A credit card can be a great way to build credit or improve your credit score.
The problem is that if you have bad credit, you may find yourself in a bit of a catch-22: You need a line of credit to improve your score, but inquiries into your credit history can damage your score further, and at the end of that, you may not even be approved for a card if your credit is in really rough shape from a traditional financial institution.
So, what can you do? A secured credit card may be the answer.
Let’s dig into one secured credit card option, the OpenSky Secured Credit Card.
What is the OpenSky Secured Credit Card?
The OpenSky Secured Visa Credit Card is a card that can be opened without any inquiries into your credit. Rather than checking your credit, OpenSky Secured Credit Card takes a refundable deposit from you.
This means there are no negative marks against you for a credit inquiry, and you will most likely be approved no matter how rough your credit history is.
Usually, a credit card will use your credit score and credit history to determine the likelihood of making your payments on time. However, with OpenSky Secured Credit Card, the initial deposit you put down acts as that security instead.
Then you can build up your credit and work on raising your credit score by making payments on time and keeping your balance low. You have to use credit if you want to develop a positive credit history.
Deposits are refunded when your balance is paid off, and the account is closed. They are kept in an FDIC-insured account until then.
These deposits can be as low as $200. If you put down a $200, you will receive a credit line of $200. In this way, it’s almost more like a checking account since you are using your own money. Yet, you have the advantage of having your payments reported to all three major credit bureaus, and this can raise your credit score in only a few months.
Who is OpenSky Credit Card For?
People who would benefit most from an OpenSky Secured Credit Card want to improve their credit.
Anyone who has problems over-spending with credit cards might want to consider an OpenSky Secured Credit Card. Since it is a Visa card, the OpenSky Secured Credit Card is accepted everywhere that Visa is accepted. In addition, there’s no risk of racking up more debt since it is secured with a deposit, and that’s what your credit line is based on.
How It Works
Customers can apply to open an OpenSky Secured Credit Card in only a few steps on the OpenSky website. First, customers decide what size deposit they’d like to put down. This can range from $200 all the way up to $3000. This will act as the initial credit limit. Then, after six months, customers can apply for a credit increase without an additional deposit if they demonstrate good payment history. So, there is always the option to get an actual credit line after half a year of using the secured card responsibly.
The OpenSky Secured Credit has an 85% approval rate, and it is reported that almost half of all cardholders who make their payments on time see their FICO score increase by 30 points or more within just a few months.
OpenSky Secured Credit Card Pros and Cons
The Pros of OpenSky Secured Card include:
- There is no credit check. This means that you can be approved even with a low credit score. It also means that your score won’t be brought down even further, which it often can be when applying for a credit card.
- It operates like a debit card but has the credit repair benefits of a Visa credit card. You aren’t actually creating debt because you put down a refundable deposit. You are spending money that you already have, much as you would with a checking account. However, unlike with a checking account, your payments and balance are reported to all three credit bureaus. This can help you repair your credit quickly if you engage in responsible credit behaviors.
- You don’t need even need a bank account to open this card. The refundable security deposit can be paid in several ways. Paying with a debit card is one option, but customers without bank accounts can also pay their deposit via certified check, money order, or a money transfer through Western Union. The ability to pay the deposit without a bank account is a perk that not all secured credit cards have.
- The OpenSky Secured Credit Card works like any other Visa card. This card is accepted anywhere that takes Visa, and nobody will know by looking at it that it is a secured credit card.
- You have the option to extend your credit line after 6 months without an additional deposit.
The Cons of OpenSky Secured Credit Card include:
- There is an annual fee of $35.
- There are no rewards. Many other credit cards include rewards like cash back, points, or miles. The OpenSky Secured Credit Card does not have any such perks.
- This card does not provide any credit monitoring. This could be a useful benefit to customers looking to improve their credit.
- There is no path in place to promote customers to an unsecured card. Customers can have their credit extended without an additional deposit after six months. Customers also have the option to apply for the OpenSky Gold Unsecured Credit Card after six months and then close their OpenSky Secured Credit Card, but there’s no upgrade path for customers to move seamlessly from one phase to the next as their credit improves.
