What Is a Plain Vanilla Card?

A plain vanilla card is a basic credit card with no special features or perks and no monthly or annual fees. The perks of plain vanilla cards are basically the same from one financial institution to the next, while the card’s credit limit also depends on the cardholder’s creditworthiness.

Key Takeaways

  • Plain vanilla credit cards are a basic offering that comes with no perks but also no exorbitant fees.
  • Plain vanilla credit cards can be a good option for fair credit borrowers or borrowers looking to improve their credit score.
  • While plain vanilla credit cards can be a reasonable option, it isn’t always the best idea to opt for ease of understanding since promotional cards do offer some great benefits.

Plain Vanilla Card Explained

Plain vanilla credit cards, along with other plain vanilla financial products, represent a base standard for which products build upon. Plain vanilla is usually the most basic form of a product which makes it very easy for consumers to understand.

With a plain vanilla credit card, the terms and conditions are very clear. This makes it easy for a cardholder to use and also easy for the credit card company to manage. Plain vanilla cards have no extra fees. Many plain vanilla cards use an ending balance interest system, which means cardholders can avoid interest if they pay off the balance before the cycle end date. This usually also means no minimum interest charge.

Plain vanilla credit cards can be good for consumers for several reasons. In general, no-fee cards come with much lower costs than a card that charges monthly and/or annual fees. Plain vanilla credit cards have very clear terms which make it easy to understand the interest charges on each statement. Many consumers like these cards because there is no need to decipher complicated fine print. These cardholders may also prefer not to bother with credit card rewards programs or may not spend enough to earn meaningful rewards.

Card Terms

Plain vanilla cardholders often form the basic standard for network processors when they begin negotiations with potential issuers. Issuers work with their desired network processor to build out a card offering that is most appealing to their customers. Oftentimes, a plain vanilla credit card will have low to intermediate credit requirements. The somewhat lower standards can make these types of cards a good option for borrowers with fair credit or prospective cardholders looking to build their credit history.

While plain vanilla credit cards are generally consistent across financial institutions, that does not mean they offer the same terms. It is up to the issuer to negotiate the terms of the card with the network processor before bringing it to market. Moreover, a card’s interest rate will usually depend on the cardholder’s credit score so not all cardholders will receive the exact same rate.

Processors and issuers work together to negotiate and decide on the final terms of a credit card.

As with all credit cards, the issuer can decide on how they plan to charge interest. Not all plain vanilla cards will use the same method so this can be one area to review when applying for this type of card. End-of-balance interest is usually the best for the cardholder because they can alleviate interest if they pay the balance by the last day in a cycle. Other types of interest however, may charge based on a daily balance or possibly a previous cycle balance.

Advantages and Disadvantages of Plain Vanilla Cards

Plain vanilla cards have the advantage of simplicity and ease of use. These cards will be a basic offering, presented in alliance with one of the four major credit card network processors:

The card’s acceptance will depend on its processor.

While plain vanilla cards offer many advantages, they may not necessarily be the best option for every consumer. These cards generally fall in the middle when it comes to the full range of credit cards available.

Plain vanilla cards beat out high annual fee cards and cards that charge monthly fees. They can also come with reasonable levels of interest, sometimes much lower than reward cards. However, these cards don’t usually beat out some of the big advantages that can come with promotional and reward card offerings. You also won’t be using these cards at your favorite retail stores to earn reward point discounts.

The best promotions and reward programs are typically only available for higher credit quality borrowers. Closed-loop retail reward program cards can be an exception since they have somewhat different customer targets.

In general, plain vanilla cards can be an alternative if a borrower doesn’t qualify for a high-profile rewards card from a major credit card issuer, but in general, many reward programs don’t require anything of the cardholder, just spending. For borrowers who qualify for cards with perks and plan to spend regularly, a promotional or reward program is usually always the best bet if the interest rate is reasonable.

Promotional offers can come with 0% interest over an introductory period which can mean no interest and no fees. Reward programs, specifically cash-back programs, usually offer cardholders a rebate for each purchase. Thus, it is a good idea to look into the full array of options available before just settling with a plain vanilla card that may have the same interest rate.

In another example, consider a credit card that offers $500 cash back after making $5,000 in purchases in the first three months. If a high spender qualifies for this $500 cash-back promotional option, they may find the cash-back offer to be a better fit. Thus, in this instance it can also be worth it to take a few extra steps to understand the perks and watch spending a little more closely in order to get the $500.