Q: Dear CreditCardGuru, I am looking to rebuild my credit in 2013 and was wondering if a secured Visa card would be the best brand to get? Or would it look better on my report for it to be a MasterCard?
A: This is one of the biggest myths about credit cards! Many people assume that it makes a difference, but here’s the truth…
1. Visa doesn’t even issue credit cards!
This may come as a huge surprise to some, but Visa is only a payment processing network. That means when you swipe your credit card and make a purchase, it happens over their network. As far as the card itself, it’s the bank that issues and manages it (such as Chase, PNC, etc.). The same holds true for MasterCard.
2. Your credit report won’t label the account as Visa
Here’s another shocker. Let’s say you apply for a secured Visa credit card. What do you think it will say on your report? It will probably look something like this…
As you see, it will say the name of the bank and the account number. It won’t say the name of the card, nor will it say whether it’s a Visa or not. And good news for you- most secured credit cards do NOT say “secured” anywhere on your report. So if you had one and someone saw your credit report, they usually won’t know whether an account is unsecured or secured.
This means when it comes to improving your credit score and history, it really doesn’t matter what “brand” the card is.
3. The only difference between Visa and others are benefits
Knowing the above info, that brings us to the logical question… why would someone choose a Visa over a MasterCard and vice-versa? For the most part, there’s no logical reason to pick one over the other. Why? Because the benefits between the two are extremely similar.
The only exception would be the higher-tier Visa Signature and World Elite MasterCard, which still have similar benefits but there are some key differences between the terms and conditions that go along with each. But since your credit isn’t that hot, all you will qualify for right now are Visa secured cards which are NOT the”Signature” level. So in your situation, you really shouldn’t care which brand you get.
So which is the best choice for YOU?
Since the branding is irrelevant to credit building, what you need to be focusing on is finding a secured card that has the following characteristics:
- A bank that reports your card to all 3 credit bureaus. You may say “Duh! Why wouldn’t they report?!” Well the sad truth is that some shady secured cards will not report your account. The reason being is because banks actually have to pay money to report accounts to the credit bureaus. So some fly-by-night companies will skip doing that. For this reason you need to stick with reputable issuers.
- Make sure the security deposit is flexible. Most credit cards that are secured will require a minimum deposit of at least $500, however there are a few which allow less. Whatever the case, make sure the bank gives you the option to add more funds later on to increase the deposit and therefore the credit limit. With some cards, you can’t increase your deposit after you open the account.
- Don’t pay ridiculous fees. There are numerous secured Visa cards for bad credit history that charge a high annual fee AND a monthly maintenance fee AND a high interest rate. Together those may exceed a $100 or more per year! Just because you have bad credit, it doesn’t mean you should get ripped off. My recommendation would be to look for a credit card that has fees of no more than $40 per year.