Upgrade Cash Rewards Card Review: Charge Like a Credit Card, Pay Off Like a Loan

The $0-annual-fee Upgrade Cash Rewards Visa® is a unique product for people with lower credit scores, or for anyone who needs to finance a large purchase. It advertises "the flexibility of a credit card with the low cost and predictability of a personal loan," and indeed it can be used in those two ways:

• As a credit card: Use it to make purchases, which are converted to installment loans at a fixed interest rate. If you carry a balance beyond the due date, you can repay it in equal monthly installments over a set period. The card itself is issued by Sutton Bank.

• As a personal loan: Tap into your credit limit and request that funds be sent directly to your bank account. You can pay back the loan in equal monthly installments over a set period with a fixed interest rate and a 5% cash advance fee. (You cannot use the card at an ATM to withdraw cash, however.) Personal loans are made by Upgrade's lending partners.

That's a good bit different from how most credit cards work, and it could make monthly budgeting a lot easier. The Upgrade Cash Rewards Visa® also earns a solid 1.5% cash back on all purchases. Still, if you have good to excellent credit, you may have a number of 0% intro APR options to choose from if you need to carry a credit card balance.

» MORE: Is the Upgrade Card legit?

Upgrade Cash Rewards Visa®: Basics

Card type: Starter cards, fair credit.

Annual fee: $0.

Credit limit: Typically $500 to $20,000. (Some borrowers may qualify for up to $50,000.)

Sign-up bonus: None.

Rewards: 1.5% cash back on all purchases. (Cash back will be applied to the next month’s balance on your card.)

APR: The ongoing APR is 14.99%-29.99%.

Foreign transaction fee: None.

Balance transfer fee: N/A.

Other facts and benefits:

• No security deposit required.

• Get pre-approved without hurting your credit scores.

• Pay down balances at a fixed interest rate with equal monthly payments.

• No prepayment penalty, late fees or penalty APR.

• Reports to all three major credit bureaus.

» MORE: Card issuers are offering cheaper ways to access your credit line

Which Upgrade Card is right for you?

Upgrade offers several different cards, and while they all offer the same unique "credit card/personal loan" hybrid feature, their rewards structures differ. Here's a closer look:

It's available to those with FICO scores of 600 and up

Applicants with FICO credit scores of 600 or above can qualify for the Upgrade Cash Rewards Visa®, and unlike a lot of other cards available to those with less-than-stellar credit, there's no security deposit or annual fee. Because on-time payments are reported to the three major credit bureaus, the card can help you build your credit scores over time with responsible use.

It earns cash-back rewards

The Upgrade Cash Rewards Visa® unveiled a cash-back rewards program in October 2020. You'll earn 1.5% cash back on all purchases, and earnings will be applied to the next month’s balance on your card, almost like a prepayment on your bill. This redemption process may not be ideal for everyone (more on that below). But still, it's uncommon for an unsecured card geared toward those with fair credit to offer rewards and charge a $0 annual fee.

Fixed monthly payments make budgeting easier

Revolving balances on typical credit cards have no set deadline to be paid off in full, and the amount you owe can change — and balloon — over time thanks to variable interest. The Upgrade Cash Rewards Visa® treats your debt like a personal loan. You're charged a fixed interest rate on that balance, but you can prepay it at any time with no penalty. Monthly payments can be debited directly from any bank account, and you have 24, 36 or 60 months (depending on what you're approved for) to pay it off in equal monthly installments.

It offers other hard-to-find features

Aside from its low cost to carry, the Upgrade Cash Rewards Visa® also allows you to see what credit line you’d qualify for without initiating a hard pull on your credit report. Such hard pulls can temporarily ding your credit scores, which isn't ideal for those with low scores to begin with. A hard inquiry is completed only once you agree to the terms. This feature is rare among credit cards, although the Apple Card is a well-known product that has a similar pre-approval process.

Other loan options may still offer better terms

Depending on your financial situation, a personal loan or other credit card may make the cost of borrowing money significantly less expensive. The interest rate you’re approved for by the Upgrade Cash Rewards Visa® can be quite low if you qualify for its best rates, but also quite high if you do not. And as noted above, different transactions on the card may be subject to different APRs depending on multiple factors.

» MORE: Where to get a personal loan

It lacks some benefits of more traditional credit cards

If you’re looking for a sign-up bonus or a 0% intro APR period on balance transfers or new purchases, look elsewhere. The Upgrade Cash Rewards Visa® doesn't offer these things. Instead, you might want to look into other products.

If you have good to excellent credit, you might qualify for the Capital One Quicksilver Cash Rewards Credit Card. It, too, earns 1.5% cash back on most purchases and the annual fee is $0. New cardholders get an introductory APR offer and can earn a nice sign-up bonus.

» MORE: NerdWallet's best credit cards for fair credit

You can't 'bank' your rewards

Because the cash back you earn with the Upgrade Cash Rewards Visa® is automatically applied toward your next month's balance, it means you can't save up your cash back for a big purchase later.