Should You Open a Credit Card With Your Bank? Probably Not

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KEY POINTS

  • Many banks promote their products and services to existing customers.
  • It would be easy to open a credit card through your bank, but it may not be a good move.
  • Depending on your financial situation and goals, you may be able to find a better credit card elsewhere.


Before opening a credit card with your bank, decide if it's the right card for you.

If you've walked into your local bank branch recently, chances are you've been asked if you want to open a new credit card. This situation happens to me every time I visit my local bank branch.

Banks are continuously marketing their products as a way to make more money and increase their customer base. You might be asked if you want to open a new account or upgrade an existing account.

While credit cards can be an excellent financial tool to help build credit and develop responsible spending habits, a bank credit card may not be the best choice compared to other cards on the market.

Are bank credit cards a good option?

Many banks promote their own credit card products. As an existing bank customer, you may be told that you've been pre-approved for a card if you meet the financial and credit requirements.

However, a bank credit card may not be the best option for you -- especially if you're looking to maximize the rewards that you can earn. That's because the rewards may be minimal compared to other credit cards on the market.

My bank keepings offering me a credit card with a 1.8% earning rate on all purchases. This isn't a terrible rewards rate. Some credit cards only earn 1% or 1.5%, and others may earn a higher rate but have earning caps. However, I have several credit cards that earn higher rates in various spending categories.

One card, for example, offers 4% rewards on restaurant and grocery purchases. I also have a travel credit card that earns 3% rewards on travel purchases -- and as a frequent traveler, those points add up.

While the cards I'm mentioning have annual fees, the rewards and additional perks offered make the annual fees well worth the cost.

What other benefits do some of my credit cards offer? Trip cancellation and trip interruption coverage, cellphone protection, airport lounge access, yearly travel credits, and monthly food and drink credits. These are valuable benefits that I put to use.

What to consider before opening a bank credit card

Could a bank credit card work well for you? Maybe. It depends on your personal finance situation and what you're looking for in a card.

Here are a few things to consider before you open a bank credit card:

Annual fee: Does the card have an annual fee? Can you get a better card with no yearly fee elsewhere? Would it make sense to pay an affordable annual fee for additional card perks?

Rewards: Does the card earn rewards? Are the rewards flat-rate, or are they earned in specific spending categories? Can you earn unlimited rewards, or is there a cap on what you can earn?

Redemptions: How are rewards redeemed? Do you earn cash back, or are there other flexible options?

APR: What is the APR? Is there a 0% intro APR card offer available?

Benefits: Are there any benefits or perks that could increase the card's value? Could you get better benefits with a different card?

Do your research before opening a credit card

Don't assume that a bank credit card is your best option. If you're offered a credit card from your bank, ask for more information and don't decide at the moment. Do some research and figure out if there are other credit card options that better meet your needs.

Are you looking to learn more about other credit cards?

Check out our list of best credit cards to see which cards we recommend.

If you're hoping to earn valuable credit card rewards, review our list of best rewards credit cards.

Our picks for 2024's best credit cards

Our experts carefully review the most popular offers and select those that are worthy of a spot in your wallet. These standout cards come with fantastic benefits like generous sign-up bonuses, long 0% intro APR periods, and robust rewards.

Click here to learn more about our recommended credit cards

Our Research Expert

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