Q: Given my terrible credit history, I have come to the conclusion the only credit cards I will qualify for are secured. I was reading a review of the Public Savings Bank and their secured card offer. Are they a scam or not?
LATEST UPDATE FOR 2013: This bank has been shut down by the FDIC and is no longer in business. What a bombshell! That’s just one more reason why you should stick with the big guys like Cap One and others for a card that’s secured. Small startups like Public Savings are just too risky!
A: You are wise to be skeptical of secured credit cards in general, because indeed, many of them are unscrupulous to say the least.However when it comes to Public Savings Bank they are a legitimate company. In fact, they are one of the very few secured card issuers that CreditCardForum advertises. With that said though, let’s review the pros and cons:
- The security deposit amount is flexible: One of the biggest complaints of secured cards is that many require a minimum security deposit of $500. Depending on your circumstances, that high of an amount might not be in your budget. Fortunately the Public Savings Open Sky Visa card allows you to have a secured limit ranging from $200 to $3,000. So you have the ability to start small and build a bigger limit by adding to your deposit over time.
- Your security deposit is FDIC insured: Whatever amount you decide for your security deposit, rest assured knowing that it will be placed into an FDIC-insured deposit account. This is important, because some other secured card issuers are not banks, and hence, their deposits are not insured.
- The annual fee is reasonable: The Public Savings Bank secured card charges a $50 annual fee. While that’s not cheap compared to a traditional unsecured card, it is a reasonable amount for the secured category. Many other issuers charge similar annual fees, PLUS monthly fees, application fees, etc.
- Reports to TransUnion, Experian, Equifax: Your account will be reported to all 3 credit bureaus, which of course is very important if you are trying to establish or re-build credit.
- There is no penalty APR: Ideally you shouldn’t be carrying a balance anyway but in the event that you do, at least there’s no penalty APR for late payments (but you will still be charged a late fee).
- Paper statement fee: After the first 2 billing cycles, accounts are charged a $3 monthly fee for paper statements. Fortunately though you can avoid this be enrolling in online statements instead.
- Possible holds on payments: Generally the customer credit card reviews are quite favorable for Public Savings Bank, however I heard a complaint from someone regarding the standard practice of holding payments for 5 days to ensure they are cleared. Because I have only heard that from one person I cannot confirm whether that’s accurate or not, but to play it safe, I would just recommend making your payments as early as possible in case there is any sort of delay.
Unlike some other secured card issuers, Public Savings is a real physical bank in Pennsylvania which is re-assuring. The cost of the their Open Sky secured card is reasonable and I definitely would not classify it as a scam.
Interested in other options? Check out these secured card reviews!
Update: Public Savings has been shut down
On August 18th, 2011 Public Savings Bank was closed by the FDIC for being undercapitalized. It was unclear what exactly will happen to their secured cardholders though rest assured, your deposit account was FDIC insured so it should be safe. However people that were considering applying for a new card probably won’t be able to and it’s unlikely this current secured card will continue as it is (if at all).
Latest update: Megan McMahon, the marketing coordinator for Capital Bank (not to be confused with Capital One) emailed to let me know they have acquired certain deposits and assets of Public Savings. Unfortunately, this new owner has jacked up the fees and now they report the card as secured, which makes it a lot less attractive than before.
What’s the best alternative for 2013?
The Capital One Secured MasterCard® has been the highest rated on CreditCardForum for 3 years in a row.