-align: center;">13.99% to 25.99% variable</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Chase Freedom Unlimited®</td><td style="width: 50%; height: 20px; text-align: center;">14.99%–23.74% variable APR</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Blue Cash Preferred® Card from American Express</td><td style="width: 50%; height: 20px; text-align: center;">12.99% to 23.99% variable APR</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Capital One® Savor® Cash Rewards Credit Card</td><td style="width: 50%; height: 20px; text-align: center;">15.99% - 24.99% variable APR</td></tr></tbody></table><h3>Student credit cards</h3><p>Created specifically for college students, these cards are best for young adults who haven't <a href="https://www.businessinsider.com/personal-finance/how-credit-cards-can-improve-credit-score" target="_blank" rel="noopener">built much credit yet</a> and can be secured with a cash deposit up front. Slightly more forgiving, these student credit cards can be a great way to build credit while still in school, but can have high interest rates. While some borrowers with the best credit scores will see rates around 12.99%, interest rates could be as high as 26%. </p><table style="height: 120px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10 px"><tbody><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;"><strong>Credit card</strong></td><td style="width: 50%; height: 20px; text-align: center;"><strong>APR range</strong></td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Journey® Student Rewards from Capital One®</td><td style="width: 50%; height: 20px; text-align: center;">26.99% variable APR</td></tr><tr style="height: 20px;"><td style="width: 50%; height: 20px; text-align: center;">Citi Rewards+ Student Card</td><td style="width: 50%; height: 20px; text-align: center;">14.49% - 24.49% variable APR based on your creditworthiness</td></tr><tr><td style="width: 50%; text-align: center;"><p>Deserve® EDU Mastercard for Students</p></td><td style="width: 50%; text-align: center;">18.74% Variable</td></tr></tbody></table><h3>Balance transfer cards</h3><p><a href="https://www.businessinsider.com/personal-finance/best-balance-transfer-credit-cards">Balance transfer cards</a> allow you to consolidate credit card debt onto one card. They can also be used to finance large purchases for a short amount of time. One popular type of these cards is a 0% interest credit card, which allows borrowers to finance large purchases or consolidate credit card debt with no interest for several months. But, these cards won't be interest-free forever: Rates go up after the introductory period is over. </p><p>During the introductory period, interest won't accrue on your balance. If you pay off your card in full by the time the offer is up, it can be a good alternative to a personal loan. After that intro period is over, you'll pay a fairly typical interest rate. </p><p>Here are a few examples of how this works with a few popular cards that have them. </p><table style="height: 102px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10px"><tbody><tr style="height: 20px;"><td style="width: 33.3333%; height: 20px; text-align: center;"><strong>Credit card</strong></td><td style="width: 33.3333%; height: 20px; text-align: center;"><strong>Introductory APR</strong></td><td style="width: 33.3333%; height: 20px; text-align: center;"><strong>Permanent APR</strong></td></tr><tr style="height: 42px;"><td style="width: 33.3333%; height: 42px; text-align: center;">Chase Freedom®</td><td style="width: 33.3333%; height: 42px; text-align: center;">0% APR for the first 15 months on both purchases and balance transfers</td><td style="width: 33.3333%; height: 42px; text-align: center;">14.99%–23.74% variable APR</td></tr><tr style="height: 20px;"><td style="width: 33.3333%; height: 20px; text-align: center;">Citi Simplicity® Card</td><td style="width: 33.3333%; height: 20px; text-align: center;">0% APR for the first 21 months for balance transfers made within the first four months</td><td style="width: 33.3333%; height: 20px; text-align: center;">14.74% - 24.74% (Variable)</td></tr><tr style="height: 20px;"><td style="width: 33.3333%; text-align: center; height: 20px;">Citi® Double Cash Card</td><td style="width: 33.3333%; text-align: center; height: 20px;">0% APR for the first 21 months for balance transfers made within the first four months</td><td style="width: 33.3333%; text-align: center; height: 20px;"><p>13.99% - 23.99% APR (Variable)</p></td></tr></tbody></table><ul class="read-more-links"><li>Related Content Module: More Credit Card Coverage</li></ul>Read the original article on <a href="https://www.businessinsider.com/average-credit-card-interest-rate">Business Insider</a>

