How Does a Self Credit Card Work?
The Self Visa is a secured credit card, a card type that allows people with no credit or poor credit to build a credit profile. After meeting the Self Visa’s lenient eligibility requirements, you’re granted a loan that is placed into an interest-bearing Certificate of Deposit. The personal loan has an APR.
After you pay off the loan in full, the CD has unlocked value and then you can open a secured card using the CD funds as the security deposit. You earn interest on the amount you’ve repaid, but the card also comes with some fees and charges. It offers no rewards or other benefits.
- How Does The Self Credit Builder Card Work?
- Who Should Get The Self Credit Card?
- What Are The Pros And Cons of a Self Credit Card?
- What’s The Self Credit Card Limit?
- Should I Build my Credit With Self-Lending?
- How Fast Does Self Build Credit?
- Can I Transfer Money From my Self Credit Card to my Bank Account?
- How Many Points Does Your Credit Score go up With Self Lender?
How Does The Self Credit Builder Card Work?
The Self Visa credit card provides a solid option for individuals who otherwise might not qualify for a secured card due to absent or poor credit, or a lack of funds for the security deposit that most such cards require to get started. The lack of a credit check or upfront security deposit makes the Self Visa accessible, and the loan component of the card allows you both to build credit and save some money. And you choose the monthly payment, which can be as low as $25 if you wish.
However, this card can be more costly in the long run than some other secured cards and, unlike those, it doesn’t provide immediate access to funds.
Those seeking to build their credit record who have more cash on hand might consider a secured card that’s more traditional than the Self Visa. The Citi Secured Mastercard, for example, has no annual fee and reports to all three major credit bureaus. It requires at least a $200 security deposit.
Another option is the Discover it Secured, which earns cash-back rewards. There’s no annual fee and it offers 2% cash-back rewards at gas stations and restaurants up to $1,000 per quarter. It also automatically matches all of the cash-back you’ve earned at the end of your first year.
Who Should Get The Self Credit Card?
The Self Visa credit card is designed for those who seek to build credit but have neither much money nor any credit record to help start the process. The monthly payment can be as low as $25 and no credit history is required.
But the card is also for those with patience since you don’t get a Self Visa card until you’re a few months into the process. Specifically, after you have had an active loan account for three months and have built up $100 in savings, which can be longer than three months if you opt for a lower payment.
It’s also a great card for someone who would like a credit card that can double as an enforced savings plan. After you complete paying off the loan, typically after either 12 or 24 months, and any card balance and remaining fees are deducted, you receive any interest earned from the security deposit in the account. This is, then, a card for those who are willing and able to pay to build their credit record.
Interest (finance) charges on the loan are assessed at rates between 14.14% and 14.87%, depending on your repayment plan. That’s far from the highest rate for those with minimal or poor credit but is a much higher rate than those with excellent credit can now pay for a two-year personal loan. There’s also an annual fee on the credit card and a one-time administrative charge to open the self credit builder account.
Here’s how the math might work. Let’s say you choose at the start to pay $25 installments over a 24-month period. After the two years are up, assuming you paid off your charges to the card every month—which best serves your credit record—you’d have $520 in the account. You pay $9 upfront to set up the account and make $600 in payments ($25 x 24) less $80 in finance charges. That leaves you with $520, plus you have been able to borrow against at least some of those funds for 19 months in this scenario.
Self Visa Credit Card’s Outstanding Benefits
- No upfront cash security deposit required
- No credit check required
- Credit Builder account that earns interest
- Reports to three major credit bureaus
- Card can be used everywhere Visa is accepted
Self is not included in the J.D. Power Credit Card Satisfaction Survey, but customers can contact Self through its website, via live chat, or by calling (877) 883-0999.
Self offers safety and security measures that are standard for credit cards issued by U.S. financial institutions. All card accounts come with multi-level encryption and regular vulnerability scans to keep data secure.
What Are The Pros And Cons of a Self Credit Card?
- Qualification Is Relatively Easy: Receiving the Self Visa is a less onerous process than for some other secured cards. Unlike some competitors, this card doesn’t require a standard credit check or a traditional security deposit. To qualify for the Self Visa, you need to have an active Credit Builder account for at least three months, have at least $100 in this account, and ensure that this Credit Builder account is in good standing.
- Builds Credit While Earning Interest on Savings: After you open the credit builder account associated with this card, one of Self’s bank partners provides you with a small loan. Because your payments repay that loan, they’re reported to credit agencies and can so help you to build credit factors such as payment history. In turn, the loan funds are held in an FDIC-insured Certificate of Deposit that earns interest. When your loan term ends, the CD unlocks and you get back the principal amount and the interest you’ve earned minus fees and finance charges. If you’ve opened a Self Visa account, Self will hold onto your funds as a security deposit. You’ll receive your security deposit back when your credit card account is closed, minus any outstanding charges on the account.