OpenSky Secured Credit Card Fees
There is a $35 annual fee. Some customers may balk at this and decide the card isn’t worth it. However, if you haven’t been able to get approved for other credit cards, you may decide you’re willing to part with that $35 yearly fee if it means getting your credit back on track.
Other fees include:
- Cash Advance Transaction Fees. These amount to either $6 or 5% of the cash advance, whichever is greater.
- Foreign Transaction Fee. This fee is 3% of the transaction is U.S dollars.
- Late Fee can be up to $38.
- Returned Payment Fees can be up to $25.
Then there are the interest rates:
- The OpenSky Secured Credit Card TOS cites an APR of 17.39% for both purchases and cash advances, but the terms also state that this rate can vary based on the Prime Rate.
Is OpenSky Secured Credit Card Right for You?
The answer to this really depends on what state your credit is in and what you’re hoping to gain from a credit card. If you’re not having trouble being approved for credit cards and you’ve already learned how to use a credit card responsibly, then this bare-bones secured credit card may not be the best option for you. Instead, you may opt to get an unsecured card that has more perks and benefits.
If you need credit monitoring or more extensive credit repair services (such as sending disputes, debt validation letters, or goodwill letters on your behalf), then you may opt to go with a subscription to a credit repair company rather than a secured credit card.
However, if you’re planning to send your disputes or you know there are no items on your credit history that could feasibly be disputed, a secured credit card may be the best option for you.
OpenSky Secured Credit Card is available to people with poor credit, and you don’t even need a bank account to open a card. This card is a middle ground between a credit card and a debit card, and it gives customers the best of both worlds.
Also, unlike a credit repair service which can not guarantee results as it’s ultimately up to the creditors and credit bureaus whether items are removed, customers know they will see results with the OpenSky Secured Credit Card. As long as payments are made on time, and other good credit habits are practiced, you can reasonably assume that your score will go up as this positive information is reported to the three credit bureaus.
OpenSky Secured Credit Card FAQ
Where is the OpenSky credit card accepted?
The OpenSky Secured Credit Card is accepted almost anywhere that Visa is, which is pretty much everywhere.
Can I use the OpenSky card for online purchases?
Yes, the OpenSky card is a great option for online purchases just as you would any other Visa card.
Can I get a cash advance with my OpenSky card?
Yes, you can get a cash advance with your OpenSky card. However, you will need to provide your PIN number in order to complete the transaction.
Is there an annual fee for the OpenSky card?
Yes, there is a $35 annual fee for the OpenSky card.
Are there late fees associated with the OpenSky card?
Yes, if you have any late payments, OpenSky charges a fee. They can be up to $38.
What is the APR for the OpenSky card?
The APR for the OpenSky card can vary based on the Prime Rate. The current APR is 17.39%.
What if I want to cancel my OpenSky card?
If you want to cancel your OpenSky card, you can do so by calling customer service. You will need to have your account number and the last four digits of your social security number available when you call.
Does OpenSky have any rewards?
While OpenSky Credit Card has numerous advantages, they do not offer any rewards. The purpose of this card is to help rebuild your credit. Most secured cards do not offer any type of benefits.
Does OpenSky offer a path to “graduation”?
No. OpenSky does not offer a path to graduation. While some major banks offer this benefit, OpenSky does not. Instead, they offer a credit limit increase without the need for an additional deposit.
Wrapping It Up
A secured credit card is a good option if you need to improve your credit. Many users have taken their poor credit and converted it to a good credit score by making good financial choices and making on time payments.
If you’re making purchases with cash or a debit card, this isn’t helping your credit score at all, but with the OpenSky Secured Credit Card, you can make the same purchases you’d be making anyway, and if you pay your bill on time and keep your credit-to-debt ratio low, this can raise your credit score in just a few months.
OpenSky Secured Credit Card is one of the easiest cards to get and doesn’t require a bank account.
As with any financial decision, you should always research all of your options and think about your specific needs before deciding.