<p class="financial-disclaimer"><i>This article is brought to you by the <keyword id="9070397" type="UNKNOWN" weightage="60" keywordseo="personal-finance-insider">Personal Finance Insider</keyword> team. It has not been reviewed, approved, or otherwise endorsed by any of the issuers listed. Some of the offers you see on this page are from our partners, like Citi, but our coverage is always independent.</i></p><ul class="summary-list"><li>If you want to stop paying a credit card's annual fee, consider downgrading your card rather than canceling it.</li><li>Downgrading to a different card with <a href="https://www.businessinsider.com/personal-finance/best-no-fee-credit-card">no annual fee</a> preserves your average age of accounts, which is an important factor in determining your credit score.</li><li>I used this strategy to downgrade from the Amex EveryDay® Preferred Credit Card from <keyword id="91294" type="CITY" weightage="60" keywordseo="American-Express">American Express</keyword> with a $95 annual fee to the Amex EveryDay® Credit Card from American Express with no annual fee.</li><li>If you're looking to cut costs, downgrading premium rewards <keyword id="6387037" type="UNKNOWN" weightage="60" keywordseo="credit-cards">credit cards</keyword> like the Platinum Card® from American Express to no-annual-fee options might make sense.</li><li><a href="https://www.businessinsider.com/personal-finance/best-no-fee-credit-card">See Business Insider's list of the best credit cards with no annual fee.</a></li></ul><p>The <a href="https://www.businessinsider.com/personal-finance/which-premium-travel-rewards-credit-card-if-only-one">best premium travel credit cards</a> don't come for free. For example, the Platinum Card® from American Express and the <keyword id="42561" type="COMPANY" weightage="60" keywordseo="chase">Chase</keyword> Sapphire Reserve® have $550 annual fees. While these cards can give you hundreds or even <a href="https://www.businessinsider.com/personal-finance/american-express-platinum-credit-card-review">thousands of dollars per year in travel rewards and other benefits</a>, not everyone will be able to justify paying for these cards, especially if they can't take advantage of all the perks.</p><p>If you're looking to cut down on expenses, you may be considering canceling a premium credit card with a high annual fee. But don't close your credit card to avoid an annual fee unless that's your last option. Instead, your first choice should be to <a href="https://www.businessinsider.com/personal-finance/how-and-why-to-downgrade-credit-card">downgrade to another credit card with no annual fee</a>.</p><p>Here are three signs it's time for you to downgrade your premium travel credit card.</p><p>We're focused here on the rewards and perks that come with each card. These cards won't be worth it if you're paying interest or late fees. When using a credit card, it's important to pay your balance in full each month, make payments on time, and only spend what you can afford to pay.</p><h2>Your card's annual fee no longer feels worth it</h2><p>The biggest reason to close or downgrade a credit card is to eliminate an annual fee. If you want to save on annual fees, your first thought may be the close the card. But you shouldn't rush to do that as it can harm your <a href="https://www.businessinsider.com/personal-finance/how-to-improve-credit-score">credit score</a>. More on that in the next section.</p><p>Between my personal cards, my wife's cards, and my <a href="https://www.businessinsider.com/personal-finance/best-small-business-credit-card">business credit cards</a>, I have nine different credit cards with annual fees that add up to more than $1,000 per year. But those cards give me free flights, hotel nights, rental car insurance, <a href="https://www.businessinsider.com/personal-finance/top-credit-cards-with-free-global-entry">TSA PreCheck and Global Entry</a> for my family, and other benefits.</p><p>I don't mind paying for an annual fee if I get at least that value in return each year, but I sometimes find a card is no longer worth it. In that case, downgrading can eliminate the annual fee. I usually give up rewards and benefits, but with a downgrade, I can keep the card open and still save on annual fees.</p><h2>You want to maintain your credit score</h2><p>While it makes sense to close old bank and investment accounts you no longer use, you shouldn't rush to close a credit card just because it isn't your main card. Credit cards are a factor in your <a href="https://www.businessinsider.com/personal-finance/how-to-read-a-credit-report-check-score">credit report</a> and credit score. Keeping cards open as long as possible is good for your credit.