The 4 Digital Banks With Credit Cards (2023)

Credit cards are an essential financial tool. Every bank, including the traditional brick-and-mortar ones, provides credit cards to their customers to pay for their purchases and pay back at the end of the month. Traditionally, banks issued these cards as means to increase their profitability and boost customer loyalty.

But with the influx of digital banks and innovations in the banking sector, customers can now access credit cards as a means to build credit.

In addition, if a customer pays back the statement on time and in full each month, the banks report the credit score to major credit bureaus. Here are some of these banks.

Chime

• Chime Credit Builder Visa Credit Card
• No annual fees
• Savings account
• Early payday
• 0.5% APY on savings accounts
• Fee-free overdraft

The Chime Credit Builder Visa Secured Credit Card serves the same purpose as the traditional credit card. The primary difference is that it also helps you build your credit history at the same time. This card is provided by Chime bank, a digital bank based in the USA.

This card has a $0 annual fee and doesn’t require a minimum deposit or credit history check. This card was launched in 2020 and works like a regular debit card by allowing users to only spend the cash in the accounts. This card is accepted when paying for gas or groceries and everyday purchases.

To qualify for this credit card, customers are required to open a Chime Spending Account and set up a direct deposit. This requirement is in place so that customers can move money instantly across their Chime accounts.

The cash you move into the Credit Builder secured account is the amount you can spend. Unlike other credit cards, this money can also be used to pay monthly balances. This account doesn’t have a pre-set limit and will not report the utilization on your credit history.

Chime bank reports your credit payments made to major credit bureaus such as TransUnion, Experian, and Equifax. This way, the bank helps you build your credit over time.

The credit card is issued by Stride Bank and may be used everywhere Visa credit cards are accepted.

SoFi

• Earn 2% unlimited cashback
• Cash in points into crypto
• No annual fees
• Low APR after 12 months timely payments
• Credit card rewards with popular brands
• No foreign transaction fees

Stanford business school students founded Social Finance, Inc (SoFi) in August 2011 with the purpose of using an alumni-funded lending model to connect recent graduates with alumni. By 2020, the Fintech company attained 1 million members. The company is based in San Francisco, SoFi, and has so far raised over $4 billion.

SoFi offers a credit card that has no annual fee. It also earns customers 2% unlimited cashback that can be easily redeemed into crypto or used to invest in stocks or pay down a SoFi loan. If you make 12 monthly on-time payments within the expected due date, SoFi will lower your APR by 1%.

For customers that use this credit card, there are benefits associated with some of the popular brands. For instance, if you use your card to pay for Lyft, the bank gives you a $5 Lyft credit for every three rides taken in a month, once every month. With Shoprunner, customers get free annual membership of $79.

You can apply for this card via the app or the website by filling in your personal details and financial information. Before applying for this credit card, it’s advisable to check your credit score because SoFi will carry out a hard credit check which could impact your score.

Other financial products by SoFi include student loan refinancing, personal loans, mortgages, SoFi investing, crypto, fractional shares, ETFs, and insurance.

Discover

• Earn up to 5% cashback on credit card purchases
• Unlimited 1% cashback
• 11.99% to 22.99% Standard Variable Purchase APR

Discover is well renowned for its variety of credit cards. As a full-service digital bank, it offers a broad range of services.

The bank credit cards include Discover Cash Back Credit Card, Student Cash Back Credit Card, Discover Chrome Credit Card, Discover Secured Credit Card, and the Travel Credit Card. Among these cards, the Discover Cash Back Credit Card is highly rated because of its rewards.

Once you apply for this credit card from Discover, you earn a 5% cashback on everyday purchases on Amazon, grocery stores, gas stations, plus an unlimited 1% on all other purchases. Discover will also automatically match all the cashback you’ve earned once the first year ends. For this, they don’t limit the minimum spending or maximum amount of rewards. For the first 14 months until November 2021, customers can enjoy a 0% APR on purchases and balances.

The regular APR is 11.99% to 22.99% on purchases and up to 5% fee for future balance transfers.

The Student Cash Back Credit Card also has a 5% cashback reward, while the others earn a 2% cashback on up to $1,000 in combined purchases each quarter.

Capital One 360

• No annual fees
• Cashback and rewards
• Variable APR
• 0% intro APR on some cards

Capital One 360 is the digital branch of Capital One Bank. They offer a series of seven credit cards with different benefits, rewards, and bonuses. The Platinum Mastercard is perfect for building credit; QuicksilverOne Rewards is a good alternative for everyday rewards, while the Venture Rewards Credit Card is good for unlimited travel rewards.

Each of these credit cards has a different variable APR as well as a specific cashback reward.

Before applying for a credit card with Capital One 360, you can check whether you are pre-approved on the website. This check will not affect your credit score.

A pre-approval involves answering some questions that give your personal information to the bank. Next, the bank will display the cards you are eligible for, and you can complete the application process.

Capital One 360 will not charge a fee if you use your credit card overseas for foreign currency transactions.

You can monitor all your credit transactions via the mobile app, available on Google Play and the App Store.

What to Consider Before Getting a Credit Card

If you want to apply for a credit card from one of these digital banks, here are some factors you should keep in mind.

• Your Credit Score

Applying for a credit card with some of these digital banks doesn’t come with a credit check. However, some will check your credit history before determining your eligibility.

In addition, as you make your monthly payments, the banks usually report to the three major credit reference bureaus. This is a good alternative if you want to build your credit score.

Therefore, if your goal is to boost your credit history, it’s better to get a card with a bank that has a credit builder.

• The APR

The interest rate charged on a credit card can make it hard to keep up with the payments. Before getting a credit card, request the APR rates and keep in mind that most of them are variable. Also, some banks will have a 0% APR for new customers, which changes after a few months.

To avoid late payments and potential penalties, it’s better to go for a credit card that you can sustainably pay off even after the introductory APR is scrapped off.

• Fees

Some banks offer credit cards without annual fees. When applying for a card, it’s best to check that the bank is not charging you any extra fees. To avoid paying extra, do your research and compare cards from different digital banks.

In addition, you should also confirm whether your bank charges a foreign transaction fee if you use your credit card overseas. This allows you to plan well, especially if you travel a lot or deal in foreign currency.

• Rewards and Cashback

Once you get a credit card, it is highly likely to come with some rewards and cashback when you make a purchase or pay bills. Some of these rewards give you discounts with specific brands, while others give you miles to travel or points that you can redeem for a service or a product.

Cashback cards return a percentage of the money you have spent to your account. You can cash these rewards to get a higher amount on your gift card.

• Penalties

Credit cards will help you build your credit history if you make full payments each month and on time. Digital banks offer an incentive to their customers to make timely payments by providing a reporting service to the three major credit reference bureaus.

However, other banks would charge you a late payment fee when you fail to pay off your monthly balance on time. Before picking a specific credit card, it’s best to ensure that you know whether there are penalties and if you can keep up with the payments.

• Credit Limit

A good credit card should give you enough wiggle room to pay off the balance and avoid getting into trouble. If it’s your first card, you can start with a lower limit and increase it as you make more money.

Summary

Digital banks are changing the delivery of banking services. While most of them are yet to introduce a credit card, some banks are already offering customers this product to either help them earn rewards and cashback or build credit.

A good credit card should not cost the customer extra annual, foreign transactions, and balance transfer fees. Before choosing a credit bank from a digital bank, you should take some time to compare the different benefits and features to get the best deal.