Self – a startup based in Austin, Texas – has partnered with Missouri-based Lead Bank to offer the Self Visa credit card, a secure credit card which offers a unique route to credit.
Secured credit cards usually require a credit check and an initial cash security deposit, which can be a barrier for people with poor or no credit histories or with little access to immediate funds. The Self Visa credit card allows you to skip these steps if you are opening a Credit Builder account, a secured installment loan required for eligibility.
It’s an interesting model that can clear obstacles that are important to many, but the map has its own hurdles that you’ll need to jump through.
How you start with yourself
Bridge Payday no credit check, easy to open account but you will need to pay a one-time, non-refundable administration fee of $ 15. One of Self’s partner banks issues you a small loan, but you do not immediately receive access to the funds. The bank keeps this loan until you pay it off.
You do this through monthly installments, starting at $ 25 per month, depending on the length of the loan. Self offers one- and two-year terms, and you can view relevant pricing information – including APRs, finance charges, and total payout amounts – by using the slip tool on Self website.
The payments you pay accumulate in federal insurance certificate of deposit which earns interest until the term ends and the loan is repaid. During this time, your payment history, which is a big factor in your credit scores, is being reported to everyone. three major credit bureaus: TransUnion, Experian and Equifax. If you decide to apply for the Self Visa credit card, your monthly loan payments to the Credit Builder account will eventually serve as a security deposit for the card and play a role in determining your credit limit.
How to get the credit card
You can benefit from the Self Visa credit card when you meet the following criteria:
You saved $ 100 or more on your certificate of deposit. (This will serve as a security deposit.)
The last three monthly payments have been made in full.
Your account is in good standing with no unpaid fees.
When it comes to your credit scores, your account mix is another factor, and with Self you can get an installment loan and a credit card in one model.
“Our thesis is that now with us you have two different ways to develop your credit,” says Brett Billick, Director of Marketing at Self. “Ultimately it will help you as a customer to show [the credit bureaus] what you can do. “
As with traditional secure cards, you can get your deposit back when you close the account in good standing.
Nerdy tip: You do not need to have repaid the loan from the Credit Builder account to be eligible for the Self Visa credit card. All you need to do is have enough savings in your certificate of deposit and meet the other card criteria.
Self Visa Credit Card Details
Once you’ve met the above criteria and are eligible to order the Self Visa credit card, here’s what you can expect:
Annual subscription: $ 25. The annual fee will reduce the amount of credit initially available. (If your initial credit limit is $ 100, for example, your available credit will only be $ 75.)
Interest rate: Variable APR of 23.99% (exact rate as of November 2020).
Credit limit: You choose the portion of your security deposit (above $ 100) that determines your credit limit.
Credit Reports: A report of your credit card payments to the three credit bureaus.
Low fees: There is no APR penalty, and Self does not charge a late fee on your first late payment. Later late payment fees can be as high as $ 15, which is significantly lower than the fees charged by other credit cards. (The highest late fees are capped at $ 39 by the Consumer Financial Protection Bureau.)
Does this suit you?
The Self Visa credit card certainly lowers some of the traditional barriers to credit card approval, especially given the lack of credit checks. And initially, it can also pay off. The finance charges that you will pay on a Credit Builder account loan range from around $ 46 to $ 115, depending on the amount borrowed. If you add the annual fee of $ 25 for the auto visa, it is initially lower than what you would pay for a traditional security deposit on some secured credit cards. This could be ideal if your budget and credit would benefit from stretching your deposit over multiple payments.
But in the long run, the loan and card combined would end up costing more than an initial security deposit. Many secure cards do not charge an annual fee.
Plus, unlike those traditional secure cards, you don’t have access to your funds – or card – immediately. And while you can pay off your Credit Builder account loan sooner and get your funds earlier, it can affect the payment history you can establish with the credit bureaus.
Make sure you are prepared to make those compromises first.