</p><p>A long, positive history with a card helps your credit score in a couple of ways. First, <a href="https://www.businessinsider.com/personal-finance/which-factors-determine-your-fico-score-payment-history-is-key">on-time payments are the biggest factor in your credit score</a>. Using a card just occasionally, as long as you pay it on time, still gives you a positive mark on your credit report. Keeping a card also slowly improves your average age of credit, a smaller but still important factor in your credit.</p><p>Closing a card has the opposite result. It stops adding to your average age of credit and lowers your total available credit. Lower available credit can hurt your credit utilization, another big factor in your credit.</p><p>When you downgrade a card, you can usually keep your account number and all of the benefits of a card with longevity. But you can stop paying that sometimes-expensive annual fee.</p><h2>You could be earning more rewards where you spend the most</h2><p>While my household has nine cards with annual fees, we have 20 cards in total. Many of the 11 <a href="https://www.businessinsider.com/personal-finance/best-no-fee-credit-card">cards with no annual fee</a> started as cards with an annual fee. By cutting annual fees on cards I don't use as often, I can point those dollars to cards that give me the best value everywhere I use them.</p><p>For example, my Amex EveryDay® Credit Card from American Express used to be an Amex EveryDay® Preferred Credit Card with a $95 annual fee. This used to be my main card for daily purchases, but I switched things up to better meet my needs. The EveryDay card has no annual fee and I use it for an occasional purchase to keep the account active.</p><p>I use a combination of cards to get the best rewards where I spend most:</p><ul><li>American Express® Gold Card ($250 annual fee) — restaurants and US supermarkets </li><li>Chase Sapphire Reserve ($550 annual fee) — travel</li><li>Chase Freedom® (no annual fee) — rotating categories (currently including grocery stores)</li><li>Ink Business Cash℠ Credit Card (no annual fee) — office supplies and internet</li><li>Chase Freedom Unlimited® (no annual fee) — everything else</li></ul><p>While you're spending some extra time at home anyway, it's a perfect opportunity to review your spending habits, downgrade from cards that are no longer ideal, and sign up for the <a href="https://www.businessinsider.com/personal-finance/how-to-pick-best-credit-card-for-your-spending">cards that earn bonus rewards on your most common purchases</a>.</p><h2>Realign your cards with your spending habits</h2><p>If you've been thinking about making some updates to your wallet, there's no better time than the present. While you may run into longer wait times than usual for customer service, saving hundreds of dollars per year could be worth the wait. Once you've downgraded your old cards to eliminate unnecessary annual fees, you can start focusing on getting the right cards for your current and future needs.</p>Related Content Module: More Credit Card CoverageRead the original article on <a href="https://www.businessinsider.com/signs-you-should-downgrade-premium-credit-card">Business Insider</a>

3 signs it's time to downgrade your premium travel credit card to an option with no annual fee

<p class="financial-disclaimer"><i>This article is brought to you by the <keyword id="9070397" type="UNKNOWN" weightage="60" keywordseo="personal-finance-insider">Personal Finance Insider</keyword> team. It has not been reviewed, approved, or otherwise endorsed by any of the issuers listed. Some of the offers you see on this page are from our partners, like Citi, but our coverage is always independent.</i></p><ul class="summary-list"><li>Airline miles generally expire 18 to 24 months after you last earned or used rewards in your account, though Delta, JetBlue, Southwest, and United rewards never expire.</li><li>Hotel points typically expire 12 to 24 months from your last account activity. Some brands have pushed back points expiration dates due to the coronavirus pandemic.</li><li>Credit card points like <a href="https://www.businessinsider.com/personal-finance/amex-membership-rewards-points-ways-to-use" target="_blank" rel="noopener">American Express Membership Rewards</a> and <a href="https://www.businessinsider.com/personal-finance/guide-earning-using-chase-ultimate-rewards-points" target="_blank" rel="noopener">Chase Ultimate Rewards</a> never expire — and you can transfer these points to various airline and hotel programs. These points also tend to be more valuable than airline miles and hotel points, because you have so many options for using them.