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Best Credit Cards of December 2019: Reviews, Rewards and Offers

A BEGINNER’S GUIDE TO CREDIT CARDS

How bank cards work

The thought behind bank cards is easy: While you use a bank card, you’re borrowing cash to pay for one thing. In a while, you need to repay what your borrowed. Should you take time to pay it again (fairly than pay it in full when your bank card assertion comes), you may be charged curiosity. The entire bank cards trade rests on this primary premise.

A primary bank card transaction works like this:

  1. You swipe your card. When it comes time to pay for one thing, you use your card on the money register by working it by way of a card reader (or, if you happen to’re on-line, you enter your card info on the checkout web page).

  2. The acquisition is allowed. The cardboard reader contacts your bank card firm to verify the cardboard is legitimate for the acquisition quantity. Assuming all the pieces is OK, the transaction is allowed.

  3. The service provider will get paid. The financial institution that issued your bank card sends cash for the acquisition to the service provider the place the transaction passed off.

  4. You pay. The transaction reveals up in your bank card assertion, and you repay the financial institution for the acquisition.

How bank card rewards work

Varieties of rewards

Many of the perfect bank cards offer you rewards to your spending. Rewards are available two primary flavors:

  • Money again. You should use money again to instantly scale back your steadiness. In some instances, you possibly can have your money again deposited in a checking account or despatched to you as a test.

  • Factors or miles. Factors and miles may be redeemed for journey, reward playing cards, merchandise or different issues. You may additionally have the choice of redeeming factors for credit score in your assertion, identical to money again.

The cardboard issuer units the rewards charge that applies in your card. There are two primary sorts of rewards buildings:

  • Flat charge. You get the identical rewards charge on all spending performed with the cardboard, regardless of what you spend cash on. You would possibly get 2 factors per greenback on all purchases, or 1.5% money again on all the pieces.

  • Bonus rewards. You earn a base charge on all spending (sometimes 1 level per greenback or 1% money again) and then increased charges in sure classes — 5% money again at fuel stations, for instance, or Three factors per greenback spent on journey. Bonus rewards are awarded primarily based on the place you purchase one thing, not what you purchase. Each service provider is assigned a class code; in case your card pays bonus rewards at grocery shops, for example, you may earn these rewards any time you pay at a service provider with a class code that identifies it as a grocery store or grocery retailer.

Many bank card customers carry a number of playing cards with bonus rewards in numerous classes, plus a flat-rate card for purchases that fall exterior these classes.

Monitoring your rewards

The rewards you earn in your card are saved in a rewards account you could entry while you log into your card account on-line or, usually, from the issuer’s cellular app. Some issuers credit score your rewards account for a purchase order nearly instantly. In different instances, your rewards account will replace when your billing cycle closes and the issuer prepares your bank card assertion, so it could possibly take a number of weeks for rewards from any specific buy to indicate up in your account.

The rewards course of

The rewards course of works like this:

  1. You make a purchase order along with your bank card.

  2. The issuer calculates your rewards. You probably have a card that earns bonus rewards, the issuer seems to be on the class code of the service provider the place you made your buy and then applies bonus rewards as essential. In any other case, the issuer simply calculates your rewards primarily based on the flat charge.

  3. The issuer credit your rewards to your account. As talked about, it may take wherever from a number of days to a couple weeks for the rewards to indicate up.

  4. You redeem rewards by logging into your account on-line. Money-back redemptions are fairly simple. Redeeming factors or miles would possibly contain reserving journey by way of an internet software much like Orbitz or Expedia. Each card is totally different.

How bank card curiosity works

When you borrow cash from a financial institution, you often must pay curiosity, which is the price to you of utilizing the financial institution’s cash. Credit playing cards are uncommon in that there’s a solution to keep away from curiosity totally. Most playing cards provide a “grace interval”: Should you pay your steadiness in full on every assertion — that means you do not roll over any debt from one month to the subsequent — you will not be charged curiosity. Should you carry debt, although, you may be charged curiosity. Curiosity works like this:

  1. Your card issuer units your rate of interest. On the whole, the higher your credit score, the extra seemingly you’re to qualify for decrease charges, however bank card rates of interest are usually considerably increased than charges on different shopper debt.

