5 Things to Know About the Greenlight Credit Card
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The Greenlight Family Cash Mastercard is part of a growing group of credit cards that can help parents turn rewards into education funds for their children. The basic premise is, earn cash back on everyday spending and deposit those rewards into an investment account such as a 529 plan.
The Greenlight card, issued by First National Bank of Omaha, is made from that same mold, but it’s distinct in terms of its rewards structure and subscription requirement. If you’re already a Greenlight subscriber, it may make sense to apply for the Greenlight card. But if Greenlight isn’t for you, there are other cards that work just as well as the Greenlight Card — and don’t require a paid subscription.
Here are five things to know about the Greenlight Family Cash credit card.
1. A Greenlight subscription is required to get the Greenlight card
To get the Greenlight credit card, you must subscribe to Greenlight, an app that offers products and services to teach children how to manage money. There are three subscription tiers:
Greenlight Core: $4.99 per month.
Greenlight Max: $9.98 per month.
Greenlight Infinity: $14.98 per month.
The subscription requirement means that it’s not free to use the Greenlight card — even though the annual fee is technically $0. If you sign up for the Infinity subscription, you’ll pay almost $180 a year for access to the Greenlight credit card and other Greenlight services. That cost may be too steep for a family whose budget is already clogged with various subscription services.
The Greenlight Family Cash card is a separate product from the Greenlight debit card. The debit card earns 1% cash back on purchases, but only if you have Greenlight Max or Infinity subscription. This article can help you decide whether a credit or debit card is best for your child.
2. Applicants need at least fair credit
The Greenlight card requires at least fair credit, typically a score between 630 to 689. Most credit cards that offer up to 3% cash back, like the Greenlight card does, won’t accept anything less than a good credit score. Keep in mind that while the Greenlight app is geared toward teaching kids about money management, and the Greenlight card can help kids build credit as an authorized user (more below), it's the parent who will be applying for the card.
3. Rewards rates are tied to spending
The Greenlight card’s rewards structure is unusual in that the earning potential is based on spending per billing cycle, regardless of which categories you spend in. Greenlight cardholders earn:
3% if they spend $4,000 or more in a billing cycle.
2% if they spend $1,000 up to $4,000 in a billing cycle.
1% if they spend less than $1,000 in a billing cycle.
Rewards aren’t capped and don’t expire.
Some people won’t like the inherent uncertainty of the Greenlight card’s rewards rates. If your spending patterns are inconsistent, for example, you may not always be able to comfortably spend $4,000 in one month and thus wouldn’t qualify for the 3% rate.
The connection between spending and rewards might also cause some cardholders to overspend in the pursuit of rewards, which could easily negate their value.
A credit card that earns at least 2% back regardless of spending habits may be a better fit for some.
4. Redemption options include investing in stocks and ETFs
Cash back earned with the Greenlight card may be automatically invested in stocks and exchange traded funds (ETFs) on a recurring or one-time basis. However, if you opt for Core, the cheapest Greenlight plan, you’ll be restricted to investing in ETFs. Max and Infinity subscribers can invest in ETFs and stocks.
Other redemption options include:
Statement credit.
Deposit into the Greenlight Parent Wallet, where parents save money that may be transferred to a Greenlight debit card.
Deposit to the child’s own savings account. (This option is available for Max and Infinity subscribers.)
All redemptions must be initiated within the Greenlight app.
Cash advances and balance transfers aren't allowed with the Greenlight credit card.
5. Children may be added as authorized users
Children of any age may be added as authorized users to the Greenlight card, putting it on par with issuers like Capital One, Chase and Citi, which also have no minimum age requirement for authorized users.
Greenlight reports activity from the authorized user to the credit bureaus, and that’s a good thing for building your child’s credit — as long as the primary user pays off the card’s balance on time and in full each month. Authorized users may use a credit card, but they aren’t responsible for making payments.
The addition of another user to the Greenlight card could be a double-edged sword, though. More people spending with the card makes it more likely that they’ll hit the $4,000 spend threshold required to get the 3% rewards rate. But giving a minor a credit card could lead to runaway spending and negative marks on the parent’s and child's credit reports. To avoid this, parents can set monthly spending limits for authorized users on the Greenlight card.
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