</li><li>To <a href="https://www.businessinsider.com/personal-finance/how-to-keep-points-and-miles-from-expiring" target="_blank" rel="noopener">prevent your miles and points from expiring</a>, you can use a credit card associated with your loyalty program, or you can redeem your rewards for <keyword id="6354692" type="UNKNOWN" weightage="60" keywordseo="Travel">travel</keyword> or even merchandise.</li></ul><p>It's easy to earn <keyword id="9250624" type="UNKNOWN" weightage="60" keywordseo="points-and-miles">points and miles</keyword> by using <a href="https://www.businessinsider.com/best-rewards-credit-cards" target="_blank" rel="noopener">rewards credit cards</a> and joining hotel and airline loyalty programs, but when it comes time to redeem them, there's often some fine print to parse. Not only do different hotel and airline rewards programs have their own award charts specifying how many points or miles you'll need to book a hotel room or a flight, but programs also have their own expiration policies that dictate the lifespan of your hard-earned rewards.</p><p>In most cases, your points or miles will expire in 12 to 24 months from your last "account activity," which could be anything from purchasing points or miles to taking a flight to using an airline or hotel credit card to make a purchase. </p>Table of Contents<h2>Miles expiration policies, by airline</h2><p>Here's a breakdown of several major US airline's miles expiration policies.</p><table style="height: 126px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10px"><tbody><tr style="height: 21px;"><td style="width: 50%; height: 21px;"> </td><td style="width: 50%; height: 21px; text-align: center;"><strong>Expiration policy</strong></td></tr><tr style="height: 21px;"><td style="width: 50%; height: 21px;"><strong>Alaska Airlines</strong></td><td style="width: 50%; height: 21px; text-align: center;">2 years (24 months) from last account activity</td></tr><tr style="height: 21px;"><td style="width: 50%; height: 21px;"><strong>American Airlines</strong></td><td style="width: 50%; height: 21px; text-align: center;">18 months from last account activity</td></tr><tr style="height: 21px;"><td style="width: 50%; height: 21px;"><strong>Delta</strong></td><td style="width: 50%; height: 21px; text-align: center;">Miles never expire</td></tr><tr style="height: 21px;"><td style="width: 50%; height: 21px;"><strong>Frontier Airlines</strong></td><td style="width: 50%; height: 21px; text-align: center;">180 days or 6 months from last account activity</td></tr><tr style="height: 21px;"><td style="width: 50%; height: 21px;"><strong>Hawaiian Airlines</strong></td><td style="width: 50%; height: 21px; text-align: center;">18 months from last account activity</td></tr><tr><td style="width: 50%;"><strong>JetBlue</strong></td><td style="width: 50%; text-align: center;">Points never expire</td></tr><tr><td style="width: 50%;"><strong>Southwest</strong></td><td style="width: 50%; text-align: center;">Points never expire</td></tr><tr><td style="width: 50%;"><strong>Spirit Airlines</strong></td><td style="width: 50%; text-align: center;">3 months from last account activity</td></tr><tr><td style="width: 50%;"><strong>United</strong></td><td style="width: 50%; text-align: center;">Miles never expire</td></tr></tbody></table><h2>Points expiration policies, by hotel</h2><p>Unlike with airline loyalty programs, most hotel programs dictate that your points will expire if you don't have any account activity within a specified timeframe — with Best Western being the notable exception.</p><table style="height: 255px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10px"><tbody><tr style="height: 21px;"><td style="width: 50%; height: 21px;"> </td><td style="width: 25%; height: 21px; text-align: center;"><strong>Expiration policy</strong></td><td style="width: 25%; height: 21px; text-align: center;"><strong>Points extension in light of COVID-19</strong></td></tr><tr style="height: 21px;"><td style="width: 50%; height: 21px;"><strong>Best Western</strong></td><td style="width: 25%; height: 21px; text-align: center;">Points never expire</td><td style="width: 25%; height: 21px; text-align: center;">N/A</td></tr><tr style="height: 21px;"><td style="width: 50%; height: 21px;"><strong>Choice Hotels</strong></td><td style="width: 25%; height: 21px; text-align: center;">18 months from last account activity </td><td style="width: 25%; height: 21px; text-align: center;">Through May 31, 2020</td></tr><tr style="height: 21px;"><td style="width: 50%; height: 21px;"><strong>Hilton</strong></td><td style="width: 25%; height: 21px; text-align: center;">12 months from last account activity</td><td