Upgrade Cash Rewards Visa^®: Is It Worth It?

The Upgrade Cash Rewards Visa^® is a good card if you’re trying to build your credit score and need a low-cost way to finance purchases. At the end of the month, your purchases are put into a fixed monthly payment plan with a set end date.

This type of repayment plan helps keep your finances organized and may help you avoid getting stuck in debt, which happens when cardholders only make minimum payments. One drawback to note is that there’s no grace period on new purchases. However, if you qualify for a lower APR, this card may allow you to finance large purchases.

It has some notable features to look for in a card for building credit: It accepts applicants with fair credit, has a $0 annual fee and a potentially low APR and earns cash back rewards.

With regular use of the card and on-time payments, this card helps build your credit so you can access other financial products that require good to excellent credit.

• Earns cash back rewards at a high rate

  With the Upgrade Cash Rewards Visa^® you earn 1.5% unlimited cash back on card purchases every time you make a payment . This is a good rate among flat-rate cash back credit cards, but even better when compared to other credit-building cards that don’t offer rewards.

  You’ll also qualify to earn a sign-up bonus for opening a checking account with Upgrade. You’ll get a $200 bonus after opening a Rewards Checking Plus account and making 3 debit card transactions*.

  It’s rare for a card targeted to people with low credit scores to offer any kind of sign-up bonus, so this is an outstanding offer that can help compensate for the cost of using the card in the first year.

• Few fees

  The Upgrade Cash Rewards Visa^® has a $0 annual fee and does not charge late fees. This is a significant amount of savings if you frequently make late payments. Late payment fees typically cost $30 for the first late payment and $41 thereafter. This offers savings of up to $492 per year, depending on how often you make late payments.

  Annual fees are more easily avoided if the card you want doesn’t have one. However, a number of credit cards for building credit have annual fees which range from $35 to $100.

  Even though the Upgrade Cash Rewards Visa^® doesn’t charge late fees, you should strive to pay your monthly payment on time because late payments affect your credit score. Your payment history makes up 35% of your credit score, so a single late payment can negatively impact your FICO score.

• Fixed monthly payments

  Although it’s a credit card, your payments resemble those of an installment loan. At the end of the billing cycle, your purchases are put into a monthly payment plan with a fixed payment amount. Because of this, you know exactly how much is due every month and can budget accordingly.

  This can help keep you from going into credit card debt because you are forced to make larger payments than you would if you were paying the minimum payment on a traditional credit card.

  Take note: As you continue to use the Upgrade Cash Rewards Visa^®, you will obtain a new closed-end loan. As loans are paid down additional credit may become available to you.

• Potentially low APR

  If your credit score enables you to qualify for the lowest interest rate, your interest charges will be roughly 50% lower than if you have to pay the higher rate. The Upgrade Cash Rewards Visa^® has a 14.99% - 29.99% APR and the rate you receive depends on your creditworthiness. Currently the average APR in the United States is 24.71%, which makes the Upgrade Cash Rewards Visa^®’s lower tier rate attractive.

  Remember that with a traditional credit card, you only pay interest on balances still owed after your payment due date. If you don’t carry a balance, the APR is less important in your choice of a credit card.

• Builds credit in several ways

  The Upgrade Cash Rewards Visa^® helps you build credit in a few ways:

  • Unlike a typical credit card, your monthly balance on the card is reported as an installment loan. For every month that you use it, a new installment loan is generated. This helps diversify your credit mix, which accounts for 10% of your credit score.
  • If you use the card every month for the first six months, you’ll have six loans reported to the credit bureaus. If you make your payments on time, more positive data will be reported, helping build your credit history. This helps your payment history, which accounts for 35% of your FICO score.
  • Over time, you may be allowed a larger line of credit. This can improve your credit utilization ratio, which makes up 30% of your credit score.

• No grace period for interest

  Traditional credit cards have a grace period, meaning interest isn’t charged if you pay your balance in full by the payment due date. But with the Upgrade Cash Rewards Visa^® there is no grace period and interest is calculated from the day of purchase. This means you cannot avoid paying interest with this card, which is a serious drawback if you tend to pay your balance in full each month.

