Neu Card 1 Review: Access to Credit, for a Monthly Fee

There’s a low barrier to entry

For students, immigrants and others who might be trying to build or repair their credit, a credit card can be an effective tool. However, credit cards from traditional banks typically have credit history requirements. That loop of needing credit to build credit can make it difficult for newbies to gain access to more conventional credit cards.

The Neu cards can make it easier to begin the credit-building journey: They don’t require a security deposit, and they can evaluate factors beyond traditional FICO scores — like income, bank activity, educational background and address stability — to determine creditworthiness.

The Neu Card 1 also doesn't require a Social Security number, like most traditional credit cards do. Applicants who might not yet have a Social Security number can apply with a U.S. visa or foreign passport instead.

A few things to keep in mind: Although you don’t need a credit history to qualify for the card, the company will still perform a credit check when you apply. Plus, you must have a valid U.S. address and bank account when you apply.

» MORE: Best credit cards with no credit check

It doesn’t charge interest

If you carry a balance on the Neu Card 1, you won’t be charged interest, which can be a helpful safeguard when you’re new to credit.

Remember, though, that one of the core pillars of good credit-building habits is paying off your bill on time and in full every month. So it’s still important to do so when you can, in preparation for other credit accounts that you might qualify for in the future. Those accounts will indeed charge interest.

Also keep in mind that the Neu Card 1 charges a fee every month, regardless of whether you use the card or carry a balance.

» MORE: 'Debt-proof' credit cards lower some barriers but raise their own

It earns travel rewards

Another way the Neu Card 1 stands out is through its rewards offerings. Cardholders earn 3% cash back on in-person and online air-travel purchases, including flights purchased directly from airlines or major travel sites, checked-bag fees, seat upgrades, related add-ons and most in-flight purchases. Cash back earned with the card is automatically redeemed as statement credit toward your card’s balance, and rewards don’t expire.

Not all unsecured or credit-building cards offer rewards, and it's rare for such cards to also double as travel credit cards. Earning rewards typically isn't a priority when trying to build credit, but in this case it might be helpful to international applicants who are frequent fliers.

Note that Neu occasionally offers additional merchant-specific rewards through the Neu app.

You can graduate to the Neu Card 2

An important feature of a good credit-building card is the ability to upgrade to a better card once you’ve strengthened your credit. With responsible use, like making on-time payments, Neu Card 1 holders can graduate to the Neu Card 2. The company says it automatically reviews Neu Card 1 holders’ credit lines every six months to determine upgrade eligibility. Because of its monthly fee, holding on to the Neu Card 1 can be costly over the long term. The opportunity to upgrade to the $0-annual-fee Neu Card 2 offers relief from that cost. However, keep in mind that unlike its sibling card, the Neu Card 2 does charge interest — so carrying a balance on it will cost you.

There’s a monthly fee

While holders of the Neu Card 1 are off the hook when it comes to putting down a security deposit or paying interest, it's not free to carry. You'll owe a fee that, on an annual basis, will make the card nearly as expensive as some options meant for those with good to excellent credit — but with far fewer benefits than those cards offer.

Remember that unlike a security deposit, a monthly fee is not refundable. And unlike interest, you'll owe that fee each billing cycle, regardless of whether you actually use the card or carry a balance.

There are alternative unsecured options that may be less expensive and that offer some of the same credit-building opportunities as the Neu Card 1. For example, the Chime Card™ doesn’t perform a credit check, doesn’t charge interest, and doesn't have monthly or annual fees. (Note that it does require a Chime checking account, though, and there's no upgrade path.)

Neu doesn’t report to all three credit bureaus