  2. Your rate of interest is listed in your bank card assertion. It is expressed as an annual charge, however normally it’s charged every day. So in case your rate of interest is 17.5% a 12 months, it is truly charged at about 0.048% per day.

  3. When your billing cycle ends, your issuer calculates how a lot curiosity you owe. Your curiosity cost is predicated in your every day balances and your every day charge.

  4. The curiosity cost is included in your subsequent month’s minimal cost. Credit card curiosity typically doesn’t compound — that means, it doesn’t get added into your steadiness. You must pay your full curiosity price every month. Learn extra about minimal funds.

DIFFERENT TYPES OF CREDIT CARDS

Credit card corporations provide totally different sorts of playing cards to fulfill totally different shopper wants. Some individuals put loads of cash on their playing cards each month and then pay them off instantly; these individuals profit from a card that returns a portion of their spending within the kind of rewards. Others have a tendency to hold a steadiness from month to month; they’re higher served with a card that provides a low ongoing rate of interest. Nonetheless others are working to enhance their credit score; issuers have playing cards designed for these individuals, too.

Listed here are the most important varieties of bank cards.

Rewards bank cards

These playing cards “pay you again” for a portion of your spending by supplying you with money, factors or miles. See our roundup of the greatest rewards bank cards for a spread of choices for various varieties of customers. Or look into particular varieties of rewards playing cards:

  • Money-back bank cards offer you, nicely, money, which you should utilize to cut back your steadiness or, in some instances, have deposited in a checking account or despatched to you as a test. See our greatest cash-back bank cards.

  • Normal journey bank cards offer you factors that you should utilize to pay for journey. In contrast to playing cards tied to particular airline or resort loyalty applications, these playing cards provide a terrific deal of flexibility. You should use their rewards on airways, lodges and different bills. See our greatest journey bank cards.

  •  Airline bank cards carry the identify of a selected airline. While you use them, you earn miles you could redeem for free flights or upgrades on that airline. These playing cards do not provide loads of flexibility in phrases of how you should utilize your rewards, however they actually pack in worth with unique perks — free checked baggage, precedence boarding, airport lounge entry and extra. See our greatest airline bank cards.

  • Lodge bank cards carry the identify of a selected resort group, and they earn factors you could redeem for resort stays. As with airline playing cards, the perks may be improbable — a free evening yearly, automated upgrades, elite standing and so on. See our greatest resort bank cards.

Steadiness switch bank cards

These let you transfer debt from a high-interest card onto a brand new card and then offer you a 12 months or extra at 0% curiosity to pay that debt off. You will usually pay a charge for the switch, however the curiosity financial savings may be substantial. See our greatest steadiness switch bank cards.

Low-interest and 0% bank cards

These playing cards are greatest for individuals who count on to hold debt from month to month. Zero-percent playing cards provide new cardholders a 12 months or extra of 0% curiosity on purchases, making them appropriate for an enormous expense. Low-interest playing cards won’t provide a 0% interval, however they’ve a low ongoing charge that makes them a great long-term possibility. See our greatest low-interest and 0% bank cards.

School scholar bank cards

These playing cards are designed particularly for faculty college students who’re simply getting began with credit score. The applying course of takes under consideration the truth that younger individuals are unlikely to have a protracted credit score historical past or a high-paying job. Bear in mind, although, that merely being a school scholar will not be sufficient by itself to qualify. See our greatest school scholar bank cards.

Small enterprise bank cards

These playing cards are designed for entrepreneurs and small-business homeowners. Their rewards and perks are tailor-made towards companies, and they provide perks like free playing cards for workers and instruments to trace bills. They seem to be a step beneath company playing cards, although; while you apply, the issuer takes your private credit score historical past under consideration. See our greatest small enterprise bank cards.

Credit playing cards for constructing credit score

The bank cards with the richest rewards, plushest perks, lowest rates of interest and longest 0% intervals can be found solely to these with good to glorious credit score. Should you’re nonetheless constructing your credit score (or rebuilding it after a misstep), you may wish to maintain off on making use of for these playing cards till your rating improves. Nevertheless, banks have designed playing cards particularly for individuals working to enhance their credit score. Getting one of these playing cards and utilizing it responsibly can go a good distance towards your objectives:

  • Credit playing cards for truthful credit score are meant for these with credit score scores roughly within the vary of 630-689, generally additionally known as “common” credit score. See our greatest bank cards for truthful credit score.

