Up-Front Credit Card Fees? Here’s a Better Option

Photo (cc) by Tax Credits

I review dozens of credit card offers each week to find the best deals. My goal is to help you use credit cards to build and protect your money and credit. Check out more on our credit card page.

According to last week’s New York Times, the new Consumer Financial Protection Bureau recently backed off from a fight to prevent credit card companies from charging fees before you open an account with them. These so-called “application fees” sidestep the Credit Card Act of 2009, which limited the fees banks could charge to 25 percent of your credit limit in the first year.

First Premier Bank went to court and successfully defended its right to charge larger up-front fees, arguing it would “suffer irreparable harm” if it had to stop collecting its $95 upfront fee. But its card, aimed at people with poor credit, makes its customers suffer too. They get hit with…

  • a $75 annual fee
  • a monthly service fee that adds up to another $75 a year
  • a 36 percent interest rate

There are much better cards for people with bad credit. They’re called secured cards.

How secured cards work

These cards require you to submit a security deposit, which guarantees you a line of credit of like amount. For example, if you want a $500 line of credit, you’ll deposit $500 with the issuer that essentially insures your account. Since the issuer is taking little risk, they’re more likely to approve applications for those with bad or no credit.

Once you’ve got the card, you’re issued statements, pay bills, and build credit like any other cardholder. When your account is closed, your security deposit is refunded – sometimes with interest. While not everyone will qualify for every secured card, there are still plenty of great cards from mainstream banks that accept nearly everyone.

Check out these secured cards, all from well-known banks…

  • Orchard Bank Classic Card. A subsidiary of HSBC Bank, Orchard claims all applicants who provide a security deposit will get approved. If you can prove your identity, it doesn’t matter what your credit score is, or if you’ve declared bankruptcy. There’s a $200 minimum security deposit, no annual fee the first year, and a $35 annual fee thereafter.
  • Wells Fargo Secured Visa. To be accepted, you must have been out of bankruptcy for one year and have no unsettled liens. Your credit limit is set by the security deposit, which can range from $300 to $10,000. There’s a $25 annual fee.
  • U.S. Bank Secured Visa. This bank actually places your security deposit in an interest-earning savings account. There’s a $35 annual fee.

Even though the government regulators backed down and allowed the fee-laden cards, don’t sign up for one. Even if you have little or no credit, you can still get a secured card from a mainstream bank. For more options, check out 8 Tips to Get Credit When You Don’t Have Any.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
Retirees Can Dodge Taxes on These 9 Types of Income
Retirees Can Dodge Taxes on These 9 Types of Income

There are lots of things Uncle Sam can’t touch — so long as you play by the rules.

16 Products That Solve Everyday Annoyances
16 Products That Solve Everyday Annoyances

These items put an end to the daily irritations that bug you the most.

Eat This Food If You Want to Avoid Alzheimer’s Disease
Eat This Food If You Want to Avoid Alzheimer’s Disease

One type of food associated with the Mediterranean diet offers especially large benefits.

7 Things That Prove Cheaper Isn’t Always Better
7 Things That Prove Cheaper Isn’t Always Better

These purchases can end up costing you more if you try to go the cheap route.

7 Things I Never Buy at Costco
7 Things I Never Buy at Costco

A bulk buy isn’t always the best buy.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

What a $15 Minimum Wage Means for Social Security
What a $15 Minimum Wage Means for Social Security

A federal minimum-wage hike could affect the Social Security system dramatically.

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

9 Shopping Mistakes to Avoid at Costco
9 Shopping Mistakes to Avoid at Costco

Are you missing out on serious savings at your favorite warehouse club?

10 Deep Discounts Available on Amazon This Friday
10 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

This Is the Most Dependable Car Brand in the U.S.
This Is the Most Dependable Car Brand in the U.S.

This brand’s vehicles are least likely to give drivers repair headaches, according to J.D. Power.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.