  Considering that the card’s APR ranges between 14.99% - 29.99% APR, the interest that you pay for using the card is likely to wipe out most or all of the cash back that you earn. If you need a payment plan to stay on track of paying off your credit card, the Upgrade Cash Rewards Visa^® may still be worth it. But, if you’re likely to pay off your card each month, you should consider a credit card with a grace period, like the Petal^® 2 Cash Back, No Fees Visa^® Credit Card.

• Offers less payment flexibility

  With the Upgrade Cash Rewards Visa^®, you have to pay your balance in set installments. Each month your charges are bundled together and your total payment amount is divided by a set number of months, much like an auto loan. You need to pay this amount every month to stay current. In comparison, a traditional credit card only requires a minimum payment, which could be helpful if you’re having a particularly bad month financially and can’t afford to pay more.

• Autopay may be required

  According to the terms and conditions, those who qualify for the lowest APR rate are required to enroll in autopay. This isn’t necessarily bad — it helps ensure your payment is made on time every month. However, you must be mindful that you have sufficient funds to not accidentally overdraw your bank account.

Upgrade Cash Rewards Visa^® vs. OpenSky^® Secured Visa^® Credit Card

A highlight of the OpenSky^® Secured Visa^® Credit Card is that there’s no credit check so if bad credit is getting in the way of finding a credit card, this card is worthy of consideration. Financial information like your annual income and your monthly housing amount is used to determine your creditworthiness. The OpenSky^® Secured Visa^® Credit Card requires a minimum security deposit of $200 (and a maximum of $3,000). It does charge a $35 annual fee and has a slightly higher than average APR of OpenSky^® Secured Visa^® Credit Card.

The OpenSky^® Secured Visa^® Credit Card offers credit line increases (with accompanying deposit), the chance to graduate to an unsecured card and reports your account acidity to all three credit bureaus.

Upgrade Cash Rewards Visa^® vs. Petal^® 2 Cash Back, No Fees Visa^® Credit Card

The Petal^® 2 Cash Back, No Fees Visa^® Credit Card is a $0 annual fee unsecured credit card that doesn’t require a credit history to apply. After you allow read-only access to your bank account, it calculates your “Cash Score” to determine whether or not you’re qualified.

Every purchase earns cash back and while the 18.24 - 32.24% Variable APR skews higher on the spectrum for some customers, you won’t pay any interest if you pay your balance in full on or before the payment due date. This makes it a better option for someone likely to pay their balance in full each month.

With qualifying on-time payments, you can earn credit line increases in as little as six months. Also notable with the Petal 2 Credit Card is that you earn cash back on every purchase with additional cash back at select merchants.

Upgrade Cash Rewards Visa^® vs. Capital One Platinum Credit Card

The Capital One Platinum Credit Card is another card worth considering. It’s an unsecured card with a $0 annual fee and is open to applicants with limited / fair credit. As a cardholder, you receive access to a variety of credit-building tools, including automatic account reviews six months after you open your card to see if you’re eligible for a credit limit increase. Capital One reports your account activity to all three credit bureaus and offers free credit score access.

The Capital One Platinum Credit Card does have a high 29.99% (Variable) APR. But, it also has a grace period for interest, so you won’t have to worry about interest charges as long as you pay your balance by the due date. Additionally, the card doesn’t include a rewards program. While you won’t get cash back from your purchases, you won’t be tempted to overspend because of it.

With potentially high credit lines and lower-than-average interest rates, the Upgrade Cash Rewards Visa^® offers a solid way to avoid getting deep into credit card debt and diversify your credit mix while building credit. The rewards help offset the interest, and if you’re able to pay more than your monthly payment, you can do so without penalty.

It’s not a card for everyone, especially those who pay their balance in full each month. The OpenSky^® Secured Visa^® Credit Card or Petal 2 Credit Card are alternative cards to consider if you want to build credit without paying interest.

Alternatively, if you’re interested in a balance transfer credit card but have bad credit, a personal loan is an option to look into.