  • Credit playing cards for bad credit report are meant for individuals with scores of lower than 630. The very best bank cards for bad credit report are secured playing cards, which require you to place down a money deposit (which is refunded to you if you happen to improve or shut the cardboard in good standing). There are “unsecured” playing cards for bad credit report that do not require a deposit, however they have an inclination to cost excessive charges. See our greatest bank cards for bad credit report.

  • Secured bank cards, as talked about above, require a refundable safety deposit, which is often equal to your credit score restrict. (The extra you deposit, the upper your credit score restrict.) The deposit protects the issuer in case the cardholder would not pay their invoice, so these playing cards are often simpler for individuals with decrease credit score scores to qualify for. Bear in mind that some secured playing cards can be found to individuals with no credit score or a skinny credit score historical past however to not individuals with broken credit score. See our greatest secured bank cards.

CHOOSING A CREDIT CARD

Should you’re a newbie to bank cards, see our step-by-step information to selecting a bank card. It begins by serving to you determine what playing cards you possibly can qualify for, then walks you thru deciding what type of card most closely fits your wants. The method briefly:

  1. Test your credit score. The upper your credit score rating, the extra seemingly you’re to qualify for the perfect playing cards. NerdWallet presents free entry to credit score scores.

  2. Resolve on a broad card kind. In case your credit score rating wants work, get a card designed for constructing or mending credit score. In any other case, select between a card that gives you rewards to your spending or one that can prevent cash on curiosity.

  3. Slender your selections. In order for you a rewards card, do you like money again or factors, and how a lot effort are you keen to place into managing your rewards? Should you’re trying to save cash on curiosity, do you want a 0% introductory interval, or a low ongoing charge? Do it’s essential do a steadiness switch? Are you a scholar or a enterprise proprietor who may gain advantage from a specialised card?

  4. Apply for a card that offers you the perfect general worth. 

Evaluating bank card options

Each bank card delivers worth in its personal method, by way of its personal distinctive mixture of options. And there are trade-offs concerned. In order for you rewards, for instance, you may most likely have to just accept the next rate of interest. In order for you high-value perks, you may seemingly pay an annual charge. In order for you a low rate of interest and no charges, you should not count on a lot else from the cardboard. In different phrases, you are unlikely to discover a single card that provides a excessive rewards charge, a protracted 0% interval, a rock-bottom ongoing rate of interest, beneficiant perks and no annual charge.

Listed here are the details of comparability when  bank cards.

Annual charge

Some persons are dead-set towards paying a charge only for the privilege of carrying a bank card. However paying an annual charge is price it in sure circumstances. For instance:

  • To earn considerably higher rewards charges.

  • To unlock priceless perks, comparable to airport lounge entry or free checked baggage.

  • To get a card while you won’t in any other case be capable to, comparable to by avoiding a credit score test.

With any annual charge, the mathematics comes down as to if the worth you get from the cardboard exceeds the greenback quantity you pay. Nonetheless decided to not pay? See our greatest bank cards with no annual charge.

Different charges

Relying on what you intend to do with the cardboard, you may wish to take these different charges under consideration:

  • Steadiness switch charge. It is a cost you pay to maneuver debt from one card to a different. Charges are sometimes 3% to five% of the quantity transferred, however some playing cards do not cost a switch charge, or they waive it for a time. See our greatest bank cards with no steadiness switch charge.

  • Money advance charge. Utilizing your bank card to get money is pricey. You will often pay an upfront charge, the rate of interest for money advances is usually increased than for purchases, and in lots of instances, grace intervals do not apply to money advances, so that you begin paying curiosity on them instantly. A number of playing cards do not cost a charge for money advances. Some playing cards do not permit advances in any respect.

  • Late charges and returned-payment charges. These charges may be steep, however they’re avoidable. Most playing cards cost them, however some don’t.

Introductory rate of interest

Credit card corporations drum up enterprise by providing individuals with good credit score a low introductory rate of interest. A bunch of playing cards provide 0% on purchases and steadiness transfers for a 12 months or extra. Some playing cards do not go as little as 0% however nonetheless provide a decrease introductory charge.