style="width: 25%; height: 21px; text-align: center;">Through December 31, 2020</td></tr><tr style="height: 21px;"><td style="width: 50%; height: 21px;"><strong>Hyatt</strong></td><td style="width: 25%; height: 21px; text-align: center;">24 months from last account activity</td><td style="width: 25%; height: 21px; text-align: center;">Through December 31, 2020</td></tr><tr style="height: 21px;"><td style="width: 50%; height: 21px;"><strong>IHG</strong></td><td style="width: 25%; height: 21px; text-align: center;">12 months from last account activity</td><td style="width: 25%; height: 21px; text-align: center;">Through December 31, 2020</td></tr><tr style="height: 43px;"><td style="width: 50%; height: 43px;"><strong>Marriott</strong></td><td style="width: 25%; text-align: center; height: 43px;">24 months from last account activity</td><td style="width: 25%; text-align: center; height: 43px;">Through February 1, 2021</td></tr><tr style="height: 43px;"><td style="width: 50%; height: 43px;"><strong>Radisson</strong></td><td style="width: 25%; text-align: center; height: 43px;">24 months from last account activity</td><td style="width: 25%; text-align: center; height: 43px;">6 months from original expiration date</td></tr><tr style="height: 43px;"><td style="width: 50%; height: 43px;"><strong>Wyndham</strong></td><td style="width: 25%; text-align: center; height: 43px;">18 months from last account activity</td><td style="width: 25%; text-align: center; height: 43px;">Through September 30, 2020</td></tr></tbody></table><p><em><strong>Read more:</strong> <a href="https://www.businessinsider.com/personal-finance/airlines-hotels-extending-elite-status-coronavirus-travel-restrictions-2020-4" target="_blank" rel="noopener">Your airline and hotel elite status could be valid through 2021, as loyalty programs adjust in light of the coronavirus</a></em></p><h2>Credit card points never expire</h2><p>Unlike many airline miles and hotel points, credit card points don't expire as long as you keep your account open and in good standing (meaning you continue to pay off your balances or communicate with the bank if you need any <a href="https://www.businessinsider.com/personal-finance/credit-card-companies-financial-assistance-coronavirus-2020-3" target="_blank" rel="noopener">financial assistance</a>). </p><p>Here are the main credit card points currencies, along with the top credit card options for earning each of them:</p><table style="height: 295px; width: 100%; border-collapse: collapse;" border="1" cellpadding="10px"><tbody><tr style="height: 21px;"><td style="width: 33.3333%; height: 21px;"> </td><td style="width: 33.3333%; height: 21px;"><strong>Top credit card options for earning points</strong></td><td style="width: 33.3333%; height: 21px;"><strong>Travel partners</strong></td></tr><tr style="height: 169px;"><td style="width: 33.3333%; height: 169px;"><strong>American Express Membership Rewards</strong></td><td style="width: 33.3333%; height: 169px;"><p>Platinum Card® from American Express</p><p>American Express® Gold Cards</p><p>The Blue Business® Plus Credit Card from American Express</p></td><td style="width: 33.3333%; height: 169px;"><p>19 airlines, including Delta, British Airways, and Virgin Atlantic</p><p>3 hotels (Choice, Hilton, and Marriott)</p></td></tr><tr><td style="width: 33.3333%;"><strong>Capital One miles</strong></td><td style="width: 33.3333%;"><p>Capital One® Venture® Rewards Credit Card</p><p>Capital One® Spark® Miles for Business</p></td><td style="width: 33.3333%;"><p>13 airlines, including Air Canada and JetBlue</p><p>2 hotels (Accor and Wyndham)</p></td></tr><tr style="height: 21px;"><td style="width: 33.3333%; height: 21px;"><strong>Chase Ultimate Rewards</strong></td><td style="width: 33.3333%; height: 21px;"><p>Chase Sapphire Preferred® Card</p><p>Chase Sapphire Reserve®</p><p>Ink Business Preferred® Credit Card</p></td><td style="width: 33.3333%; height: 21px;"><p>10 airlines, including Southwest, United, and Virgin Atlantic</p><p>3 hotels (Hyatt, IHG, Marriott)</p></td></tr><tr style="height: 21px;"><td style="width: 33.3333%; height: 21px;"><strong>Citi ThankYou Rewards</strong></td><td style="width: 33.3333%; height: 21px;"><p>Citi Prestige® Credit Card</p><p>Citi Premier℠ Card</p></td><td style="width: 33.3333%; height: 21px;">15 airlines, including JetBlue, Etihad, and Virgin Atlantic</td></tr></tbody></table><p>These <a href="https://www.businessinsider.com/personal-finance/transferable-credit-card-points-best-rewards-to-earn" target="_blank" rel="noopener">transferable credit card points</a> can be extremely valuable, not just because you have so many options for using them to book travel, but also because there