Green Dot, best known for its prepaid debit cards, has now introduced a secured credit card, the Green Dot Platinum Visa. How does a secured card differ from Green Dot’s debit cards? And how does Green Dot’s secured credit card stack up against other secured cards? Our overview / review of the Green Dot Secured Platinum Visa is below:
Let’s begin by talking about what a secured credit card is. Secured credit cards work just like any other credit card except for one important difference: you must put down a security deposit to get the card. That security deposit is refundable when you no longer want the card, but you do NOT pay your bills from that money, this is NOT a debit card.
The security deposit is collateral, protection for the bank if you don’t pay a bill in the future. (If you’ve ever rented an apartment, the security deposit you put down on an apartment is similar to the deposit you put down on a secured credit card — it is there to protect the lender in case you don’t pay.)
The point of a secured credit card is to help you build a good credit history. (Or rebuild your credit history if you have bad credit.) When you pay your card bills on time, your credit score increases, which can help you get better rates on credit cards and other loans in the future. Prepaid debit cards, on the other hand, do NOT help you build credit. (If you’re still confused about the difference between a secured card and a prepaid debit card, go here for further explanation.)
That said, the Green Dot Secured Visa allows you to put down a security deposit anywhere from $200 to $1000. You can then make purchases with the Visa up to the amount of your security deposit, and then you pay off those purchases each month. (Remember that your security deposit is not touched; you must make a monthly payment like any other credit card.)
The Green Dot Secured Visa has an interest rate of 19.99%, which is high, so you want to be sure to pay off your complete balance each month. The card also has an annual fee of $39. This fee is not associated with the security deposit, meaning you won’t get it back.
Overall, the Green Dot Secured Visa’s terms are in line with many other secured cards on the market. However, it fails in one important area: there is not a direct path from this secured card to an unsecured card in the future. Several other banks that offer secured credit cards promise to consider you for a standard credit card after a year or so if you have made all of your payments on time. Green Dot does not have an unsecured credit card at all. Therefore, we can’t recommend the Green Dot secured card over those. We would suggest you instead look at our secured credit cards page and choose one of the top listed cards that do offer the possibility of an upgrade.