Ongoing rate of interest

The continued charge is what you pay after any introductory charge expires. Some playing cards cost a single charge for all cardholders; others permit for a spread of charges relying in your creditworthiness. On the whole, the higher your credit score, the extra seemingly you’re to qualify for a low charge. That mentioned, if you happen to pay your steadiness in full each month, your rate of interest would not truly matter since you’re by no means charged curiosity.

Ongoing bank card rates of interest are often recognized as “variable.” Meaning they will change underneath sure situations. Most charges are tied to the prime charge, which is the speed that large banks cost their greatest prospects. Sometimes, a bank card charge is set because the prime charge plus a sure quantity of proportion factors, so in case your charge is “prime + 6” and the prime charge is 6%, then your charge could be 12%. When the prime charge goes up (or down), so will your card’s charge.

What is the lowest rate of interest on any bank card? 

Though introductory rates of interest of 0% are widespread, you are not going to seek out an ongoing charge decrease than the prime charge. Nonetheless, some playing cards provide a charge only a few factors above prime. For super-low ongoing charges, your greatest wager is a credit score union.

Rewards

Money-back playing cards refund a sure proportion of the acquisition value. Different playing cards offer you a sure quantity of factors or miles per greenback spent. Each card units its personal rewards construction, so apples-to-apples comparisons may be tough. However when evaluating rewards applications, assume in phrases of:

  • Earn charge. What do you get for each greenback spent?

  • Redemption worth. How a lot do you get to your rewards when it comes time to make use of them?

  • Redemption choices. How a lot flexibility do you’ve got in utilizing your rewards?

The sign-up bonus or welcome provide is a sum of money (say, $150 or $200) or a batch of factors or miles (say, 40,00Zero factors or 50,00Zero miles) you could earn by spending a specific amount of cash in your first few months with a card. The aim is to get you within the behavior of utilizing the cardboard. The bonuses on many journey playing cards are sometimes large enough to cowl the cardboard’s annual charge for the primary few years. See our greatest bank card sign-up bonuses.

Perks

In contrast to rewards, that are what you obtain for utilizing a bank card, perks are advantages you get only for carrying a card. With some playing cards, significantly journey bank cards, it could be the perks that present the majority of the worth. Premium bank cards, which have annual charges of $450 and up, have a tendency to supply the cushiest perks. Airline bank cards and resort bank cards can simply pay for his or her annual charge with their perks. A full listing of potential perks could be too lengthy to incorporate right here, however widespread examples embrace:

  • Airline/airport advantages. Lounge entry. Free checked baggage. Precedence boarding. Elite standing.

  • Lodge advantages. Free nights. Computerized room upgrades. Early check-in/late check-out. Free facilities. Elite standing.

  • Assertion credit. Computerized credit score for things like journey bills, purchases from chosen retailers or the appliance charge for trusted-traveler applications.

  • Buy protections. Prolonged warranties. Safety in case of theft or injury. Worth safety (which refunds the distinction if you happen to discover the identical merchandise cheaper elsewhere). Return ensures.

  • Cellphone insurance coverage. Protection in case of loss or injury. You often must pay to your service along with your card to qualify.

  • Credit monitoring and safety. Free credit score rating. Credit monitoring providers. Skill to “lock” your card.

Credit-building assist

When you are trying to construct or restore credit score, a number of options are extra vital for you than for individuals who have already got good credit score.

  • Reporting to credit score bureaus. Should you’re utilizing your card responsibly, you need your credit score rating to replicate that. Guarantee that your card reviews cost exercise to all three credit score bureaus, the businesses that assemble credit score reviews.

  • Deposit necessities. Should you’re getting a secured bank card, you may want cash for a safety deposit. Minimal deposits are often within the $200 to $300 vary.

  • Improve alternatives. As your credit score improves, it is good to have the ability to improve your account to a greater card.

  • Incentives for accountable conduct. Some playing cards would possibly increase your rewards charge if you happen to pay on time, or offer you entry to the next credit score line.

How the software course of works

While you put in an software for a bank card, the card issuer makes its resolution primarily based on how dangerous it believes it could be to lend cash to you. The issuer would not know you, of course, so it goes by info you present (about your employment, earnings and belongings) and info contained in your credit score report.

The fundamental software course of works like this:

  1. You fill out an software for a card. These days, that is often performed on-line, however paper software types nonetheless exist. The applying sometimes asks for:

    • Your identify, deal with, telephone quantity and electronic mail deal with.

