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Building credit can be a difficult process. Starting from nothing makes it difficult to qualify for credit cards and loans.
This catch-22 keeps many looking to improve their credit scores stuck in a vicious cycle.
Austin-based startup Self seeks to help you find your way out. They started out focused on making credit-building accessible via credit-building loans.
Now they’ve introduced the Self Visa® Credit Card, a card built to further your credit-building efforts.
What are the pros and cons of the Self Visa®? Is this the right card for you to build your credit?
Here’s what you need to know.
Let’s start by looking at the pros and cons of the Self Visa®.
The Self Visa® Credit Cardis designed to help you build your credit when you can’t qualify for traditional credit cards.
Self’s credit card is what’s known as a secured card. These cards require users to pay a security deposit to access their cards.
The provider holds onto this deposit as collateral in case the user doesn’t pay their bill.
The Self Visa® gets around traditional credit checks and security deposits by linking the card to your preexisting credit-building loan. This loan serves as your security deposit.
As stated above, the Self Visa® aims to help you build your credit when you can’t qualify for other cards. They do this by connecting their card to their credit-building loan program.
When you take out a credit-building loan, the loan is held in a savings account. As you pay the loan off, you get access to the funds in the account.
The Self Visa® builds on that by using the loan as your security deposit. Once you’ve made 3 monthly payments and paid at least $100 of the loan off, Self sends you your card.
This lets you diversify the kinds of accounts you use to build your credit without traditionally qualifying for credit cards.
As you pay more of the loan off, you can increase your credit line, as that can be leveraged as a larger security deposit.
The secured Visa card available through Self is deeply linked with their Credit Builder program. As such, it makes sense to discuss the features of the two together.
The main advantage of this joint program is that it builds your credit in the most efficient way possible. The Self Credit Builder account works by giving you a loan that is deposited into a bank account.
You pay back the loan, and when you’re finished, you have a savings account with most of the money you borrowed sitting inside. This lets you build credit without having to lose money in the process.
The Self Visa® does something similar, only this time with a credit card account. The money you pay into the loan is also used as a security deposit, granting you access to the secured Visa credit card.
This diversity in your accounts helps build your credit better than the loan would on its own.
In addition to the basic benefits gained from this structure, Self offers a number of unique benefits
As we’ve stated, to receive your Self Visa® Credit Card, you must make 3 monthly payments on your loan and pay off at least $100.
That being said, Self offers you the option to set that number higher to have a higher credit limit.
This is a great feature as it lets you decide what kind of credit line you’re comfortable with when starting out.
This means that those new to credit cards can feel it out slowly, whereas those who want to build their credit more aggressively can also do so.
After you’ve been granted access to the card, you can prepay more on your loan to increase your credit line.
For instance, if you decide to increase your credit line, you can simply pay another $100 into your loan to serve as collateral.
When you increase your credit line, you also increase the rate at which you can build credit, as you can buy more on credit and pay it off.
This feature is useful as it allows you to control your credit line and increase it to the appropriate level for you without putting any financial strain on yourself.
Because the Self Visa® doesn’t require a traditional approval process, it bypasses credit checks and hard inquiries.
Hard inquiries diminish your credit score each time they occur. By getting around this process, Self provides you an extremely efficient way to build your credit.
Rather than taking a step back just to get access to a card, Self allows you to start building credit with the same credit score you start with.
Self’s Credit Builder loan sits in a savings account from the moment you’re approved. This means that money accumulates interest the entire time you’re paying it off.
Organizing their loan program like this allows you to earn interest on your loan as you pay it off. You build your credit while earning money rather than losing it like you would with most other programs.
Typically, secured credit cards require a lump-sum deposit before you can use them. While you do have to pay at least $100 to get access to the Self Visa®, that $100 can be paid over the course of 3 months.
This makes the card accessible to almost anyone, regardless of their financial situation.
Rather than having your lack of finances keep you from building the credit you need to borrow money, Self finds a way to work with you. They meet you where you are and make credit-building affordable.
Visa is one of the largest credit card networks in the world. By partnering with Visa, Self ensures that their card will be accepted almost universally.
This means that you can use the Self Visa® to build credit on all your typical purchases. Just pay with the Self Visa® instead of your typical payment method and pay the balance off.
Self is far from the only place you can look when building your credit with a credit card. Let’s see how they stack up compared to a few other options.
The Reflex Mastercard is another credit card focused on accessibility.