- No Immediate Access to Funds: The flip side of this card skipping a credit check or security deposit is that you must wait to actually get the credit it provides. You must, after opening your account, deposit at least $100 in your Credit Builder account before you’re eligible to receive a card. In addition, you can’t access the funds that accumulate in the Credit Builder account until your 12- or 24-month repayment period is up, or when the credit card account is closed if you decide to open one. While it’s possible to pay back the loan early, you might incur an early withdrawal fee for doing so. You could also miss out on the benefit of building your credit payment history through making multiple on-time payments.
- There Are Fees and Charges: Where some secured cards have no annual fee, the Self Visa costs $25 a year, plus there’s a one-time $9 nonrefundable administrative fee. Also, you might incur an early withdrawal fee of less than $5 depending on the account size. There also are interest charges on the Credit Builder loan. In combination, these expenses make this card relatively expensive compared to some other secured cards. That’s especially the case if you choose a longer repayment term, which means you pay more overall in interest charges.
What’s The Self Credit Card Limit?
The minimum credit limit for the Self card is $100. To reach this limit at Self, you first have to:
- Open a Credit Builder Account.
- Make at least 3 monthly payments on time.
- Have your account in good standing.
If you meet the eligibility requirements, you can use the money you already paid into your Credit Builder Account (minus interest and fees) as the security deposit for your credit card with Self.
Note: How quickly you become eligible for the Self credit card also depends on the payment plan you choose. A higher monthly payment helps you reach the $100 minimum sooner, but pick a plan you can afford to pay.
As of January 2021, the maximum secured credit limit available on the Self card is $3,000 for eligible customers. That means the maximum amount you can move from your Credit Builder Accounts to the Self card over time is $3,000.
Here are three ways you could potentially increase your Self credit card limit.
1. Pay into your Credit Builder Account
Each time you add $25 to your Credit Builder Account (after interest and any applicable fees) you could increase your card deposit by $25. Since interest is taken out of your payment each month, if you’re on the $25 plan, you won’t qualify for a credit limit increase after each payment.
We’ll hold onto this deposit as long as your Self card is open. So choose carefully how much money you want to go to your card vs. how much you want to get back when your Credit Builder Account ends.
There may be times when you choose to lower your credit limit and get some of the money refunded to your Credit Builder Account, but be mindful of the impact this could have on your credit utilization, which is a major factor in your credit score.
2. Open another Credit Builder Account
After you finish one Credit Builder Account, you are welcome to apply for another one, though you may only have one active account at a time. A second account could help you build more payment history (35% of your credit score!) while adding to your Self credit card limit.
To help you build positive credit habits, there’s a limit to how many Credit Builder Accounts you can open within a certain time period, and a $3,000 maximum limit for secured credit at Self.
While it’s not a good idea to open multiple Credit Builder Accounts and pay them off quickly to increase your credit limit at Self, using your accounts responsibly and slowly increasing your credit limit over time may help your credit score.
3. Gain access to unsecured credit on your Self card
Once you’ve had your Self card for at least six months (and met other requirements) you could gain access to an unsecured credit limit increase on your existing Self secured credit card.
What does that mean?
If you paid $300 into your Credit Builder Account, and set aside $200 for your secured card deposit, your credit limit on that card is $200.
Once unsecured credit is added to the card though, your credit limit will be higher than your security deposit. So you could have a security deposit of $200 but a credit limit of $275, for example.
Should I Build my Credit With Self Lender?
The way that a Self-Lender account works is you invest your money in a CD savings account for 12 months. You choose the total amount – starting as low as $525 (monthly payments of $25). Upon signing up, you pay a non-refundable administration fee for setting up the account (this varies by the amount you invest and is higher if you invest a greater amount).
For the next 12 months, you make a monthly payment that goes into your savings account. After the 12 months are up, you get your money back – along with interest. Your on-time payments are also reported to all three major credit bureaus (TransUnion, Equifax, and Experian), so it works like an installment or loan account, and a positive credit history shows up on your credit reports.
Using Self-Lender is a great way to build credit because it helps you build a credit history without jumping through hoops trying to get a credit card, or relying on someone else to make you an authorized user and maintain their good credit history. Plus, it’s a cost-effective way of building credit because you’re making a little bit of extra money on interest from the account, instead of paying extra money in interest to a lender. Having a solid payment history accounts for 35% of your score and having a credit history makes up 15% of your score (that’s half your score!)
