Orchard Bank Credit Card Review: The Best for Bad Credit

If you have bad credit, the Orchard Bank credit card provides the best combo of low APR and reasonable fees out of all the secured credit cards on the market. Although the Orchard Bank Secured isn’t particularly glamorous, it’s excellent for rebuilding bad credit if you can use it wisely. Even with a really low credit score or a recent bankruptcy on your record, you can still qualify for the card. And with a waived first-year fee, you get some breathing room to rebuild your credit.

Why we love the Orchard Bank cards

Orchard Bank offers both an unsecured and secured credit card, both of which are standouts for bad credit. The unsecured Visa and MasterCard are just about the easiest to qualify for in their class, and we’ve seen FICO scores as low as 600 approved. It has a $59 annual fee, which is lowered to $29 in the first year but offset by a $39 processing fee. On balance, that’s $68 the first year and $59 thereafter.

The secured version has one of the lowest fees and interest rates in the business. The $35 annual fee is waived the first year, and there’s no processing fee. The APR is an astonishing 7.99% – better than many credit unions. You do have to post collateral upfront: the minimum security deposit is $200. But Orchard has one of the most generous lending policies out there: they’ll consider you even if you’re fresh out of bankruptcy, and won’t look at your credit score. Unless your history turns up something really bad, you’ll qualify as long as you can make the deposit. Most issuers have you wait 6 months or more out of bankruptcy, even for a secured card.

The application for Orchard Bank credit cards is worth noting. You apply for either a Visa or MasterCard. Once you fill out an inquiry form on their site, you’ll be approved for either the secured or unsecured. Once you find out which, you can decide whether or not you’d like to get it. Usually, applying for a credit card temporarily hurts your FICO score, but Orchard does it in such a way that your application doesn’t affect it.

Orchard Bank® Classic MasterCards
	An excellent credit card for help rebuilding credit reports to 3 major credit bureaus monthly! Acceptance at millions of locations worldwide, including website purchases and reservations Your account information is updated and at your fingertips 24/7 so you can manage it your way Email and text messages are available to remind you of your upcoming payment due date Knowledgeable customer service representatives to assist you with questions or concerns
Annual Fee Signing Promo APR, variable* Intro APR Promotions $39 - $59 the first year, $35 - $59 per year thereafter* None Min APR: 15.0%(V) Max APR: 25.0%(V) Default APR: 29.5%(V) Cash Adv: 20.9%(V) Purchase: None Bal Trans: None

Don’t like the Orchard’s fees? Just wait till you see the other guys

When looking for a credit card to rebuild your credit, you need to be on your guard for predatory offers. That said, you shouldn’t assume that you don’t have any options. Here, we’ll name some of the popular options for secured cards. Let’s start with the legitimate offers first. The two other contenders for best secured credit card are the Citi Secured and Capital One Secured MasterCard. Both have a $29 annual fee (NOT waived the first year); the Citi’s APR is 18.24% and the Capital One MasterCard’s is 22.9% (as of 12/29/11).

Since the Orchard Bank Secured has no fee the first year, we’d recommend that card if saving money is your primary goal. However, if you’re strapped for cash right now, the Capital One Secured gives you more flexibility. The Orchard and Citi cards require a $200 minimum security deposit, but the Capital One card lets you deposit $49, $99 or $200 (based on your credit score) and gives you a $200 limit regardless. If you can’t pay upfront, Capital One lets you pay in installments, as long as the whole amount is posted within 80 days.

	Orchard Bank	Capital One Secured	Citi Secured
APR	7.99%	22.90%	18.24%
Annual Fee	$35 ($0 1st Year)	$29	$29
Min. Security Deposit	$200	$49, $99 or $200	$200

Now we’ll consider the not-so-savory cards. When you’re looking for a credit card straight after bankruptcy or with a less-than-stellar credit score, you should know what’s reasonable and what isn’t. You can expect a few fees and a security deposit, but stay away from secured cards with offers that sound too good to be true.

