Credit cards, like ice cream, come in hundreds of flavors. But when you’re trying to build or rebuild credit, you may just want to stick with plain vanilla: a basic card with no fancy features or complicated fees or terms.
The secured credit cards from First Progress are plain and simple. You can choose among three options — call them vanilla, French vanilla and vanilla bean — with nearly identical terms. The only differences are the annual fees and the interest rates.
These are secured cards, meaning that you have to put down a deposit to open a card account. Your credit limit is equal to your deposit, and you get it back when you close the account.
First Progress secured cards basics
First, here’s what all three cards have in common:
- No credit history is required to qualify, making this issuer a good choice for people new to credit. For people who already have credit history, there’s no minimum qualifying credit score.
- Account activity is reported to all three credit bureaus to help you build credit
- Deposits — and corresponding credit lines — range from $200 to $2,000
- The cards are available to residents of every state except Arkansas, Iowa, New York and Wisconsin
Buying down the interest rate
When you apply for a mortgage, some lenders allow you to “buy down” the interest rate by paying more upfront. This concept is very unusual in the credit card space, but that’s effectively what First Progress allows you to do. Applicants can choose to pay a higher annual fee in exchange for a lower interest rate.
Which First Progress card should you choose?
Our calculator can help you make a choice based on whether you expect to carry a balance from month to month and, if so, how much that balance might be:
Keep in mind that, regardless of your interest rate, carrying a balance on a secured credit card is not a good idea. Yes, sometimes life happens, and you have to do things that are not your first choice. And if a big chunk of your savings is tied up in a security deposit on that same credit card, you might need a little more time to pay things off.
However, the point of carrying a secured credit card is to build your credit so you can qualify for a better card later. Carrying a balance can slow your credit-building progress.
Why you shouldn’t carry a balance
The calculations that determine your credit score take into account your credit utilization ratio. This is your balance as a percentage of your available credit. Secured credit cards usually have low credit limits, because you’re restricted by the amount you’re willing to put down for a deposit. So it’s easier to run up a high utilization ratio.
Let’s say you have a First Progress card and you put down the minimum deposit of $200. Your credit limit, too, will be $200. You won’t be able to carry much of a balance at all before that balance becomes high enough to potentially hurt your credit. That’s because the ideal balance is less than 10% of your available credit. That translates to a balance of $20 on a card with a credit limit of $200. The next threshold is around 30% of your available credit. That’s not as good for your credit as staying below 10%, but it’s still pretty good. On a $200 credit limit, that’s a $60 balance.
Paying your bill on time — even if it’s only the minimum payment — is still the most important factor when you’re trying to improve your credit. So if you do carry a balance that’s higher than the recommended amount, make doubly sure you’re on time.
The good thing about having a lower credit limit is that your balance can’t get so high the interest becomes unbearable. Let’s say you had the Platinum Elite, which has the highest interest rate of the three First Progress cards. If you carried a balance of $100, you’d accrue only about $1.65 in interest in a month.
Even if you carry a small balance for a couple of months, the difference in interest is unlikely to be enough to make the higher annual fee worth it. If you do decide that First Progress is the right issuer for your needs, the Platinum Elite will be the better choice unless you’re chronically carrying balances north of $155.
Alternatives to the First Progress cards
The First Progress secured cards are decent, but because they have an annual fee, they’re automatically low on our list of favorites.
Here are a few secured credit cards we often recommend instead:
The Capital One® Secured Mastercard® has one very unusual feature for a secured credit card: Some applicants are able to get a credit line larger than their deposit. That makes it slightly harder to qualify for the card, though, so if you have no credit you may want to look to the First Progress cards. The annual fee for the Capital One® Secured Mastercard® is $0. Make your first five monthly payments on time, and you may get access to a higher credit line without having to deposit additional money.Discover it® Secured is also a standout card. In this case, however, it’s for the rewards. That’s right. The Discover it® Secured pays 2% cash back at restaurants and gas stations on your first $1,000 in combined purchases every quarter, and 1% on all other purchases. There’s also a regular review to see whether you’re ready to upgrade to an unsecured card, starting when you’ve been a cardholder for eight months. The annual fee is $0. OpenSky® Secured Visa® Credit Card has an annual fee. In this case, the $35. But the underwriting standards are even more flexible, because there’s no credit check at all. If for some reason you get turned down for a First Progress card, give the OpenSky® Secured Visa® Credit Card a try.
What’s the verdict?
If you need to build credit but you don’t have bankruptcies or other recent black marks, look for a secured credit card with no annual fee. You may even be able to qualify for one with cash back rewards.
But if you really need help bringing your score up into the sunlight again, the First Progress cards are reasonable options. We recommend that you apply with the intention of never carrying a balance. Pay your bill on time, and your credit can improve enough to get an unsecured card.