Posted by: John S Kiernan

Rating: 3.5 / 5

The Verdict: A secured credit card is the best tool for building or rebuilding credit at the lowest possible cost. And though the Wells Fargo Secured Visa Credit Card isn’t the absolute cheapest card of its kind, it’s in the conversation.

You see, the Wells Fargo Secured Visa charges a modest $25 annual fee, which is below the $32 first-year average for secured cards, according to WalletHub data. And while we don’t recommend carrying a balance on a secured card, considering that it means paying interest on your own money, this Wells Fargo offer’s regular APR is slightly above average for a secured card as well, according to our latest Credit Card Landscape Report.

So if you have limited, bad or no credit, aren’t facing any emergency expenses that you can’t afford in cash and are capable of placing a security deposit of at least $300, Wells Fargo Secured could be the card for you. For a closer look, continue reading below.

The Highlights

• Low-Cost Credit Building: Most secured cards are more expensive than Wells Fargo’s offer, thanks to hefty annual fees, membership fees that often kick in the second year your account is open or a combination of the two. But all you have to worry about with the Wells Fargo Secured Visa is a $25 annual fee that doesn’t change over time. And considering that sizable credit-score gains can be seen in a year’s time, $25 certainly isn’t much of a price to pay for an investment in your future.

  If you want to monitor your progress over time and find out if an upgrade to a no-annual-fee unsecured card is feasible before you have to pay another $25 annual fee, you can sign up for a free account with WalletHub. WalletHub is the first and only website to offer free credit scores and full credit reports that are updated on a daily basis.

• Cell Phone Protection: One of this card’s most unique benefits is mobile-phone insurance. As long as you pay your cell-phone bill with your Wells Fargo card, you’ll be able to claim up to $600 for cell-phone damage or theft (loss is not covered), up to two times per year and up to four phones listed on your bill. Plus, it’s completely free, save for a $25 deductible per claim. That’s a pretty sweet deal when you consider that coverage purchased from a phone company costs around $10 per month.

• Chip-and-PIN Security: As the payments industry migrates to the EMV security standard, credit cards containing embedded computer chips are being issued. Most such cards rely on a system called chip-and-signature, which is considered more secure than a standard magnetic-stripe credit card but less secure than cards such as the Wells Fargo Secured Visa that use chip-and-PIN. You can learn more about what that means for you in our Chip-and-PIN vs. Chip-and-Signature article.

The Lowlights

• Relatively Pricey Late Fee: While the Wells Fargo Secured Visa won’t gouge you on interest if you carry a balance from month to month, it will slap you with a $37 fine should you ever fail to submit at least the minimum amount required by your designated due date. This late fee is above the market average of $35.5. 

• 3% Foreign-Transaction Fee: The credit-card market as a whole is gradually shifting away from foreign-transaction fees, with the average falling by about 22% from 2011 (2.52%) to late 2016 (2.08%). But the Wells Fargo Secured Visa hasn’t joined the party, charging 3%. 

Other Things To Consider

• Allows Deposits Of Up To $10,000: Secured cards are versatile in the sense that you can directly boost your spending limit by adding to your deposit. This, in turn, increases your available credit and figures to improve your credit-utilization ratio, thus benefiting your credit score. In other words, you could start with a deposit as low as $300 and then gradually add to it over time — up to a limit of $10,000 — in order to expedite your credit-building efforts. 

• Average Regular APR: By bad-credit standards, 19.49% is an attractive regular APR, considering some cards in this segment charge as much as 36%. That doesn’t mean you should ever carry a balance, however, as 19.49% still is very high in absolute terms – far higher than you would ever think of charging yourself. But it’s you who’s really extending yourself the spending power — via your security deposit — and you could have simply used that cash to pay for whatever you’d be financing without paying any interest.

  In other words, try to pay your bill in full every month and avoid overcharging yourself. 

• Potential Upgrade To An Unsecured Card: Wells Fargo regularly considers cardholders for graduation from a secured card to an unsecured offer, which would result in their security deposits being refunded and, theoretically, provide access to better terms. How quickly an upgrade will come in your case ultimately depends on the nature of your credit history as well as your account performance. Paying your bill on time every month, for instance, will certainly work in your favor.

  However, it’s worth noting that qualifying for an unsecured card from Wells Fargo may mean your credit has improved to the point that you could also garner approval for unsecured cards from other issuers, some of which may have better terms than the Wells Fargo option. So keep an eye on your standing and feel free to shop around. 

• Pricey Overdraft Protection: If you have a Wells Fargo checking account, you can connect it with your Wells Fargo Secured Card and then use part of your credit line to cover the amount of a check when you have insufficient funds. But this a very bad idea. The transaction is technically a cash advance, which begins to accrue interest at a rate of 24.49% as soon as funds are transferred to your bank account. It also triggers an Overdraft Protection Advance fee of either $12.50 or $20, depending on whether the transfer is more or less than $50. Plus, the credit line is pre-paid, which means you’d be borrowing from yourself at that high cost.

Compared To The Competition

 

	Wells Fargo Secured Credit Card	Capital One Secured Credit Card	Citi Secured Credit Card	Discover it Secured Credit Card	Harley-Davidson Secured Credit Card
First-Year Annual Fee	$25	$0	$25	$0	$0
Subsequent-Year Fees	$25	$0	$25	$0	$0
Security Deposit For $300 Credit Line	$300	$49 to $300	$300	$300	$300
Min/Max Credit Limit	$300 to $10,000	$200 to $3,000	$200 to $5,000	$200 to $2,500	$300 to $5,000
Offers Rewards?	No	No	No	Yes	Yes
Regular APR	19.49%	24.99%	22.99%	23.49%	23.49%
Editors’ Rating	3.5 Stars	5 Stars	3.4 Stars	5 Stars	N/A
Overall Winners	Capital One Secured Credit Card        Discover it Secured Credit Card

from Wallet HubWallet Hub


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