If you’re just starting to establish credit or you’re actively seeking to shore up your credit profile, a secured credit card can be an effective way to fortify your efforts. With a secured card, you typically pay a cash deposit in exchange for an equal line of credit.
If you’re thinking of adding the card to your wallet, here are a few key things to know.
1. You don’t have to be in the military to get it
Don’t let the name fool you; no marching orders are required to apply for the Credit Builder Secured Visa® Credit Card. Although the Armed Forces Bank caters to those who are enlisted in or retired from military service, civilians are also welcome to apply.
2. You can set your own credit limit
Most secured cards have a minimum required opening deposit, and the Credit Builder Secured Visa® Credit Card is no exception. You have to be ready, willing and able to deposit at least $300 into an Armed Forces Bank Credit Builder Savings account in order to get the card. But what’s unique about this card is that 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 require you to apply to receive a higher credit limit.
If the minimum $300 deposit is more than you’re prepared to hand over, other secured cards allow for smaller deposits. The Capital One® Secured Mastercard®, for instance, grants you an initial $200 credit line after making a security deposit of $49, $99 or $200, based on your creditworthiness.
3. Your security deposit will earn interest
If you’re tying up a chunk of your hard-earned cash in a security deposit, it’s nice to know that at least your money is working for you while it’s there. If you make your monthly payments on time and in full, Armed Forces Bank will periodically review your account to see whether you qualify for an unsecured card. If so, you’ll get your initial deposit back plus the accrued interest, along with a potentially improved credit profile.
4. It’s possible to get a joint account
These days, joint credit card accounts are rare; most issuers don’t offer them anymore. But with the Credit Builder Secured Visa® Credit Card, it’s possible, as long as the savings account you open is a joint account. If so — and assuming both parties are also on the credit application — two cards will be issued.
5. It’s best for someone comfortable with electronic statements
With the Credit Builder Secured Visa® Credit Card, you’ll be charged $3 every quarter to your Credit Builder Savings account if you’re not enrolled in the issuer’s free electronic statement program called e.Statements.
That could cost you an extra $12 per year, and that’s on top of the required upfront deposit and the annual fee.
To be sure, this card showcases some interesting features. But keep in mind that there are other alternative credit cards on the market that require neither a deposit nor an annual fee. Some even offer rewards, too. These options might be worth exploring if they fit with your spending habits and lifestyle.