SoFi is launching an unlimited 2% cash-back card — here's what you need to know
Update: Some offers mentioned below are no longer available. View the current offers here.
In the earlier months of the pandemic, card companies held back on issuing new lines of credit. With a relatively unstable economic environment, issuers had difficulty assessing the creditworthiness of potential cardholders.
However, that's started to change lately. Generous new sign-up offers have emerged and card companies have generally become less restrictive when it comes to applications. That's great news for consumers who are looking to accumulate points, miles or cash back during this slower period of travel.
Entirely new card products have also appeared on the market, and you can now add another to the list of intriguing offerings. Digital finance company, SoFi, is launching a competitive, no-annual-fee 2% cash back credit card. You can also earn up to $100 when you open and fund a SoFi Money and a SoFi Invest account after getting approved for the SoFi Credit Card (See Terms).
While there are many other lucrative cash-back cards, the SoFi Credit Card is brand-new — and unique. Here are three things you should know.
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It's integrated into SoFi's other financial tools
If you're not familiar with SoFi, the company already offers a variety of financial tools to incentivize healthy financial habits, which includes a popular combined savings-checking account called SoFi Money.
There are also various platforms for investing, personal loans, home loans and more. I've been a SoFi Money customer for years and appreciate the simplicity of its online banking tool and its network of fee-free ATMs (although for new members, it is no longer any ATM).
The SoFi credit card leverages existing tools with the intention to help you redeem your unlimited cash-back earnings into one of these accounts.
Related: Best no-annual-fee credit cards
Earn 2% cash back
There are few consumer credit cards that earn unlimited 2% cash back on everything you buy, without the need to keep track of category bonuses. Count this SoFi card as one of them.
The Citi® Double Cash Card is perhaps one of the most popular 2% cash-back options. The Double Cash gives you 1% cash back when you buy and then another 1% as you pay. Cardholders can also convert the cash back they earn to ThankYou Points via a linked ThankYou account.
Similar to the Double Cash, the SoFi credit card is a World Elite Mastercard, offering exclusive discounts with retailers such as Lyft, Boxed and Shoprunner.
Use your cash back to pay down debt
Recent reports by the Consumer Financial Protection Bureau and Experian show that, as a whole, U.S. consumers are managing their credit and debt at similar levels compared to before the pandemic.
However, credit card debt remains an issue for many individuals. The average U.S. consumer's retail credit card balance — defined as a card that lets you carry a balance from month to month — is still over $2,000 in 2020.
If you need it, the SoFi Credit Card offers a sustained 1% reduction in APR after 12 consecutive on-time card payments. At TPG, we always recommend paying your balance in full, if at all possible. But if you do carry a balance with the card, the lower potential APR with the SoFi card could help you pay down your debt faster.
The SoFi credit card offers an automated redemption process into a SoFi account of your choice. That means while you can redeem for cash back, you can also pay down debt, invest or save for the future depending on the SoFi tool you connect with.
Bottom line
SoFi's new product is an unlimited 2% cash-back card that has no annual fee and is issued by the Bank of Missouri. While the cash-back card market is well-established, this is an interesting offering from SoFi that is embedded into its ecosystem of financial products.
That ecosystem is both a blessing and a curse, as the card is best for individuals who already have an existing SoFi account. Still, the card's emphasis on debt paydown is unique among the big players in the cash-back card market.