Unlike the Self Visa®, the Reflex Mastercard is not a secured credit card. This means you don’t have to put down a security deposit to access it.
That lack of a security deposit comes with a high cost, though. The annual fee for the Reflex Mastercard can be as high as $99. On top of that, the APR is higher than that of the Self Visa®, ranging from 24.99% to 29.99%.
Both cards offer no rewards.
This card is very expensive. You’re better off sticking to the Self Visa®.
The Upgrade Visa® Credit Card is similar to the Self Visa® in that both combine elements of a loan and a credit card.
With the Upgrade Visa® Card, you can charge the card like a normal credit card or request your credit line be deposited into your bank account for immediate use. This is a unique and convenient feature not offered by Self.
There is no annual fee for the Upgrade Visa® Card, and the APR can be significantly lower than Self’s, ranging from 8.99% to 29.99%.
Additionally, the Upgrade Visa® Credit Card offers 1.5% cash-back on all purchases.
That being, you will have to undergo a hard inquiry when applying for the Upgrade Visa® Card, which will hurt your credit score.
The Citi® Secured Mastercard® is, like the Self Visa®, a secured credit card.
The Citi® Secured Mastercard® requires a $200 deposit. Unlike the Self Visa®, this deposit is required up-front, meaning it might not be a great option for those strapped for cash.
That being, the Citi® Secured Mastercard® has no annual fees, something which it has over the Self Visa®.
The APR of the Citi® Secured Mastercard® is slightly lower than that of the Self Visa®, at 22.49%.
While the Secured Mastercard seems to slightly edge out the Self Visa® financially, it is a bit more exclusive. If you have truly bad credit and are looking to rebuild, it is unlikely you’ll be approved by Citi.
The OpenSky® Secured Credit Card is similar to the Self Visa®® in a few respects.
For one, both are secured cards, making them easier to qualify for.
More importantly, both cards allow you to choose your starting credit line. OpenSky’s card does require a higher minimum deposit of $200, though, and that deposit must be paid lump-sum.
Another similarity, the OpenSky® Secured Credit Card doesn’t run a credit check, meaning you don’t have to ding your credit score when applying.
The annual fee for the OpenSky secured credit card is a bit higher than Self’s at $35 a year. That being, their APR is significantly lower at 17.39%.
Ultimately the two cards are fairly similar. Which is right for you will depend on your specific spending habits.
The Self Visa® Credit Cardis pretty affordable.
There is an annual fee of $25 to continue using your card. This is significantly lower than many other credit cards, especially those available to people with bad or no credit.
APR is 23.99%, fairly comparable to most similar offerings.
There is also a small one-time administrative fee of $9 when you first apply for the card.
All said, nothing too crazy, though there may be cheaper options depending on your credit score and financial situation.
Let’s answer a few of the most frequent questions regarding the Self Visa® Credit Card.
For those with bad or no credit looking to build their credit score, the Self Visa® is a great choice. It partners with Self’s Credit Builder Loan to help you build credit through multiple avenues.
Additionally, the card doesn’t require a hard inquiry, keeping you from taking any damage to your credit score.
That being, if you already have good credit, there are better options on the market.
While the answer depends on your situation, for those with bad or no credit, the Self Credit Builder account and secured, Visa is typically worth it.
Self offers extremely affordable means of credit-building. There are few fees and little money required up-front.
If you need to build your credit, Self is one of the best ways to do so.
The Self Visa® Credit Card does not earn any rewards. It is designed to help those with bad credit build their credit scores.
Once your credit score has improved, it would be wise to switch to a credit card that does offer rewards.
Yes, you can increase your credit limit on the Self Visa® Credit Card. This is done by paying more into your Self Credit Builder loan and requesting a credit line increase.
Your Self Visa® Credit Card will only close if you request it be closed. If you aren’t going to use it anymore, you should do this to avoid the $25 annual fee.
The Self Visa® Credit Card is designed to help you build your credit score. Along with the Self Credit Builder loan program, this card provides one of the most efficient ways to quickly improve your credit.
The unique features of the Self Visa® make it incredibly accessible and affordable. Almost anyone can use this card to start building credit in fairly short order.
That being, compared to typical credit cards, it falls flat on rewards and fees. The best way to use this card is to build your credit then move on to a card with more benefits.
Still, the Self Visa® is a very useful tool for credit-building. If you have bad or no credit and need a way out, it might be just what you’re looking for.