You don't have to be in the military to get the Credit Builder Secured Visa® Credit Card from Armed Forces Bank — but it's likely only a good fit for consumers with few other options.
The card offers an adjustable credit limit feature that you can't find on other secured credit cards, and it reports to all three major U.S. credit bureaus, meaning it can indeed live up to its "credit builder" name.
But unlike a lot of other secured cards, it charges an annual fee as well as quarterly fees for paper statements. And its best feature — the fact that it offers the potential of upgrading to a regular unsecured card over time — can be found elsewhere, among cards that don’t charge such fees.
Here are five more things to know about the card:
1. The card charges significant fees
In addition to the annual fee of $39, cardholders also pay $4.50 a quarter unless they enroll in e-statements. All told, if you opt for paper statements, you would be paying $53 a year to hold this card.
And both of those cards also report to all three credit bureaus.
2. The required deposit is high, though your credit limit is adjustable
Like other secured credit cards, this one allows you to make a deposit and then spend up to that limit. In this case, you must deposit at least $300 into your Credit Builder savings account, which is on the high side compared with other secured cards.
The minimum required deposits for both the Discover it® Secured Credit Card and the Citi® Secured Mastercard® are $200, for instance. And with the Secured Mastercard® from Capital One, if you qualify you can get a $200 credit line with an initial deposit of $49, $99 or $200.
However, unlike all of those cards, your credit limit with the Credit Builder Secured Visa® Credit Card is adjustable. You can increase your credit limit by adding funds (in increments of $50 or more) to the savings account that you set up for the card, up to $3,000.
Typically, other secured cards either don't allow this or require you to apply for a credit limit increase.
3. You can eventually upgrade to an unsecured card
Not all secured cards offer a clear upgrade path to a "regular" unsecured credit card, but this one does. Armed Services Bank notes that "with good performance" you can graduate from the Credit Builder Secured Visa® Credit Card to an unsecured product, meaning a "regular" credit card that doesn't require a security deposit. (The bank also offers the unsecured Armed Forces Visa Credit Card, which charges no annual fee and features a credit limit of up to $10,000, but no rewards.)
An upgrade path is an ideal feature in a secured credit card because, in such cases, your deposit is typically returned to you and you don't have to close your old card outright and open a new one.
4. Your deposit earns interest, but very little
Your deposit into your Credit Builder savings account earns 0.05% as of this writing. That means if you deposit $500 into the account, over one year it will earn just a quarter.
5. The card allows joint account owners
Many card issuers don’t allow joint account owners on credit cards, so if you are looking to jointly own a card with someone, that could be a reason to get this card. In order to open a joint account, both people need to fill out the card’s application.