    • Monetary info, together with your employment standing and annual earnings. The applying may additionally ask about your belongings (comparable to financial institution accounts or investments) and your different obligations, comparable to your hire or debt funds.

    • Your birthdate and Social Safety quantity. The issuer wants these to entry your credit score report.

  2. The issuer checks your credit score. Many individuals assume of their credit score solely in phrases of their credit score rating. However that three-digit quantity is actually nothing however a abstract of the knowledge in your credit score report. It is the report that issuers are curious about. You might have a terrific rating however nonetheless be rejected for a bank card as a result of the issuer thinks you have utilized for too many new playing cards within the current previous, or as a result of your debt obligations are too large relative to your earnings.

  3. Should you meet the issuer’s necessities, your software is permitted. With on-line purposes, approvals are often attainable inside minutes. (In case your software is rejected, you possibly can often count on to obtain a written clarification by mail in a few week to 10 days.)

  4. Your new card comes within the mail. This sometimes occurs inside 10 enterprise days.

  5. You activate your card. Do that by calling a telephone quantity or going surfing. As soon as it is activated, you should utilize it.

What is the best card to get permitted for?

Approval for a bank card isn’t assured. Even when you’ve got a superb credit score rating, an issuer may nonetheless decline your software as a result of you do not have sufficient earnings, or since you’ve opened a number of different playing cards just lately, or for another cause. Plus, “straightforward” is a relative time period. Somebody with glorious credit score and a great earnings will often qualify for many playing cards. Somebody with a middling credit score rating would possibly battle to get permitted even with ample earnings.

  • On the whole, the decrease the chance to the bank card issuer, the better it’s to get permitted. That is why secured bank cards are a really helpful place to begin for individuals working to construct or mend credit score: The safety deposit requirement reduces the chance. See our greatest secured bank cards.

  • Should you’ve begun to construct credit score and have a rating within the mid-600s, take a look at bank cards for truthful credit score. These present extra advantages however do not require a top-tier credit score rating. See our greatest bank cards for truthful credit score.

  • Retailer bank cards are additionally typically simpler to qualify for than financial institution playing cards. They have an inclination to have low credit score limits and excessive rates of interest, however they are a viable credit-building software offered you retain your balances low relative to the restrict and pay them off every month.

What number of bank cards ought to you’ve got?

Simply as there isn’t any single greatest bank card for everybody, there isn’t any excellent quantity of bank cards to have. It is dependent upon your wants and how a lot effort you wish to put into managing your bank cards. Some individuals carry one card and put all the pieces on it. Others have actually dozens of playing cards, and for every buy they use the cardboard greatest fitted to that transaction. When deciding what number of is best for you, take into account:

  • There’s no restrict to what number of playing cards you possibly can have. Every lender evaluates your credit score by itself time period, however there is no exhausting restrict the place you’ve got “too many playing cards.”

  • You need not have a number of playing cards to keep up good credit score rating. Credit scoring formulation are likely to reward you for having totally different varieties of accounts — bank cards, mortgages, loans, and many others. — however it’s not essential to have a number of accounts of every kind. One bank card, responsibly managed, is sufficient.

Benefits of carrying a number of playing cards

  • Maximizing rewards: One card could pay you the next rewards charge on groceries. One other could reward you handsomely at eating places, or on fuel purchases, or for spending on journey. Having a number of playing cards permits you to maximize your complete rewards.

  • Flexibility: Some playing cards are extra broadly accepted than others. It’s good to have a backup in conditions the place one card isn’t accepted. Moreover, if a card is misplaced, stolen or compromised, you may have another choice whilst you await a substitute.

  • Extra out there credit score: A key consider your credit score rating is your credit score utilization, or how a lot of your out there credit score you are utilizing. Ideally, you may wish to hold utilization beneath 30%. You probably have a $500 steadiness on a card with a $1,00Zero restrict, your utilization is 50%. You probably have $500 in balances unfold throughout three playing cards with limits of $1,00Zero every, your utilization about is 17%.

RISKS OF CARRYING MULTIPLE CARDS

  • Shedding observe of spending: The extra playing cards you’ve got, the tougher it’s to recollect how a lot you’ve spent on which card.

