The Indigo Platinum Mastercard is an option “for those with less than perfect credit,” as the card’s website states — but it may not be an ideal one.
The card, issued by Utah-based Celtic Bank, comes in a variety of different colors and designs, but don’t let that distract you from its potentially high fees. It offers a costly pathway toward building credit. Even for those with poor credit, better options exist.
Here’s what you need to know about this card.
1. It can help you build credit …
The Indigo Platinum Mastercard reports to all three major credit bureaus: TransUnion, Equifax and Experian. That’s ideal for someone trying to build credit because these bureaus collect the information used to calculate your credit scores.
Payment history is a key factor in those scores. As long as you stay on track with payments, you can qualify for better credit cards in the future.
» MORE: What makes up your credit score?
2. … But it may cost you
Depending on your creditworthiness, you might not be charged an annual fee. But if you have poor credit, you will likely owe an ongoing annual fee of either $59 or $99. For new cardholders, the $99 annual fee drops to $75 for the first year.
The higher the annual fee, the less appealing this card becomes. After all, you could instead save up a few hundred dollars for a secured credit card deposit, which would allow you to build credit and get that deposit back eventually as long as you make on-time payments. (You will not be able to recover the cost of an annual fee.)
The card also charges an ongoing interest rate of 23.9% APR (rate accurate as of March 2019). That’s within the typical range for a card that caters to applicants with poor credit. Nevertheless, it means that carrying a balance will be expensive.
3. You can pre-qualify without hurting your score …
Before formally applying for the Indigo Platinum Mastercard, you can pre-qualify to check your likelihood of approval (and the annual fee you’re likely to pay) without affecting your credit scores. This way, you know where you might stand.
But pre-qualification doesn’t mean you’re approved; it’s more of a soft “yes” or a “probably.” If you agree with the tentative terms, you’ll still have to submit a full application for review, which will come with the usual temporary ding to your credit score.
4. … But the low credit limit is a pain
The credit limit goes only as high as $300, and possibly lower due to fees. For an account that charges a $59 annual fee, for example, your credit limit might initially be $241 because the issuer assesses setup and maintenance fees.
This low credit limit makes it easy to run a high credit utilization, which can hurt your credit even as you’re working to improve it. It’s not worth paying a high annual fee for a credit limit that’s floor-low.
With poor credit, you again might be better off with a secured credit card, where the credit limit is generally as high as the amount you can deposit.
The Capital One® Secured Mastercard® may offer an exception. This card starts you off with a credit limit of $200 for a deposit of $49, $99 or $200, depending on your creditworthiness. You can also get access to a higher credit line after making your first five monthly payments on time. And whatever amount you deposit, you’ll eventually get back if you maintain a good payment history.
The card has an annual fee of $0.
5. There are some side benefits
The Indigo Platinum Mastercard offers Mastercard benefits, which include extended warranty coverage and travel assistance services, among others.
And as a Mastercard, it’s travel-friendly and widely accepted abroad. It also has a low 1% foreign transaction fee, although you can find some cards that don’t charge this fee at all.