For example, the Aventium and Centennial credit cards from First Premier Bank offer a $300 line of credit with a $95 security deposit, but once you consider the fees, they’re not worth it. There’s a $75 first-year annual fee, a $6.50 monthly fee that kicks in your second year, a $45 annual fee on top of the monthly fee, and a $3.95 fee to use First Premier’s online services. And lest we forget, the APR is a staggering 49.99%! Holy inconceivable interest rates, Batman!

The Platinum Zero from Applied Bank has a good pitch going: 0% APR, even if you’re late on a payment; no application fee; and a “choose your own credit limit” feature. But take a look at the fees: $119 a year! Interest-free borrowing may sound like a draw, but it comes at far too high a cost.

The theme here is that secured cards are often bad news bears. The key is to build up your credit as quickly as you can, and then move on to getting an unsecured credit card. We think that the Orchard Bank credit card is a great way to do this, since the secured one doesn’t charge you an annual fee the first year, and it’s surprisingly free of gimmicks.

 Should you get a secured card?

For people with less-than-stellar credit histories, a no-fee credit card or rewards credit card may be out of reach. Secured credit cards allow you to re-establish credit and then move on to a regular credit card with no annual fee and lower interest rates. For this purpose, the Orchard Bank Secured MasterCard is a good, all-around choice. If you have trouble coming up with the minimum security deposit, we recommend the Capital One Secured MasterCard as an alternative. Capital One may let you get away with a lower security deposit, and they’ll give you 80 days after your approval date to come up with the money to pay it.

The most important thing to remember with a secured credit card? Make all your payments on time, or it’ll only make your credit score worse. If the possibility of you missing a payment is high enough to make you think twice, you might want to re-think getting a credit card for now. Instead, stick with a checking account until you’re sure of yourself. Checking doesn’t help your credit score, but missing a credit card payment will most certainly hurt it.

Secured credit cards and prepaid debit cards: a background

There are two common alternatives to a regular credit card, and neither is particularly good: secured credit cards and prepaid debit cards.

	Regular Credit Card	Secured Credit Card	Prepaid Debit Card
Improves Credit Score	Yes	Yes	No
Upfront Deposit	No	Yes	Yes
Line of Credit?	Yes	Yes	No

A secured credit card requires you to post upfront collateral equal to the amount of your line of credit – if you want a credit limit of $250, you’ll have to pony up that amount when you open the account, and you won’t get it back until you close the account.  In the meantime, you still have to pay interest on your purchases if you don’t pay your bill in full each month. The cards often come with fees: annual fees, processing fees, and the like. However, a secured credit card does help build your credit score, so with good behavior, you can eventually qualify for a regular credit card.

Prepaid debit cards are similar in that you have to deposit money up front, but after that it acts just like a standard debit card. You aren’t technically “borrowing” money – you can only spend what’s in your account, and then you reload it. Because there’s no credit line, it doesn’t help you build credit, and isn’t likely to help you qualify for a regular credit card line. It’s exactly like a checking account, with the added bonus of having to pay fees at every turn – monthly maintenance fees, ATM fees, reloading fees, and even usage fees are common.

If neither of these options sounds appealing, especially if you can’t or don’t want to deposit the money necessary for a secured credit card, the Orchard Bank MasterCard credit cards are aimed at those with bad credit.

Who qualifies for Orchard Bank?

Credit scores as low as 500-600 can qualify you for the Orchard Bank cards, much lower than the threshold for most traditional credit cards. The bank goes out of its way to help those with less-than-stellar credit, and most banks wouldn’t even consider an applicant with a credit score that low. Word on the street is that they’re fairly generous with their credit limits as well.

Orchard Bank has a poor-credit-friendly approval process: you fill out an inquiry form online, and they pre-qualify you almost instantly. The advantage of Orchard’s selection process is that the inquiry won’t appear on your credit history, which takes a hit if it’s requested too many times in a short period of time.

If you want to qualify for the regular (unsecured) MasterCard, you must draw a salary of at least $12,000 and have a valid social security number. This may be an issue for the long-term unemployed and recent immigrants.

So despite the fees and interest rates, Orchard Bank’s the way to go if you need time to rebuild your credit or build a history from scratch, and is the fastest way to work your way back up to a regular credit card. At least with their cards, you’ll be able to build your credit score without needing to post a lot of money upfront.