Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
A new kind of secured credit card is offering applicants the ability to use assets, instead of cash, as collateral for establishing a credit line.
The Pesto Mastercard — launched in May 2023 and issued by Continental Bank — pitches itself as an alternative to pawnshop loans and their notoriously high interest rates. The card has an annual fee of $39.96, which cardholders will pay in monthly installments of $3.33.
There's no minimum credit score required, but you will need to submit personal information, such as your Social Security number, on your application.
How it works
As with a pawnshop loan, the Pesto Mastercard requires a physical asset as collateral, the value of which determines your credit limit. (Pesto's website has a calculator that can help you estimate what that might be.) Currently, only precious metals, jewelry, diamonds, gemstones and watches qualify as collateral for the card.
But while a pawnshop loan may have interest rates upwards of 200%, outstanding balances on the Pesto Mastercard are subject to a purchase APR of 29.99%, as of this writing.
As with other credit cards, you won't owe any interest at all as long as you pay your balance in full by the due date.
Appraisals are performed by experts certified by the Gemological Institute of America, said James Savoldelli, Pesto founder and CEO. To have your item evaluated, you can physically bring it to one of Pesto's partner locations or mail it in.
In the latter case, Pesto will cover the shipping cost. All valuables are insured during shipping and while they’re held in temperature-controlled storage.
Return delivery is also free for cardholders whose accounts are closed with no outstanding balances.
» MORE: What is a purchase APR?
Is it a good deal?
With traditional secured credit cards, your credit limit is usually equal to the amount of money you're able to put down as a security deposit. So for those who are short on cash but have a valuable possession, the Pesto Mastercard could be a pathway to credit.
And while its ongoing APR is higher than average among interest-charging credit cards (20.92% as of February 2023), it's certainly far lower than what a pawnshop loan might offer.
However, you'll still owe what amounts to a nearly $40 annual fee just for holding the Pesto Mastercard, and it's possible to find less expensive products for those with bad credit. Even certain traditional secured credit cards now offer flexibility with their deposits, essentially allowing you to set your own credit limit depending on what you can afford to put down.
Other secured cards offer rewards, as well as upgrade paths to better cards once you're ready; the Pesto Mastercard offers neither. (The company does say it expects to offer an upgrade path in the future.)
Also keep in mind that the Pesto Mastercard accepts a narrower range of items compared with the average pawnshop, and that cardholders with accounts in default for more than 90 days forfeit ownership of their valuables to Pesto.
Because of an editing error, a previous version of this article misidentified the issuing bank for the Pesto Mastercard. The card is issued by Continental Bank. This article has been corrected.