The Navy Federal nRewards secured Visa and MasterCard are excellent choices for rebuilding credit, but read this before you apply.
Who can apply?
There are no “official” credit score requirements, which presumably means that a history of bankruptcy, foreclosure, and charge-offs shouldn’t disqualify you.
However in order to apply for this credit card, you would need to first join Navy Federal Credit Union (if you aren’t already a member). Anyone who serves in the Navy, Army, Marines, Air Force, Coast Guard or Department of Defense is open to apply.
How much does it cost?
Aside from their branding, both the MasterCard and Visa are the same:
- Minimum Security Deposit: $500
- Annual Fee: none
- Interest Rate: “as low as” an 8.99% variable APR. The application has an asterisk next to that which says: “Rates are based on an evaluation of credit history, so your rate may differ.” So keep in mind that if you have bad credit (which users of the Navy Federal secured likely do!) your interest rate could be higher.
- Grace Period: 25 days. That means if you pay your balance in full within 25 days of the statement date, you won’t be charged any interest.
What are nRewards?
This is NFCU’s rewards program. Given that practically every other secured card on the market gives no rewards whatsoever, I’m not going to criticize the program on this card. However there are a few caveats to be aware of:
- 1 point per dollar does not necessarily mean 1% cash back. They describe the program has having “up to 1% return on each dollar spent” which is technically correct, but many redemption options are worth 1/2%. For example, a $10 Starbucks gift card will cost you 2,000 points. If you redeem a lot of points at once (like 7,500) then you will be more likely to get 1 cent worth per point.
- Points do expire. Fortunately they’re good for 4 years from the date they are earned, which is plenty of time as long as you don’t forget about them.
Should you consider this card?
Yes! The secured credit card from Navy Federal is definitely one of the best on the market (which is why I include it in my top 10 list). While I don’t have it myself, the reviews I’ve seen from cardholders are generally quite positive.
In order to apply they do require you to first have the $500 minimum deposit available in your NFCU savings account (not elsewhere). So make sure you have that money in there and ready beforehand.
Important: This should not be your only account! A lot of people who are trying to build or rebuild credit only have one card. That’s a huge mistake.
In order to achieve a great credit score, you’re going to need several forms of credit. And you may be saying “well I already have a car loan, student loan, and mortgage” but guess what? FICO counts those as a different category; installment loans.
To get that high score, you will need both installment loans AND revolving accounts (a fancy name for credit cards).
In fact credit cards are so powerful in building a high score, I got to the high 700’s in my early 20’s using nothing but credit cards. I had no loans whatsoever.
This is why I would recommend you start with at least two different secured cards.
In addition to getting the Navy Federal secured credit card, get one or two others that have low fees. Check out my favorite ones for 2013 and these 3 important tips about using them in the most beneficial way possible.