Start where you are
It can be tough qualifying for credit cards or loans with little to no credit history. After all, you need to have credit products to start building credit.
A secured credit card, like the Varo Believe Card, gives you an opportunity to either rebuild credit or start building credit from scratch. It doesn’t matter where your current credit history stands.
How does a traditional secured credit card work?
With a traditional secured credit card, you can access a line of credit by putting down a security deposit. It’s typically much easier to qualify for secured credit programs compared to unsecured credit cards because the deposit acts as collateral.
The security deposit is usually refundable, and the security deposit amount and credit limit given vary depending on the program. The Varo Believe Program offers one of the best secured credit cards because it has no minimum security deposit, and the money you put toward your deposit goes straight toward paying off the card.
Just like an unsecured credit card, you can use your Varo Believe Card on everyday purchases, and you’ll receive a statement at the end of the month. Paying off your statement on time and in full each month is key to building credit because all your payments will be reported to the three major credit bureaus.
Secured credit cards vs. unsecured credit cards vs. prepaid cards
You can think of secured cards as a hybrid between prepaid cards and unsecured credit cards. Like a prepaid card, secured credit cards require money in the account before you can use the card. Unlike a prepaid card, however, the money isn’t taken out of the account when you make a purchase. Instead, you use your credit line like you would with an unsecured credit card.
With a secured credit card, you’ll get a statement at the end of the month and your payments will be reported to the credit bureaus. That can help you build, or rebuild, a positive credit history.
Traditional secured credit cards can hold you back
While a traditional secured credit card can be beneficial for credit building, there can be a few drawbacks.
First off, many secured card issuers perform credit checks to determine whether you qualify for the card. This isn’t helpful when you’re actively trying to rebuild credit, as credit checks can negatively impact your credit score.
On top of that, many secured credit card programs charge high annual fees, maintenance fees, and interest rates. With all these fees, it’s easy to fall into runaway debt instead of building credit.
Build credit the easy way with Varo Believe
Looking for a secured credit card to help build credit?
Applying for Varo Believe is simple and, more importantly, won’t impact your credit score.
To get on the path to credit building with Varo Believe, you’ll need a Varo Bank Account and a minimum of two direct deposits totaling $1,000 or more in the past 90 days. Additional qualifications apply.
Once you’re approved, you can use your Varo Believe Card anywhere Visa® is accepted.
How it works
We’ll report your payments to the three major credit bureaus to help you start building a positive credit history. It’s important to pay on time! Late payments may negatively impact your credit, so on-time payments are critical to building your credit score.
Best of all, there’s no minimum security deposit, no maintenance fees, no APR, and no annual fee.
|Varo Believe Secured Credit Card||Other Secured Credit Cards|
|No minimum security deposit||Yes||No|
As much as $500 deposit required2
|No annual fees||Yes||No|
Up to ~23%3
|Can pay card balance with secured deposit||Yes||No|
Fully-locked security deposit
|Helps you avoid runaway debt**||Yes||No|
|No hard credit check to apply||Yes||No|