If you’re looking for a secured card to build your credit, your options have just increased beyond the major banks: Green Dot (primarily known for its reloadable prepaid cards) has launched the Green Dot Platinum Visa Secured Credit Card.
This product functions slightly differently from other secured credit cards and may appeal to the anti-bank-account crowd that Green Dot has long courted.
How it works
As with other secured cards, you’ll fund your credit line in advance. This is what makes secured cards a good credit-building product – because you put down money to secure your credit line, the bank takes no risk on you and can draw on your deposit if you fail to pay off your purchases.
For the Green Dot Platinum Visa Secured Card, the minimum credit line is $200, and the maximum is $1,000. The credit line will be equal to the amount you deposit.
Most secured cards require you to have an existing bank account from which you’ll make the security deposit. But Green Dot’s secured card will let you fund (and increase) your deposit just like you do with its prepaid card – at participating retailers. This is a boon for customers who don’t want to open up a bank account.
As you make purchases and pay your balance, your payment behavior will be reported the three major credit bureaus (Experian, Equifax and TransUnion). If you pay on time and keep your utilization low, your credit scores should increase.
Fees and costs
Because secured cards provide a specific service (credit-building for those who need a leg up), they often charge fees. These are the costs you’ll need to be aware of for the Green Dot Platinum Visa Secured Card:
- Annual fee: $39 (which will be subtracted from your credit-limit deposit)
- APR: 19.9 percent
- Foreign transaction fee: 3 percent of each transaction
- Late payment fee: $27
How does it compare?
Before you select Green Dot as your secured-card provider, analyze the market (view other secured cards here). After all, you could be using a secured card for a few years to build your credit enough to qualify for a non-secured card.
Fees: When it comes to annual fees, Green Dot’s $39 annual fee is competitive. Some cards charge high annual fees and various maintenance and application fees, which amount to upwards of $100 per year. A few cards (including the Capital One® Secured MasterCard® and the Discover it Secured card) charge no annual fees. And there’s a smattering of cards that charge somewhere in the middle, like Green Dot’s card.
Graduation abilities: By going with a major credit-card issuer, you might be able to “graduate” to a regular credit card when you’re ready. Green Dot doesn’t have any options to graduate to. However, even with major issuers, graduating is no guarantee – and building your credit with Green Dot will still allow you to improve your score and hopefully get a major issuer’s credit card.
Flexibility: If you’d like the ability to load your deposit at a retailer’s check-out counter, Green Dot provides that. No other secured-card issuers do (they’ll require you to fund your card via an existing bank account).
Credit line: Green Dot maxes out at $1,000. Because it’s important to keep our credit utilization below 30 percent (to maximize your credit score), you’ll need to make sure you don’t exceed a balance of $300. Other secured cards allow you (depending on our credit, of course) to make bigger deposits for higher limits (up to several thousand dollars).
Remember to look at all your options
Before applying for any secured card, see if you may qualify for a non-secured product (you might, even if you have poor credit). Even using a no-perks, low-limit regular card could be better than shelling out a deposit for a secured card:
Why we gave it 2 out of 5 stars
This card’s rating was based on our rating standards for secured cards. It gained stars for the unique ability to reload at retailers and for its transparent and reasonable fees. It lost stars for lacking some of the extras that secured cards from major banks have. If you’re not a fan of major banks, however, the two stars this card got may be worth more to you than the stars it didn’t get.
|Low fees: This card earns a full star for having a clear and reasonable annual fee and no other maintenance fees.|
|Ability to graduate: Green Dot doesn’t have any credit products you can graduate to, once you’ve built your credit.|
|Ability to get higher credit line than deposit: With this card, your deposit equals your credit line, up to $1,000.|
|Rewards: No rewards on spending|
|Unique perks: You can fund your credit line at Green Dot’s retail partners, instead of via a bank account.|