5 Things to Know About the Self Visa Credit Card
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The Self Visa credit card, issued by Lead Bank, is a secured card that offers those with no credit or poor credit a unique path to establish a credit history.
Secured credit cards typically require a credit check and an upfront cash security deposit, which can be obstacles for those with bad credit history or little access to immediate funds. The Self Visa credit card allows you to skip these steps if you open a Credit Builder Account, a secured installment loan necessary for eligibility.
(Card image courtesy of Self)
It's an interesting model that can eliminate significant roadblocks to credit for many, but the card has its own hurdles — including an annual fee — that you'll have to clear.
Here’s what you need to know.
1. There's no credit check, nor is a traditional deposit required
Typically when you apply for a credit card, the issuer conducts a hard inquiry that temporarily lowers your credit scores. You don’t have to worry about that with the Self Visa credit card.
And unlike with most secured credit cards, you won't need to come up with a set lump sum ahead of time that establishes your credit limit. The Self Visa works a little differently.
2. But you will need a Credit Builder Account with Self …
A Credit Builder Account is a secured installment loan, and though it doesn’t require a credit check, it requires effort on your part and an administrative fee of $9 (this is a nonrefundable, one-time charge).
You'll pay the Credit Builder Account with monthly installments, starting at $25 per month, depending on the loan term. Self offers one- and two-year terms, and you can see the relevant pricing information — including annual percentage rates, finance charges and the total amount of payments — using the sliding tool on Self's website.
The installments you pay accumulate in a federally insured certificate of deposit that earns interest until the term ends and the loan is paid off.
3. … And you'll have to jump through a few other hoops
Once you’ve opened a Credit Builder Account and held it for some time, it might be possible to qualify for the Self Visa credit card if you meet these other requirements:
Saving $100 or more in the certificate of deposit. (This will serve as your security deposit.)
Making three on-time monthly payments.
Maintaining an account that is in good standing, with no outstanding fees.
The minimum amount allowed as a security deposit is $100, but you’ll get to choose how much of your savings to put toward it. This amount will determine your credit limit. As with traditional secured cards, you can get the deposit back upon closing the account in good standing.
You don't necessarily need to have paid off the Credit Builder Account loan to qualify for the Self Visa credit card. You need only to have saved enough in the certificate of deposit and met the card's other criteria.
4. There's also an annual fee …
Once you've met the above criteria and are eligible to order the Self Visa credit card, here's what you can expect from it:
An annual fee: The $25 annual fee will reduce the amount of credit initially available to you. (If your initial credit limit is $100, for instance, your available credit will be only $75.)
An interest rate: It has a 28.24% variable APR (rate accurate as of January 2023).
Low fees: There's no penalty APR, and Self doesn't charge a late fee on your first late payment. Subsequent late payment fees are as high as $15, which is significantly lower than fees charged by other credit cards. (The highest possible late fee is capped at $41 by the Consumer Financial Protection Bureau.)
Don’t forget that this list doesn’t include other associated costs with the Credit Builder Account: the one-time administrative fee, plus whatever monthly loan installment amount you've chosen. If you end up carrying a balance with the Self card, add in that cost, too.
Some secured credit cards allow you to build credit with no fees, no interest and no minimum deposit requirement, although they also don't allow you to carry a balance from one month to the next. The Chime Credit Builder Visa® Credit Card and Varo credit card, for instance, require you to open an account with the company that offers the cards. That account is used to fund the security deposit in the amount of your choice. Still, there's no annual fee for these cards.
Other credit cards with less flexible security deposits may save more money in the long term. If you prefer a more traditional route to credit, the Capital One Platinum Secured Credit Card allows a lower deposit of $49 or $99 for a starter credit line of $200, if you can qualify. The Discover it® Secured Credit Card requires a minimum security deposit of $200, but it offers rewards that can eventually make up that cost and a path to upgrade to an unsecured credit card. And again, the annual fee for these cards is $0.
5. … But you'll get robust credit-building features
When you use the Self Visa and pay the bill, that payment history — which is a large factor in your credit scores — is reported to all three major credit bureaus: Equifax, Experian and TransUnion.
Accounts in good standing may also have opportunities to increase the card’s credit limit over time. Self considers those who have held a Self Visa credit card for six months or longer for an unsecured credit limit increase. To determine eligibility, Self performs a soft inquiry that doesn’t affect your credit scores. The company also reviews your income and account management history, among other factors.
Juggling the Self Visa credit card and Credit Builder Account loan may seem like a lot of work, but there are benefits to having two types of credit. When it comes to your credit scores, another factor is your mix of accounts, and with Self you can get an installment loan and a credit card in one model.
Note that having both types of credit can increase your costs if you’re also paying interest charges on the credit card. So you’ll have to determine whether it’s a worthy investment for your credit-building journey.
The Chime Credit Builder Visa® Credit Card is issued by Stride Bank, N.A., Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted.
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