are certain sweet spots you can use to your advantage. For example, if you have the Chase Sapphire Reserve, your Ultimate Rewards points are worth 50% more when you book travel through Chase. Plus, you may be able to use your bank points for things beyond travel — in light of the coronavirus outbreak, Capital One added options to redeem miles from the Capital One® Venture® Rewards Credit Card <a href="https://www.businessinsider.com/personal-finance/redeem-capital-one-miles-food-streaming-services" target="_blank" rel="noopener">for food delivery and streaming services</a>. </p><p>Even if you're a very frequent flyer and love your <a href="https://www.businessinsider.com/personal-finance/delta-amex-credit-card-comparison" target="_blank" rel="noopener">Delta</a> or <a href="https://www.businessinsider.com/personal-finance/best-credit-cards-for-american-airlines" target="_blank" rel="noopener">American Airlines card</a> for earning miles and enjoying perks like a <a href="https://www.businessinsider.com/personal-finance/how-to-avoid-checked-bag-fee" target="_blank" rel="noopener">free checked bag</a>, adding a credit card that earns Amex, Chase, Capital One, or Citi rewards to your wallet is a smart strategy. You'll be diversifying your rewards, and those bank points will never expire.</p><h2>How to keep points and miles from expiring</h2><p>Since the travel rewards you earn are only as valuable as the flights or hotel stays you're able to book with them, you won't want to let them expire — even if you're not sure when you'll be able to travel again.</p><p>Here are some of the top ways to keep them alive:</p><h3>Use a co-branded credit card</h3><p>If your American Airlines miles are in danger of expiring, you can make a purchase with an <a href="https://www.businessinsider.com/personal-finance/best-credit-cards-for-american-airlines" target="_blank" rel="noopener">American Airlines credit</a> card to keep your rewards active. This will work with any airline or hotel rewards program; using a <a href="https://www.businessinsider.com/personal-finance/best-marriott-bonvoy-credit-cards" target="_blank" rel="noopener">Marriott credit card</a> will prevent your Bonvoy points from expiring as well.</p><h3>Go through an online shopping portal</h3><p>If you're making a purchase online, check to see if your airline or hotel has a <a href="https://www.businessinsider.com/personal-finance/use-shopping-portals-maximize-rewards-online-purchases" target="_blank" rel="noopener">shopping portal</a>. Shopping portals earn you a specified number of points or miles per dollar when you shop with participating retailers. For example, by going through the <a href="https://www.alaskaair.com/MileagePlanShopping/SignIn" target="_blank" rel="noopener">Alaska Airlines MileagePlan portal</a>, you could earn miles for shopping with retailers like Apple and Sephora — and extend the life of your Alaska miles by two years.</p><h3>Use your points or miles</h3><p>Redeeming your rewards is included under the umbrella of account activity that will preserve your points. Even if you don't want to book a travel reservation, you could redeem a small number of points or miles for merchandise, like a magazine subscription. To see your redemption options, log into your loyalty account and navigate to the rewards section.</p><p><a href="https://www.businessinsider.com/personal-finance/how-to-keep-points-and-miles-from-expiring" target="_blank" rel="noopener">See Business Insider's guide to keeping your points from expiring</a> for more ideas.</p><h2>What to do if you let your points and miles expire</h2><p>If you do slip up and let your points or miles expire, you may be able to pay to get those rewards reinstated. Only two airline programs publicly advertise this option (American Airlines and Alaska Airlines), but it's still worth calling your loyalty program's customer service to see if there are any options for you.</p>Related Content Module: More Credit Card CoverageRead the original article on <a href="https://www.businessinsider.com/personal-financedo-credit-card-points-miles-expire">Business Insider</a>

Unlike most airline and hotel rewards, credit card points never expire — and they're often a better deal