  • Lacking a cost: A number of due dates enhance the chance of lacking a cost, which may set off a late charge or (if it is late sufficient) even injury your credit score.

CREDIT CARD COMPANIES

Credit card issuers, networks and co-brands

As you seek for the perfect bank card to your wants, it can assist to familiarize your self with the different sorts of corporations within the trade. That method, you may know not solely what to search for in a bank card but additionally the place to search for it. Each bank card has an issuer and a community. Many of them even have co-brand companions. Every of these offers totally different sorts of advantages.

Issuer

The issuer is the financial institution that maintains your bank card account. It may very well be an enormous financial institution like Chase, Capital One or Wells Fargo, or it may very well be your native financial institution or credit score union.

  • The issuer takes your bank card software and decides whether or not you qualify for the cardboard. It units your rate of interest and expenses any account charges.

  • The issuer sends your assertion each month and collects your funds.

  • While you make a purchase order on a bank card, you are borrowing cash from the issuer, and while you repay your card, you are paying again the issuer.

  • Advantages that come from the issuer: Rewards to your spending — money again, factors or miles per greenback spent — are sometimes paid to you by the issuer. The issuer may additionally present perks (advantages you obtain only for carrying the cardboard, regardless of whether or not you employ it).

Community

The cost community acts as a go-between for bank card transactions. Visa, Mastercard, American Specific and Uncover are cost networks.

  • The community determines the place you should utilize your card.

  • While you pay for one thing with a bank card, the community makes certain that the transaction will get reported again to the issuer (so it reveals up in your assertion) and that the service provider will get paid (by your issuer).

  • American Specific and Uncover are particular in that they’re each issuers and networks.

  • Advantages that come from the community: Community-provided advantages are usually protections and perks, like rental automobile protection or journey insurance coverage. In some instances, networks make sure advantages out there on their playing cards, however it’s as much as the issuer to determine whether or not a card will truly embrace them.

Co-brand companion

The companion is a retailer, airline, resort or different model whose identify seems on the cardboard and whose loyalty rewards program is tied to the cardboard.

  • Not all bank cards have co-brand companions.

  • The companion administers the loyalty program linked to the cardboard. For instance, when you’ve got an American Airways bank card, you earn miles along with your purchases. American operates the frequent-flyer program the place you’ll use these miles.

  • Advantages that come from the co-brand companion: The co-brand companion allows you to redeem the rewards earned on the cardboard and usually offers extra perks to cardholders, comparable to free checked baggage for an airline card, automated room upgrades for a resort card or reductions for a retailer card.

You’ll be able to see the way it works by looking at a number of in style bank cards:

What is the distinction between Visa and Mastercard?

That is one of the commonest questions on bank card corporations. Nearly each place that takes bank cards takes each Visa and Mastercard, with solely a pair of exceptions (comparable to Visa-only Costco), so shoppers are left questioning whether or not there is a distinction in any respect.

The most vital factor to keep in mind is that neither Visa nor Mastercard points bank cards. These corporations are simply cost networks that course of transactions. Most of the advantages that include a card are offered by the cardboard issuer, not the community. And since their acceptance charges are almost similar, you are higher off specializing in the options of particular person playing cards fairly than which community they function on. Learn extra about Visa vs. Mastercard.

What’s the perfect bank card firm?

Simply as there may be no single greatest bank card for everybody, shoppers have broadly totally different opinions about the perfect (and worst) bank card issuers. One individual may get the runaround from customer support rep and charge a financial institution zero stars consequently, whereas one other has nothing however optimistic experiences and provides it 5 stars throughout the board. Nonetheless, some traits emerge in buyer satisfaction surveys.

J.D. Energy conducts an annual examine of satisfaction amongst main issuers. It frequently charges Uncover and American Specific on the prime amongst mass-market issuers, with a number of large banks not too far behind. In the latest examine, USAA had the best ranking of all, however remember the fact that solely individuals affiliated with the army are eligible for USAA merchandise.

J.D. Energy 2018 Credit Card Satisfaction Research

* Satisfaction Index makes use of a scale of Zero to 1,000.
** Energy Circle Rankings use a scale of 2 to five. Definitions: 5 is “the perfect.” four is “higher than most.” Three is “about common.” 2 is “the remainder.”

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