Building credit may seem impossible when you’re first starting out, and it can be especially frustrating if you’re having trouble getting approved for the credit cards you really want. But with the right financial product, you can build credit with no credit history or repair bad credit over time.
Secured credit cards are among the most popular credit-building card options, offering a low entry barrier and often charging no annual fee. The main drawback is you have to tie up money in a security deposit as you prove your creditworthiness. While you can get your deposit back when you close your account or upgrade your card, this can be a roadblock if you’re short on cash.
The Self – Credit Builder Account and Secured Visa® Credit Card combo offers a unique solution to this dilemma, allowing you to slowly save up your security deposit over time while simultaneously building credit via a credit-builder loan.
The catch? Even though you’re borrowing money from yourself, you’ll have to pay interest and fees to Self as you would with a personal loan. Though this credit-building combination could be helpful if you don’t have much money to set aside for a deposit, it will almost certainly end up costing more than the best secured credit cards.
How it works
You start off by signing up for a Self credit-builder loan, a type of loan in which you essentially lend money to yourself. Self issues you a small loan (typically between $500 and $1,700) that is held in a locked account as you make monthly payments, which are reported to the three credit bureaus. This allows you to build credit history while setting aside a bit of money each month in your Self account. Once you’ve paid off the loan, the account is unlocked and you can access the full amount, minus interest and fees.
To take advantage of an additional layer of credit building, you can request a Self Visa Credit Card if you’ve made at least your last three monthly credit-builder loan payments in full and on time, saved $100 or more in your credit-builder account and have no outstanding fees.
A secured card, the Self Visa uses the money that’s already in your Self Credit Builder Account to secure your line of credit. This allows you to build up your deposit gradually through credit-builder loan payments instead of being forced to come up with a large deposit upfront.
Your credit limit will equal your chosen deposit amount, and you can use your Self Visa like any other secured card to make purchases and build credit with responsible use. Plus, you’ll enjoy more credit mix by combining two types of credit products: a secured card and a personal loan.
This combo may sound great on paper – and it will do the job if you need to build credit but want to avoid putting up a security deposit upfront – but dig into the loan terms and you’ll find your costs start to add up.
See related: What affects your credit score?
Why you might want the Self Credit Builder Account and Self Visa Card
The Self Credit Builder Account is a great way to start building credit if you’re new to the financial world or don’t have a lot of experience with managing money or managing your own finances. It’s also perfect if you want to make sure that every dollar in your account goes toward improving your credit score. It also provides a few credit-building benefits that will help you build good financial habits as well.
High approval odds
On the plus side, you can qualify for a Self Credit Builder account and Self Visa card with no credit history and without a hard inquiry on your credit report or a credit check of any kind, making this combo one of our top “soft pull” credit card picks.
You also won’t have to apply separately for the Self Visa card – as soon as you’re eligible for the card by meeting the minimum criteria with your credit-builder account, you’re approved and can get started.
Beneficial card perks
Though the Self Credit Builder account and Self Visa combo lacks most of the noteworthy perks you’d hope for on the best credit cards, such as a rewards program, the duo offers a few key advantages that help it stand out:
Pay your security deposit over time. Unlike most secured credit cards that require a large security deposit to get started, the Self Visa lets you break up your initial deposit of $100 over three or more months. This means you can begin working toward a credit card right away instead of having to build up the savings first.
Your Credit Builder account earns interest. The money you pay toward your Self credit-builder loan is held in a Certificate of Deposit (CD) that earns interest to help cover some of the fees you’ll pay.
You’re forced to save. This account requires you to commit to a loan payment for 24 months, which makes it a forced savings account of sorts. Once the loan term ends, you can receive the amount you paid into the account plus the interest your CD has accrued, minus loan charges and fees.
Increase your credit limit over time. While your initial credit limit can be as low as $100, you can increase your credit limit on the Self Visa as you make more loan payments over time. You can also set a higher starting limit if you’ve saved more in your credit-builder loan account.
Why you might want a different card
If you’re looking for a way to boost your credit score and build credit history, the Self Credit Builder Account and Visa Card may be exactly what you need. But if you want a card with low rates, no fees or lots of perks and rewards, this isn’t the one for you.
High card rates and fees
When you sign up for a Self Credit Builder account, you commit to a monthly loan payment of at least $25 with a 24-month term but can opt for higher payments and shorter loan terms to cut down on interest charges. You’re also charged a one-time $9 non-refundable administrative fee.
While the secured card itself charges a relatively low $25 annual fee and you can avoid its 26.99% variable APR as long as you pay off your card balance in full each month, you won’t be able to escape interest charges on your credit-builder loan.