Remember, building credit takes time, and it won’t happen overnight, but it’s definitely worthwhile if you’re trying to purchase a car or a home, or even just want to qualify for a rewards credit card. If you’re not sure where your credit stands, you can sign up for your free credit report card at Credit.com and receive two scores updated each month.
While Self-Lender can help those with no credit history or poor credit, it may well be worth it for those who have fair to excellent credit as well, especially if you need to show a greater variety in your credit mix by adding an installment account. Another awesome advantage is Self-Lender will also help you save money, and who couldn’t use a little extra cash?
How Fast Does Self Build Credit?
One of the main benefits of Self is being able to improve your credit score. Experian states the most influential item on your credit report that affects your overall score is your ability to make on-time payments to any creditors you owe.
By reporting to all three credit bureaus monthly, your credit score may increase as you make on-time monthly payments into a CD, which you will be getting back at the end of the term you have requested. This is a unique way to work on your credit score without making a major financial purchase.
Despite your past, Self is a chance to improve your credit in preparation for a future life event; For instance, purchasing a home or a new car. With a higher credit score, you have access to more traditional financial products. In addition, you are also able to save thousands in interest over time.
Other benefits of using Self include 24/7 access via an app for your smartphone as well as an online account anywhere there is internet access.
You’ll also have access to open up your own Self Visa Credit Card as mentioned above. It doesn’t get any easier than that, including a FAQ page as well as additional customer support if you may need it. The bottom line is that it’s an easy tool to use to better your financial health.
Self will report on-time payments to all three major credit bureaus on your behalf.
Your secured loan will show up on your credit report anywhere between 30-60 days. Most customers that have used Self report a rise in their credit score as soon as three months.
The lifetime of the account going anywhere between 12-24 months, dependent on the monthly payments you choose. As a result, this ensures your score will continue to rise with on-time monthly payments.
Can I Transfer Money From my Self Credit Card to my Bank Account?
If you just opened your Self Credit Builder Account or are thinking about doing so, remember that unlike traditional personal loans, the purpose of the Credit Builder Account is to help you build credit and save some money aside for later.
You get the money (minus interest and fees) from your Self Credit Builder Account at the end of the loan term or when you close your account. (If you need access to money immediately, consider getting a personal loan instead.)
Once you finish your account, it takes up to 3 weeks for your money to arrive, depending on the payout method you chose.
When you’re getting close to the end of your Self Credit Builder Account, take these steps to streamline your payout process as much as possible.
Step 1 – Make sure your information is correct
Login to your Self account and make sure your name, mailing address, and contact information are all up to date (especially if you plan to get a paper check by mail).
If you chose direct deposit, make sure your bank account information is still correct.
Step 2 – Track your payout using the payout tracker
Once you complete or close your Credit Builder Account, you can track your payout using the payout tracker. To view your payout status, Download the Self app.
Step 3 – Remember your Self Visa® Credit Card deposit (if applicable)
If you used some of your Credit Builder Account funds to secure your Self Visa® credit card, those funds will be held as security for the credit limit as long as the card is open.
If you don’t have the Self secured credit card yet and are looking for the next tool to build your credit, you can learn more. You may already be eligible to open the Self card. If so, you will see your eligibility tracker in your Self account dashboard.
Step 4 – Account for any fees (if applicable)
If you have any unpaid late fees or returned payment fees, those fees will be deducted from the payout before you get your money.
How Many Points Does Your Credit Score go up With Self Lender?
According to Self, their customers’ credit scores increased by 32 points on average. Self customers that started with no credit reached an average score of 670. Since Self’s loan terms are 12 or 24 months, customers see the 32 point increase within that time period.
A 32 point raise can move you from one credit score bracket to the next one.
Here’s what 32 points can do for you:
- You can move from the “Fair” bracket to the “Good” bracket.
- With Good to Excellent credit, one is expected to have an average credit card interest rate of 19.35%.
- While those with a credit score below 670 should expect an average credit card interest rate of 23.87%.
The higher your credit score, the better. The consensus is that a good credit score is 720 or higher.
It’s crucial to understand that the impact of the Self Credit Builder Account varies based on your unique credit history, whether you pay on time, and how long you keep it open.
If you make your monthly Self loan payments on time, it should bump up your credit score. If you pay late, your score will actually go down!
There are some people who report that Self caused their credit score to go down, even when they made on-time payments.
If you’re like most Self customers with new credit or a very thin credit profile, then Self can be a great thing for you. Look for a credit score bump of around 30 points if you make all of your payments on time.