If you’re applying for a credit card, having an account with the issuing bank can make it easier to get approved. But in many cases, it’s not a requirement.
“According to J.D. Power research, 45% of bank customers have a credit card from their primary bank, so almost half get their credit card from another credit card issuer,” says Jim Miller, vice president of the banking and credit card practice at J.D. Power.
In fact, it’s possible some issuers may not require you to have a bank account at all to open up a credit card.
Adam Marlowe, principal market development officer at Georgia’s Own Credit Union, says, “From a credit card bank’s perspective, they’re not necessarily concerned if you have a checking account or savings account somewhere, as long as you can make the payments on the card.”
At the same time, not having a bank account could make owning a credit card trickier. If you’re considering this option, here’s what you need to know.
Bank Accounts Make Managing Credit Cards Much Easier
As you can imagine, not having a bank account can make managing your credit card cumbersome. “Generally speaking, when you’re online and you want to make a payment, they usually want to deduct that payment from a bank account. If you don’t have one, that makes it extremely difficult,” Marlowe says. Without a bank account, you have to use other payment options that cost money or delay your payment.
If the issuing bank has local branches, you may be able to pay your credit card bill in cash using a teller. Unfortunately, this adds the extra step of driving to your local bank branch. If the issuing bank doesn’t have local branches, you’ll need to mail a money order or use a money service, both of which add an extra expense to making credit card payments.
Online payments can be made instantly, but if you mail a money order or use a money transfer service, you’ll need to send in your payment earlier so it will arrive by your due date. Making a payment close to the deadline can get expensive. You can’t control how quickly the mail is delivered, unless you pay more for faster service. If you have to overnight your payment to get it to your credit card issuer on time, that’s another fee, Marlowe says.
Having access to a bank account can make your life much easier when you have to make credit card payments. Miller says, “A vast majority of customers who have a credit card would qualify for a checking account and should be able to find one with no monthly service charges.” With a bank account, you can make credit card payments online either through your credit card’s website or your bank account’s bill pay service, if it offers one.
Additionally, most credit cards allow you to set up automatic payments for the minimum amount due, the full statement balance or something in between. Just make sure you always have enough money in your bank account to cover any automatic payments you schedule to avoid overdraft fees or rejected payments.
Benefits of Keeping Bank and Credit Card Accounts at the Same Bank
Where you have your bank account doesn’t make a huge difference when it comes to making credit card payments. That said, it can make a difference in other ways.
“Many banks use the same mobile app and online banking system for credit cards and checking accounts,” Miller says. “This makes it very easy for customers to view all of their accounts in one place and pay their credit card.” It reduces the number of logins and passwords you need to keep track of, too.
And loyalty can build loyalty. Having several financial products with the same institution can make that institution more willing to waive an annual fee, lower your interest rate or offer another incentive to keep your business. Marlowe says, “The more business that you do with an institution, or anyone frankly, the more likely they are to allow that relationship to grow.”
Some institutions have bank accounts and credit cards that complement each other. Bank of America offers higher rewards earning rates on certain credit cards based on the amount of money you hold in its banking accounts and Merrill Edge and Merrill Lynch investment accounts. Those with $20,000 to $49,999 in combined eligible assets get a 25% bonus on their qualifying credit card rewards. The bonus increases to 50% for those with $50,000 to $99,999 in combined assets and maxes out at a 75% bonus for those with $100,000 or more in combined assets.
Chase offers a 60,000-point Chase Ultimate Rewards sign-up bonus for Chase Sapphire or Chase Freedom credit card customers who open a bank account. But you have to transfer $75,000 in qualifying new money to qualifying Chase accounts within 45 days of opening your account and maintain that balance for 90 days to earn the bonus.