<ul class="summary-list"><li>The Roth 401(k) and Roth <keyword id="11898246" type="UNKNOWN" weightage="60" keywordseo="ira" source="Orion">IRA</keyword> are two different types of retirement vehicles that allow you to invest after-tax dollars.</li><li>A Roth 401(k) is offered through your employer, and a Roth IRA is set up individually.</li><li>A Roth 401(k) has stricter rules but higher contributions, while a Roth IRA has lower contributions and more flexibility.</li></ul><p>The Roth 401(k) and Roth IRA are two of the many options you can choose from in deciding how to invest. Though the names are similar, these plans differ in several important ways. Which one is the right fit for you will depend on your age, time horizon, annual income, and financial goals.</p><h2><strong>Roth 401(k) vs. Roth IRA: At a glance</strong></h2><p>The term 401(k) refers to the tax code in which these employer-sponsored plans were created. IRA stands for independent retirement arrangement. The key difference between the Roth versions of these types of accounts and their traditional counterparts is how the tax advantages work.</p><ul><li><strong>A Roth 401(k)</strong> is offered by employers. Similar to a traditional 401(k), this type of plan is provided as a benefit. Unlike a traditional 401(k), the contributions you make to a Roth 401(k) are with after-tax dollars. Qualified withdrawals are tax free.</li><li><strong>A Roth IRA </strong>isn't tied to an employer. If you meet the eligibility requirements, you can save for retirement using a Roth IRA through a brokerage like Fidelity or Vanguard and invest after-tax dollars. Qualified withdrawals are also tax free.</li></ul><p>"'Roth' means that the accounts are funded with after-tax dollars," explains Brandon R. Amaral, a certified financial planner and founder at <a href="http://www.amaralfp.com/" target="_blank" rel="noopener">Amaral Financial Planning</a>. "You don't receive a tax deduction, however any growth in the account is tax free."</p><h2><strong>What is a Roth 401(k)?</strong></h2><p>The Roth 401(k) <a href="http://www.pensionrights.org/publications/fact-sheet/new-type-savings-plan-roth-401k" target="_blank" rel="noopener">was established </a>under sweeping tax-reform legislation passed in 2001. It combined elements that already existed in a traditional 401(k) with those of the Roth IRA . Employers were given the option to implement the Roth 401(k) in 2006.</p><p>Roth 401(k) accounts are only available through your employer. As part of your benefits package, your employer may match your contributions up to a certain percentage. However, it's important to note that any Roth 401(k) <a href="https://www.irs.gov/retirement-plans/retirement-plans-faqs-on-designated-roth-accounts#8designated" target="_blank" rel="noopener">contributions by your employer</a> are made with pre-tax dollars to a traditional 401(k) account that is taxable upon withdrawal. The contributions you make are after tax, and post-retirement distributions are tax free.</p><p>On top of that, you want to be aware of vesting, which refers to ownership of the <keyword id="11909872" type="UNKNOWN" weightage="60" keywordseo="retirement-account" source="Orion">retirement account</keyword> as it relates to employer contributions. Your employer may have certain time requirements for you to meet until you're 100% vested, or in other words, entitled to all the money in the retirement account. Your own contributions are immediately 100% vested.</p><p>Roth 401(k) accounts don't offer any tax breaks now, as you use after-tax dollars. But the benefit is that you get earnings and withdrawals tax-free later on if it's a qualified distribution. You must be 59 ½ or older to qualify for tax-free withdrawals. If you withdraw before then, you could be hit with a 10% early withdrawal penalty and owe income tax. There may be certain situations such as death and disability where you can avoid these penalties. </p><p><strong>Quick tip</strong>: If your employer offers to match your Roth 401(k) contributions to a certain level, see if you can contribute up to the maximum to make the most of your retirement savings. </p><p>One of the benefits of a Roth 401(k) vs Roth IRA is that you can contribute more to your account. </p><p>"With a Roth 401(k), you can contribute up to $20,500 ($27,000 if you are over 50) in 2022," notes Amaral. "With a Roth IRA, you can contribute up to $6,000 ($7,000 if you are over 50) in 2022." </p><p>When you reach retirement age, you can enjoy your funds tax-free. You must take a required minimum distribution by age 72, if you haven't already. A Roth 401(k) can be a good choice if you're in a low tax bracket now and expect to be in a higher tax bracket come retirement.</p><h3>Roth 401(k) pros and cons</h3><table style="border-collapse: collapse; width: 100%;" border="1"><tbody><tr><td style="width: 49.7403%;"><p><strong>Pros</strong></p></td><td style="width: 50.1299%;"><p><strong>Cons</strong></p></td></tr><tr><td style="width: 49.7403%;"><ul><li>They have a higher annual contribution limit. </li><li>There are no income limits. </li><li>Qualified distributions are not taxed. </li><li>Investment earnings are tax-free if taken out under a qualified distribution.