Green Dot Credit Card Basics
Green Dot Bank offers two secured credit card options for people with poor or no credit who want to start building up their credit history: the Green Dot primor® Secured Visa® Classic Card and the Green Dot primor® Secured Visa® Gold Card.
While these cards don’t have any flashy features, they provide a solid way for anyone to build or rebuild their credit, reporting account activity to all three credit reporting bureaus.
For those who would prefer it, MasterCard versions of both of these cards are available as well.
Green Dot Features
Green Dot’s features are unique in several ways. First and foremost, it pays 5% cash back up to a $100 reward each year, which is unheard of in the prepaid card space. Green Dot also offers a free mobile app that allows you to track your spending. You can also write checks from your account to pay bills, a feature many prepaid cards don’t offer.
You can use the card anywhere that accepts Visa debit. The card can be used to make purchases online and to pay bills that accept debit cards (e.g., cell phone bill). You can also load the card with direct deposit. With direct deposit you get access to your paycheck faster and don’t have to pay check cashing fees (a reality for many unbanked). You can also use direct deposit for government benefits checks or tax refunds.
Pros & Cons
Pro: Provides a way for many to access financial services that otherwise wouldn’t be available to them.
Con: These services are riddled with fees.
Pro: Direct deposit is free, and provides a way to dodge expensive cash-checking services.
Con: You can only have $2,500 in your account at a time unless you have filed for a direct deposit exception and been approved.
Pro: Many of these fees can be circumvented if you have internet access.
Con: The very reason you need a prepaid card may be lack of internet access.
Pro: Reasonable limit on fees if your card has a zero balance.
Con: The monthly deposit requirement to avoid a Monthly Charge may exceed your income.
Should You Get the Green Dot Credit Card?
These cards were designed with one purpose in mind: to help you build up your credit, even if yours is damaged or if you have none at all.
Secured credit cards are a great way to prove that you can manage your finances responsibly. Even more so than with regular credit cards, it’s vital to always pay your bill on time and not to exceed your credit limit.
Since these cards report to all three credit bureaus, your activity will be reported each month. Positive activity will build up your credit score, while negative activity like late payments will bring it down.
Eventually, as you improve your credit report, you’ll be able to qualify for more interesting credit cards that offer rewards for purchases and other benefits.
What is a secured credit card?
A secured credit card works just like a regular credit card, cardholders can use the card anywhere the card is accepted. But you need to put down the deposit against the card’s credit limit used as collateral on the account which will be used when the cardholder default. Usually these cards are used by people with limited credit histories. In reasonable use, secured credit cards can help cardholders to build credit or repair credit.
What are the benefits of secured credit cards?
Apply and qualify easily
People with bad credit or no credit can get benefits from secured credit cards. Even people with very good credit but have trouble getting approved for regular credit cards can benefit from secured credit cards.
Build credit
If you can use your card responsibly, your credit score may increase. Therefore, you can have a better chance to get approved for a regular credit card after a few months.
Earn rewards
Although secured credit cards are not like traditional credit cards, they are still credit cards. Many secured credit cards offer rewards programs, so cardholders can earn rewards points by making purchases.
What do you need to apply for a secured credit card?
Check score
You can get approved with a bad or limited credit history. A few secured credit cards don’t require any credit check, if you can pay down the minimum required security deposit. There are also some traditional secured credit cards, the issuer will review your personal credit history when determining whether to approve your credit card and what terms you are eligible for. Responsible past use of credit will maximize your chances.
Application
You can apply for a secured credit card online, in banks or by email depending on the card. And you just need to fill in your personal information and submit your application. The credit card issuer will consider your credit reports and several different factors when reviewing your application to get an idea of your creditworthiness.
How to use a secured credit card?
Read your credit card terms and conditions.
You need to have an understanding of the terms of your credit card in order to use it better and avoid paying extra fees.
Pay your bill in full on time
Because secured credit cards don’t require you to have a very good credit score, they often have more fees than unsecured credit cards. In general, you have to pay an annual fee and an application fee. Some terrible secured credit cards charge cardholders high- interest rates, monthly account fees, and even credit limit increase fees which will be charged when you request to have your credit limit increased.
What’s more, any late payments will be reported to the credit bureau, which may you’re your credit score. If your payment is delayed for several months and your credit card is owed, your account will be closed and you will lose your deposit. Therefore, we recommend you to pay the bill in full on time in order to avoid extra fees.
Convert to unsecured credit card
Some secured credit cards will review your account after a period of time, and upgrade your credit card to unsecured card if you qualify. If your secured credit card issuer doesn’t upgrade your credit card to an unsecured credit card, you can apply for an unsecured credit card with other card issuers.