Prosper Card Review: Build Credit With No Security Deposit

No security deposit

Having the money on hand to fund a security deposit for a secured credit card can be difficult, and you don't get that money back until you close the account in good standing. For some cards, minimum deposits can cost $200 or more. However, the Prosper® Card is an unsecured card, so you won't have to make a deposit when you first open the account. (You will owe an annual fee, though; unlike a security deposit, annual fees aren't refundable.)

» MORE: How much is a secured credit card deposit?

Pre-qualify without affecting your credit score

When you apply for a credit card, you typically don't know if you'll be accepted without a hard credit inquiry, which can temporarily lower your credit scores. The Prosper® Card allows you to see what you'd be offered without affecting your credit scores, so you can make a clear-eyed decision as to whether it's the card for you.

If you proceed with the rest of the application process and get approved, your credit scores will typically fall slightly, and temporarily, once the card is added to your credit report.

» MORE: Credit cards that offer pre-qual or preapproval without a hard pull 

Instant access to the credit limit

You don't have to wait for a physical card to arrive in the mail to use your Prosper® Card. Once your application is approved, you can get a digital card by logging into your account online or through the Prosper app, which is available on both the Apple App Store and the Google Play Store. Once you get the digital card, you can add it to your digital wallet. Your digital card will allow you to use 50% of your credit limit until you get the physical card.

» MORE: Credit cards you can use instantly after approval

Credit limit increases

Your initial credit line will be between $500 and $3,000, depending on what you qualify for. But that can change quickly because Prosper will automatically review your account for a credit line increase every three months. However, note that as a result of these reviews, your credit line might remain the same or even decrease.

An annual fee

The Prosper® Card charges the following annual fee: $59 (waived for the first year if you sign up for autopay before your first statement). You'll have to sign up for auto pay before your first statement is issued to qualify for that first-year waiver. Auto pay can be tricky if you're worried you might not always have the money available in your bank account to cover your bill, but the Prosper® Card lets you choose your monthly payment date. This way, you can line it up with when you get a paycheck.

Until you build up your credit scores, a secured card may be your best bet if you want a card with no annual fee. The Capital One Platinum Secured Credit Card has a $0 annual fee, and if you qualify, you can get a $200 credit limit with a security deposit starting at $49. 

» MORE: Set up automatic credit card payments, forget the late fees

No cash advance fee, but be careful

The Prosper® Card doesn't charge an ATM fee if you use your card for a cash advance, a fact that's prominently displayed on its website. However, that means Prosper itself won't charge a fee. So you may still be subject to another fee from the ATM's owner.

And then there's the pesky matter of the interest you'll pay. The card still charges a very high interest rate on cash advances, and that rate kicks in when you grab that cash out of the ATM. That's unlike the interest you'd pay for purchases, which doesn't begin to accrue until after the payment due date.

Cash advances are very expensive, so consider them a last resort in an emergency.

» MORE: 7 alternatives to credit card cash advances

No rewards

Cards aimed at credit-building often skimp on other perks, like cash-back rewards, and the Prosper® Card is no exception. If you're open to a secured card, the $0-annual-fee Discover it® Secured Credit Card earns 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter and 1% cash back on all other purchases. Plus, there's a welcome bonus for new cardholders, which Discover phrases this way: "INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match." Note that this card has a $200 minimum for the security deposit.

No card to graduate to