Your total finance charges will vary based on your repayment plan, but Self offers a pricing tool that should help give you a sense of how much it would cost to build credit with the Self credit-builder loan and secured card combo, assuming you pay off any card charges in full each billing cycle:
- For a loan with a $25 monthly payment, 24-month term and 15.92% APR, you’d pay total finance charges of $89
- For a loan with a $35 monthly payment, 24-month term and 15.97% APR, you’d pay total finance charges of $125
- For a loan with a $48 monthly payment, 24-month term and 15.72% APR, you’d pay total finance charges of $169
- For a loan with a $150 monthly payment, 24-month term and 15.88% APR, you’d pay total finance charges of $533
You can refer to www.self.inc/pricing for the most recent pricing options, but even if you opt for a small loan amount and high monthly payment, you won’t be able to escape at least some fees with the Self Credit Builder and secured card combo.
This is a major downside to Self as a credit-building option, since plenty of secured cards charge no annual or other fees unless you pay late, have a payment returned or make a similar slip-up.
How does the Self Credit Builder Account and Self Visa card combo compare to other credit-building options?
While pairing the Self Credit Builder account and Self Visa could make it easier for you to set aside money and enjoy a better credit mix, it’s far from your lowest-cost credit-building option. If you can afford to put down at least a bit of money in a security deposit, you should save in the long run and may wind up with better options when it comes time to “graduate” from a secured to an unsecured card.
Alternatively, you could opt for a low-cost unsecured card for building credit. Here are a few cards worth considering:
 Capital One Platinum Secured Credit Card |  Discover it® Secured Credit Card |  Petal® 1 "No Annual Fee" Visa® Credit Card |
| Rewards rate None | Rewards rate
| Rewards rate None |
| Credit limit See terms | Credit limit See terms | Credit limit $300-$5,000 |
| Annual fee $0 | Annual fee $0 | Annual fee $0 |
Other things to know
| Other things to know
| Other things to know
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Capital One Platinum Secured Credit Card
Though it’s a secured card, the Capital One Platinum Secured Credit Card offers an exceptionally low entry barrier. You can put down as little as $49 as a refundable deposit and still get a $200 credit limit, making this almost a hybrid secured-unsecured credit-building option. And unlike the Self credit-builder loan and secured card combo, the Capital One Platinum Secured Credit Card charges no program fees or interest charges if you pay off your balance in full each month. The card also gives you a chance to upgrade to a higher credit line after you make your first six payments on time.
Discover it® Secured Credit Card
Easily one of the most generous credit-building cards out there, the Discover it® Secured Credit Card not only charges no annual fee but also features a generous cash back rewards program and sign-up bonus offer that matches all the cash back you’ve earned at the end of your first year. This means you can actually earn rewards as you work on your credit. On top of this, the card features a credit limit of up to $2,500 (equal to your deposit), has automatic reviews starting at seven months to see if you can transition to an unsecured line of credit and have your deposit returned, and will waive the fee the first time you pay late (up to $41 after that), all of which should be especially appealing to someone new to credit.
Petal® 1 “No Annual Fee” Visa® Credit Card
The Petal 1 card is a terrific option for credit-builders since it’s available even with limited credit history, charges no annual fee and offers a minimum starting credit limit of $300. The card is also notable for its flexible approvals process: The issuer can consider more than just your credit score when you apply and may take into account other financial data like your bill payment history. This will be a big help if you’ve had some credit missteps in the past but are otherwise on solid financial ground.
How to use the Self Credit Builder Account and Self Visa card combo
- Make at least your first three credit-builder loan payments on time to remain eligible for the secured card.
- Choose the loan amount and repayment terms that work best for you, keeping in mind the finance charges, how much you want to set aside and how much you can afford to pay each month.
- Use your Self Visa Credit Card for small purchases and pay your balance in full each month to avoid a high credit utilization ratio and late fees.
Is the Self Credit Builder Account and Self Visa card combo right for you?
The Self Visa Credit Card and Credit Builder Account combination offers a unique approach to credit building and could be useful in niche circ*mstances – such as when you can’t afford an upfront security deposit or want to improve your credit mix – but it’s far from your most cost-effective option.
Many secured credit cards let you accomplish the same goal of building credit without any required fees or charges, and several require as little as $50 as a deposit to get started. Some secured credit cards even let you earn rewards on your spending, which can add up over time as you learn to use credit responsibly.
Our verdict: Most credit builders will be better off opting for a typical secured card due to the lower cost and potential upgrade path.
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