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The GO2bank Secured Credit Card can be an ideal option for those who want to build or repair their credit. While the $0-annual-fee card won’t offer much as far as traditional benefits or rewards go, it doesn't require a credit check, and the security deposit is comparatively low.
However, there's no upgrade path once you're ready to graduate to a traditional unsecured credit card.
Here are five things to know about the GO2bank Secured Credit Card.
1. You’ll need a GO2bank account to apply
Applicants are required to have a GO2bank deposit account with direct deposits of at least $100, 30 days before card application. U.S. citizens and permanent residents who are 18 years or older can apply for a GO2bank deposit account online.
While the GO2bank Secured Credit Card is relatively easier to qualify for than conventional credit cards, its banking requirements may make it difficult for some consumers to get approved. There are alternative credit card options that offer more flexible eligibility requirements. The OpenSky® Secured Visa® Credit Card, for example, doesn’t require a bank account, which makes it accessible to individuals who are unbanked. Cardholders can pay their security deposit with a money order or a Western Union payment. The card does charge an annual fee of $35, however, which makes it more costly to carry than the GO2bank Secured Credit Card.
2. The required security deposit is relatively low
As with most secured credit cards, this one requires a refundable security deposit that will be equal to your credit limit. In this case, a minimum deposit of $100 from your GO2bank deposit account is required when you’re approved for the card. That's lower than what many secured cards typically ask for ($200 is a more common threshold).
While you won’t have much wiggle room as far as how much credit is available to you, putting small recurring charges on your card and paying your bill in full can make a positive difference in your credit within a few months.
If you can afford to, consider putting down a higher deposit, as this can make it easier to remain below a credit utilization ratio of 30%. (Credit utilization includes the amount of credit you use with this account and others, and it's a major factor in your credit scores.) The GO2bank Secured Credit Card allows a maximum deposit, and hence a maximum credit line, of $20,000. This is significantly higher than limits on other secured cards, which tend to top out around $1,000 to $2,000.
Cardholders can also apply for a credit limit increase at any time by transferring money from a GO2bank account into a security deposit account. To do this, the card account has to be in good standing, and cardholders will have to complete an ability-to-pay questionnaire.
3. It doesn't require a credit check
Even if you have poor credit (FICO scores of 629 or lower), it won’t be a hindrance to getting the card, and there won’t be a hard inquiry on your credit history when you apply.
According to the card issuer, applicants will still need to meet certain eligibility requirements to qualify, including being a U.S. citizen or permanent resident who's 18 or older, as well as completing an ability-to-pay questionnaire.
4. You won’t earn any rewards
When you're trying to build credit with a secured card, earning rewards shouldn't be a prime concern, especially since you typically won't spend enough to accumulate a significant amount.
However, if earning rewards is a priority for you, other secured cards do offer them. For example, the $0-annual-fee Discover it® Secured Credit Card earns 2% back at gas stations and restaurants on up to $1,000 in combined purchases every quarter, and 1% back on all other spending. The card does require a $200 minimum deposit to open an account, which is higher than that of the GO2bank Secured Credit Card.
5. There's no upgrade path
The GO2bank Secured Credit Card reports to all three credit bureaus, which means that as your credit score improves, you’ll likely become eligible for unsecured cards that come with rewards and other long-term benefits.
Unfortunately, though, GO2bank doesn’t offer any upgrade options for cardholders. This means that even if your credit score has improved, you won't be able to graduate to a better credit card within the company's family of products.
Depending on your credit score, you can apply for a card with another issuer, but then you're left with the somewhat difficult choice of whether to close your GO2bank Secured Credit Card. When you close your account, your deposit will be refunded. But on the other hand, closing a credit card — especially a long-serving one — can negatively affect your credit scores.
For a card that offers an upgrade path, consider the Secured Mastercard® from Capital One. With responsible card use, you can build your credit history and may be able to upgrade your account to a better product from the issuer, like the Capital One Platinum Credit Card or the Capital One Quicksilver Cash Rewards Credit Card, for example.