[Update: Some offers mentioned below have expired. For current terms and conditions, please see card agreements.]
Green Dot Corp., a company best known for its prepaid debit card products (and celebrity endorser Steve Harvey), is now offering a secured credit card. Like most secured credit cards, the Green Dot Platinum Visa Secured Credit Card is “designed to help people with no prior credit history or those with poor credit scores build a positive credit history,” according to a press release.
That’s the standard pitch in the secured credit card world: Almost anyone can get one, so you can get into the credit world. For the most part, all you need to do is be able to pay a deposit and, sometimes, an annual fee, and then you can use the secured credit card just like any other credit card: Buy things with it, and when your bill comes each month, make sure you pay it on time. If you don’t pay your bill, the bank can take your deposit. (We rounded up some of the best secured cards in America and also have an expert guide to secured credit cards here.)
Anyone in the market for a credit card should carefully review the terms of the cards they’re considering. Here’s what potential cardholders will want to know about the Green Dot Platinum Visa Secured Credit card.
Deposit: The minimum deposit is $200. So, if you make that $200 deposit, your credit limit would be $200. The maximum credit limit available is $1,000. Consumers can apply online, and once they receive their card, they can start using it as soon as they make their deposit. For a $4.95 fee, cardholders can make deposits at a Green Dot retailer (like CVS, Walgreens and Wal-Mart, among others). Some retailers can only accept a deposit of $500, so if you’re approved for a higher credit limit, you will need to mail the difference in deposit to Green Dot Bank. Wal-Mart can accept deposits up to $1,000. Cardholders also have the option of sending their deposit by mail, which takes 10 days to process, so you can’t use the card immediately upon receiving it. Green Dot Bank holds onto your deposit.
Bank Account: You do not need a bank account in order to get the card (some secured cards require cardholders to have a bank account to make their deposit and regular payments).
Credit Reporting: Green Dot reports secured credit card activity to the three major credit reporting agencies: Equifax, Experian and TransUnion.
Fees: There’s a $39 annual fee, which is charged as your first transaction. “If you are assigned the minimum credit limit of $200, your initial available credit will be only about $161,” the card disclosure says. You must pay a $4.95 service fee to make the deposit at a retail location. Paying your monthly bill at a retail location carries a $4.95 fee. Late payments and returned payments each result in a fee up to $27. Cash advance fees are the greater of either $10 or 3% of the advance. Foreign transactions assess a 3% fee on each transaction in U.S. dollars.
Interest Rate: The Green Dot Platinum Visa Secured Credit Card carries a 19.99% APR.
Payment: You can pay your bill online, at a participating retailer or by mail. Paying your bill online requires having “an account with Green Dot, or with any other bank,” according to a Green Dot spokesperson. There are no fees for using online bill pay or paying by mail, but paying at a participating retailer costs $4.95.
Moving Up: At the moment, there is no option for “graduating” from the Green Dot secured card to a standard, unsecured credit card, but the spokesperson said there are plans to do that in the future. Cardholders can request a credit limit increase, which requires adding to their security deposit.
Who Is Green Dot?
Plastic is nothing new for Green Dot, but this is the company’s first credit card. Green Dot offers an array of prepaid debit cards, including the Wal-Mart MoneyCard, which was in the news earlier this year when hundreds of cardholders were unexpectedly locked out of their accounts. The secured card may appeal to many of the same people who gravitate to prepaid debit cards: People without bank accounts and/or who are unable to get credit cards because of a poor or nonexistent credit history. Green Dot touts its network of retail partners as a plus for customers who live in underbanked areas.
Building Credit With a Secured Card
The best thing you can do when using a secured credit card is make all your payments on time, as payment history has the largest bearing on your credit scores. The second most important thing is using as little of your available credit as possible: Credit scoring companies generally recommend you use less than 30% of your available credit, so if you’re only approved for a $200 limit on a secured card, that means you’d want to keep your balance below $60. (Paying your balance in full each month is a good way to keep that balance from creeping up.) It’s a good idea to keep an eye on how your credit-building efforts progress, which you can do by getting a free credit report summary on Credit.com, updated every 14 days. Keep in mind it generally takes six months of activity to establish a scoreable credit history.
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.