Getting approved for a new credit card can feel like getting vetted for top-secret clearance, but there's a reason behind every question you need to answer.
Beyond verifying your identity, card issuers want to limit the risk of handing out money to someone who isn't going to pay it back. Your credit score, income and employment status all factor into a lender's assessment of your creditworthiness. Credit card applications also include questions such as: Do you have a savings account, checking account or both? This may not seem important but these queries can provide card issuers with key information that informs their decision.
Below, CNBC Select explains why having a bank account (or two) can improve your credit card application odds.
How bank accounts help your credit card approval odds
Deposit accounts (checking accounts, savings accounts, money market accounts, etc.) are essential financial tools for managing money, and they can also help take the sting out of inflation. The best high-yield savings accounts currently feature interest rates above 5%.
On top of all that, bank accounts can boost your odds of being approved for all sorts of credit, including credit cards.
Bank accounts indicate you're a lower risk
A typical credit score is generated based on the information that's on your credit report. A credit report from one of the three major credit bureaus won't include any deposit account information so bank accounts aren't factored into a traditional FICO® Score or VantageScore®.
However, lenders may have their own credit scoring models, which are calculated differently than the most common types of credit scores. Many of these custom credit scores look for the presence of a savings account or a checking account, according to credit expert John Ulzheimer, formerly of FICO and Equifax.
While not all card issuers use a custom credit score, it's still helpful to have savings and checking accounts when applying for credit, as most risk-assessment systems count these as a sign you're safe to lend to.
Bank accounts establish a relationship with the lender
Having a preexisting relationship with a bank can increase your credit card application's approval odds. And having a bank account can make you more likely to receive prequalified or preapproved card offers. Certain exclusive credit cards are only open to existing customers — the U.S. BankAltitude®Reserve VisaInfinite®Card, for example, is only for current U.S. Bank customers.
Cardholders who have accounts with their card issuer may find the bank more willing to waive fees or offer incentives. For example, Bank of America has a rewards program that increases the credit card rewards you earn based on the balances of your deposit accounts.
U.S. Bank Altitude® Reserve Visa Infinite® Card
Information about the U.S. Bank Altitude® Reserve Visa Infinite® Card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.
Rewards
5X points on prepaid hotels and car rentals booked through the Altitude Rewards Center; 3X points on every $1 on eligible travel and mobile wallet spending
Welcome bonus
Earn 50,000 bonus points (worth about $750 in travel) after spending $4,500 within the first 90 days of account opening
Annual fee
$400
Intro APR
N/A
Regular APR
22.24%to29.24% (Variable)
Balance transfer fee
3% of the amount of each transfer, with a $5 minimum
Foreign transaction fee
None
Credit needed
Excellent/Good
Seerates and fees, terms apply.
Bank accounts qualify you for credit union membership (and their cards)
You need to be a member of a credit union to apply for one of their credit cards. The membership requirements vary by credit union, but often you can qualify by opening a savings account with a balance as low as $5.
Once you're a member, you'll have access to favorable rates on savings accounts and personal loans. And you can apply for cards issued by that specific credit union, such as the Alliant Cashback Visa® Signature Credit Card and PenFed Platinum Rewards Visa Signature® Card.
PenFed Platinum Rewards Visa Signature® Card
On PenFed's secure site
Rewards
5X points on gas purchases at the pump and electrical vehicle charging stations, 3X points on supermarket purchases, 1X point on all other purchases
Welcome bonus
15,000 points when you spend $1,500 in the first 3 months from account opening
Annual fee
$0
Intro APR
0% introductory APR for 12 months on balance transfers made in the first 90 days after account opening.*
Regular APR
17.99% variable on purchases; 17.99% non-variable on balance transfers
Balance transfer fee
3%
Foreign transaction fee
None
Credit needed
Good/Excellent
Terms apply.
0% introductory APR for 12 months on balance transfers made in the first 90 days after account opening. After that, the APR for the unpaid balance and any new balance transfers will be a non-variable rate of 17.99%. 3% balance transfer fee per transaction. Subject to credit approval. If you take advantage of this balance transfer, you will immediately be charged interest on all purchases made with your credit card unless you pay the entire account balance, including balance transfers, in full each month by the payment due date.
Bank accounts can substitute for credit history
If you have bad credit or no credit history, you may want a credit card to help build your credit score. Having a bank account can help you qualify for a card despite your less-than-stellar credit.
The issuers of some credit cards, such as Petal with its Petal Visa cards, evaluate applications in alternative ways. According to Ulzhiemer, Petal incorporates cash flow underwriting into its decision-making process, which weighs your cash flow along with your credit report or score. Since you can be approved for a Petal card based on your banking history, a deposit isn't needed to open an account as it would be with a secured credit card.
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Bottom line
A number of factors go into a credit card application but one that's easy to overlook is having a bank account.
Credit card applications often ask if you have a savings or checking account because they're considered a positive indicator of creditworthiness. Bank accounts also establish a relationship with the card issuer or credit union, which is sometimes a prerequisite for approval. And having an existing relationship with a bank may get you access to other benefits, such as waived fees or incentives.
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Read more
The best credit cards for fair and average credit
What is a good credit score and how to get one
Why it may be easier to be approved for a credit card if you already have an account with the issuer
Looking to apply for a credit card? Know if you're eligible and have this information ready
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
