It’s hard to overstate the Verve Mastercard’s bittersweet mix of high interest rates and confusing terms, as well as low credit limits.
The Verve credit card was issued by The Bank of Missouri and is one of many similar products served by Continental Finance. It’s geared towards people who are looking to build or rebuild credit. You can do it. Because it is an unsecured Mastercard, there will not be any upfront security deposits and you can use the card almost anywhere.
These are five facts about the Verve Mastercard.
1. Fees will be charged to your account
Many unsecured credit cards for poor credit have fees. The Verve Mastercard, however, is more costly than others. Here are some things to expect:
Annual fee: The fee ranges from $99 to $125. You won’t find out what the fee is until you submit your application. After one year of regular payments, you can request to reduce your annual fee to $75. However, approval is not guaranteed. For cards with poor credit, annual fees are not a dealbreaker. This one is extremely high.
The monthly maintenance fee: This fee is uncommon and should be considered a red alert. The Verve card will also require you to pay $10 each month, an additional $120 per the year. This monthly maintenance fee is waived in the first year. However, there are other cards that don’t charge it for bad credit.
Authorized user fee: $30 per card to add an authorized person to your account
The Verve credit card’s annual and monthly maintenance fees could add up to $245 per year. This is a lot, and unlike security deposits, these fees are not refundable.
The Tomo Credit Card is a good option for those with low credit scores. This card will allow you to avoid paying fees and deposit. You will need a linked bank account to pay your card balance every week. There is no annual fee, security deposit or credit check. You’ll also earn 1% cashback on all eligible purchases made with your card.
2. Initial credit limits may be quite low
The Verve Mastercard’s initial credit limit ranges from $300 to $1,000. However, the annual fee for the card is not all that important.
Let’s assume you are approved for $300 credit and $125 annual fees. The fee will be charged before you receive your card. Your credit available will only be $175 once you receive it in the mail. This means that your initial credit utilization (or how much credit you use) would be close to 42%. Credit utilization plays a major role in credit scores. The lower your credit utilization, the better. However, your utilization will only increase once you start charging the card.
There are some good news. Continental Finance will double your credit limit if you pay on-time monthly payment for the first six month without any late charges or missed due dates.
The Chime Credit Builder Visa(r), Credit Card offers flexibility and no fees. You must link a Chime Spending account to be eligible. Instead of making an initial security deposit to secure your credit limit, you transfer money from your Chime account into your credit card. Your credit limit is determined by the amount you move.
3. All three credit bureaus can report the card to them
Equifax, Experian, and TransUnion all have access to your account details. This includes payment history for Verve Mastercard. This is advantageous because creditors may only review credit reports from one bureau when assessing your creditworthiness. Creditors won’t have access to your account history if account information isn’t reported at the chosen bureau.
This is not a reason to choose the Verve card. There are many other cards that have no or low fees and report to all three credit agencies. One example is the Capital One Platinum Secured Credit Card. The card has an annual fee of $0 and requires a $49 deposit in order to secure a $200 credit limit. Creditworthiness will vary. After six months, your account will be automatically reviewed to determine if you qualify for credit limit increases.
4. … but there is no upgrade path
Credit cards such as the Verve Mastercard that are “subprime” are designed to build or rebuild credit. Your credit score will rise as you demonstrate that you can responsibly manage credit by paying on time. Your credit score may rise over time to be eligible for a higher-quality card with lower fees.
There are no upgrades available for your Verve Mastercard. If you wish to avoid paying those high fees, the only way to do so is to close your account. However, this could have some consequences.
The Verve card’s credit limit could be lost, which can impact your credit utilization and credit history. This will also affect your credit score. If you apply for another card after closing, another hard inquiry will be made to your credit report.
The Discover it(r), Secured Credit Card is a better choice if you are looking for a card that offers an upgrade path. Although the card requires you to make a security deposit equal the credit limit you wish to establish, this deposit can be repaid by paying your monthly statements and then upgrading to an unsecure Discover card within seven months. There is no annual fee, no maintenance fees and no cost to add an authorized user. Cash back is also available, including 2% at gas stations and restaurants (upto $1,000 per quarter), and 1% on all other purchases
5. You must be specific to receive a reward program
Verve Mastercard offers a cash-back rewards program which gives 1% back on all purchases. However, it is only available to those who are targeted by mail. NerdWallet reached out to Continental Finance for more information about who is targeted and how often Continental targets individuals for the rewards program.
Capital One Quicksilver Secured Rewards Credit Card is an option for those with good credit. The card has a $0 annual cost and earns 1.5% cashback on all purchases. To secure your credit line, a $200 initial deposit is required. However, this can be refunded by making regular payments or getting upgraded to a more secured version of the card. A credit limit increase may be possible after six months, with no additional deposit.
Stride Bank, N.A. Member FDIC issued the Chime Credit Builder Visa(r), Credit Card pursuant to a Visa U.S.A. Inc. license. It can be used wherever Visa credit cards are accepted.