Review: Open Sky Credit Card

open-sky-cc225The Open Sky credit card is a secured credit card, targeted mainly at those who have no credit history or those who have a poor credit history and want to improve it. Our review of the Open Sky credit card is below:

First, what is a secured credit card?

Before discussing the Open Sky credit card, a brief discussion on what a secured credit card is. Most credit cards are “unsecured,” meaning you don’t have to put down any collateral for what amounts to a credit card loan each month. The bank is trusting you to pay back your debt, but they don’t have any of your money or property as security against you failing to pay.

A secured credit card, on the other hand, does require collateral. You must put down a security deposit in order to get the card. You use the card like any other credit card, and you pay your balance off each month — the security deposit only exists to protect the bank, it is not used to pay your balance unless you fail to pay. You get the security deposit back when you choose to close your account, provided your balance is zero.

As mentioned above, banks offer secured credit cards to people with no credit history or a bad credit history, and making payments on time with the secured card can boost your credit score, hopefully to a place where you qualify for an unsecured credit card.

How does Open Sky stack up?

Overall, we like the Open Sky credit card from Capital Bank, but it does have some downsides to go with its upsides.

To open an Open Sky credit card, you deposit anywhere from $200 to $3000 as a security deposit. The credit line on your card then equals the amount of your security deposit.

The card does have an annual fee of $35, which is NOT part of the refundable security deposit, and the card’s interest rate is 19.64%. Both the annual fee and the interest rate are competitive with other secured credit cards on the market, so it gets a thumbs-up there. (Though you should still do a direct comparison on our Secured Credit Cards page.)

No credit check required

One of the things that is especially appealing to some people who have bad credit is that they can be approved for the Open Sky credit card without a credit check, meaning approval is mostly a sure thing. (Though not guaranteed.) Most secured credit cards will do a credit check, meaning you will get a “hard pull” on your credit report that will (slightly) lower your credit score.

In addition, while most secured credit cards are much easier to get than regular credit cards, you could be turned down by other banks if your credit history is particularly bad. Open Sky is much less likely to turn you down.

No path to “graduation”

However, one of the disadvantages to the Open Sky card is that Open Sky will not “graduate” you up to a standard, unsecured credit card, even if you make all of your payments on time and handle the card wisely. So, the card is a bit of a dead end beyond its ability to help you raise your credit score.

We often recommend instead getting a secured credit card from a major bank that can graduate you if you show you are handling the card well. Discover is known to have a secured credit card that often graduates relatively quickly. Bank of America is another major bank where you might look in order to build your credit while also starting a relationship with a bank that might upgrade you to one of their unsecured cards in the future. There are others as well.

Bottom Line

The Open Sky credit card offers decent rates and fees and has no credit check. However, it doesn’t offer you a direct path to an unsecured card in the future. Whether it is a good choice for you will depend on where you are in rebuilding your credit.

If interested in the Open Sky credit card, go here.