</li></ul></td><td style="width: 50.1299%;"><ul><li>You must take distributions by age 72. </li><li>They're only available through your employer. </li><li>Contributions aren't tax deductible and won't reduce your taxable income. </li><li>Early withdrawals may include a 10% penalty. </li></ul></td></tr></tbody></table><h2><strong>What is a Roth IRA?</strong></h2><p>A Roth IRA is an account that you can use to invest for retirement on your own, without an employer. You use after-tax dollars now, so you avoid paying <keyword id="11898253" type="UNKNOWN" weightage="60" keywordseo="taxes" source="Orion">taxes</keyword> later on when it's time for a distribution. The big difference between a Roth IRA and a Roth 401(k) is its flexibility. </p><p>"Roth IRAs also allow penalty-free distributions for first-time home purchases, education expenses and unreimbursed medical expenses," Amaral says. </p><p>Roth IRAs are good for young investors who expect to be in a higher tax bracket later on. However, there are income eligibility requirements to contribute to a Roth IRA. The amount you can contribute is much less than a Roth 401(k). The maximum is $6,000, or $7,000 if you're 50 or older. But it may be good in exchange for the flexibility a Roth IRA comes with. </p><p>"While you can save more for retirement in a Roth 401(k), a Roth IRA offers more flexibility for withdrawals. With a Roth IRA, you are able to withdraw your contributions after five years to avoid any taxes or penalties," notes Amaral.</p><p>But first you need to see if you even qualify for a Roth IRA.</p><p>You can contribute up to the limit if you're single and your modified adjusted gross income (AGI) is less than $129,000. If it's beyond that up to $144,000, you can only contribute a reduced amount. If you're married, you can contribute up to the limit if your modified AGI is less than $204,000. If it's beyond that up to $214,000, you also can only contribute a reduced amount. If your income goes beyond these thresholds, you'll no longer be eligible to contribute. </p><p>One of the benefits a Roth IRA has over a Roth 401(k) is that there are no required distributions while the account owner is alive. So you can take money out when you want, and never be forced into it. The money can also be used for first time home-buying or health insurance premiums while unemployed, which makes it an attractive and flexible retirement savings vehicle.</p><p><strong>Quick tip:</strong> Wondering what your funds can be used for and if there is an exception? See the IRS' list of exceptions for <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions" target="_blank" rel="noopener">retirement accounts listed here</a>.</p><p>Though there is more flexibility with withdrawals using a Roth IRA, if you tap the earnings on your investments before age 59 ½, that money will probably be taxed as regular income, plus a 10% penalty, with certain exceptions.</p><h3>Roth IRA pros and cons</h3><table style="border-collapse: collapse; width: 100%;" border="1"><tbody><tr><td style="width: 50.9091%;"><p><strong>Pros</strong></p></td><td style="width: 48.961%;"><p><strong>Cons</strong></p></td></tr><tr><td style="width: 50.9091%;"><ul><li>You can withdraw funds tax-free. </li><li>Earnings on the investments grow tax free. </li><li>They have more flexibility with regards to the timing of withdrawals.</li><li>There are no minimum required distributions. </li></ul></td><td style="width: 48.961%;"><ul><li>Contributions aren't eligible for tax deductions. </li><li>There are income requirements in order to qualify. </li><li>They're self-administered and have no employer match available.</li><li>The annual contribution limits are relatively low. </li></ul></td></tr></tbody></table><h2><strong>The financial takeaway</strong></h2><p>Though both Roth 401(k) and Roth IRA accounts use after-tax dollars and both are used for retirement, they vary in who they are geared toward as well as who is eligible. For example, a Roth 401(k) is only available through your employer, while a Roth IRA is only available to you if you meet certain income requirements. The amount investors can invest is also a big consideration.</p><p>"The main considerations for choosing which retirement vehicle is for them is their short-term goals, current cash flow, and time horizon to retirement," notes Amaral. "If you are young, it may be wise to contribute to a Roth IRA and keep your assets liquid to help fund a potential home purchase or wedding. If you are in your 50s, you can save more money toward retirement to catch up in case you are behind."</p>

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