Nerd tip: In early 2021, State Farm credit card accounts will be converted to U.S. Bank-issued products.
You can apply for a credit card issued by the insurance giant State Farm — but that doesn't mean you should.
Perhaps you saw an ad for the State Farm® Rewards Visa® Credit Card tucked into your policy renewal paperwork, or maybe you stumbled upon an offer online. Of all the consumer cards the insurance company offers, this one stands out as offering the biggest rewards. It also comes with a decent balance transfer offer. But even though it might be the best State Farm credit card, it isn't your best option. Here’s what you should know about it.
1. The rewards are a snooze
Despite the name, the State Farm® Rewards Visa® Credit Card isn’t very rewarding. There's no sign-up bonus, and the ongoing rewards are piddling:
3 points per dollar spent on insurance premium payments, on up to $4,000 in spending annually (1 point per dollar spent afterward)
1 point per dollar spent elsewhere on eligible purchases
Even if insurance premiums were a huge expense for you, the spending cap of $4,000 annually sharply limits your earning potential in this category. You could do far better with a card like the Citi® Double Cash Card – 18 month BT offer, which gets you 2% — that is, 1% on every dollar spent and 1% back on every dollar paid off — with no limits on how many rewards you can earn.
2. The best redemption options are limiting
With this card, points are normally worth 1 cent each. But when redeeming for cash deposited in a qualifying State Farm Bank checking or interest checking account or for a State Farm Visa gift card, you can get up to 1.5 cents per point. That's because you get bonuses based on how many points you redeem this way:
0 - 24,999 points — No bonus
25,000 - 49,999 points— 25% bonus (1 point = 1.25 cents)
50,000 - 99,999 points— 35% bonus (1 point = 1.35 cents)
100,000+ points — 50% bonus (1 point = 1.5 cents)
This would be an amazing deal if it were easy to nab. But for most cardholders, it's not, for two big reasons:
To get 1.5 cents per point, the highest available rate, you have to redeem 100,000 or more points; to get that many points, you would have to put at least $92,000 on the card in a year, or $84,000 over two years.
You have to either bank with State Farm or deal with cumbersome State Farm Visa gift cards; these specific gift cards charge an inactivity fee of $2.50 a month — ugh! — after 12 months of inactivity.
It's less of a hassle to redeem points directly for statement credits, for gift cards, or to cover a State Farm bill. But if you redeem this way, you’ll get just 1 cent per point. That’s not terrible, but it’s not notable, either.
3. Its balance transfer benefits are OK
The State Farm® Rewards Visa® Credit Card, overall, is a mediocre card. But its balance transfer benefits could make it worth considering, in some cases. Here’s what it offers:
APR: 0% for 12 months on purchases and balance transfers, and then the ongoing APR of 14.24% - 24.24% Variable APR
Balance transfer fee: 3% or $10, whichever is greater
These credentials weren’t enough to earn it a spot on NerdWallet’s list of best balance transfer credit cards. But compared to most other cards, it’s still a relatively cost-effective deal. If you’re low on balance transfer options, it’s worth a look.
4. The annual fee is $0
The rewards aren't great, but at least you're not paying for them.
5. You have better options
To qualify for the State Farm® Rewards Visa® Credit Card, you need good or excellent credit. But if you have good or excellent credit, why on earth would you get it?
In the world of credit cards, a good score puts you in the catbird seat. You could qualify for one of the best credit cards available. Instead of settling for the State Farm® Rewards Visa® Credit Card and its lackluster rewards, figure out what you really want out of a credit card and look for a better deal.