Wells Fargo cards usually aren’t anything to write home about, but their secured card is pretty solid. The super-low $25 annual fee alone makes the card worth considering. After all, secured cards don’t usually have rewards, so you might as well cut down on how much it costs you.
Then again, APR is likely the most important factor if you’re in the habit of carrying a balance — which arguably isn’t a great idea when trying to rebuild credit, and especially using a secured card. But hey, we’re not here to lecture. If you need to carry a balance, this card is only so-so with a variable APR of 18.99%. That rate isn’t the worst (by far) in the secured market — a lot of cards marketed at people with bad credit have rates that push the 30% legal limit. But there are also some that offer lower rates, though usually with higher fees. As always, make sure to do the math for your financial habits and needs.
Another thing we like about the Wells Fargo Secured card is that it’s pretty easy to get accepted. For example, you can qualify just a short 12 months after filing for bankruptcy, which is a much shorter time span than is usually required. In fact, word on the street says that everyone gets approved, as long as they meet the bankruptcy requirement and don’t have any unsettled liens. (As with all rumors, we appreciate customer feedback on this issue!) What’s clear is that your chances are pretty good. And when you have bad credit, that counts for a lot, because every additional application you have to submit is another hit to your credit score.
The Wells Fargo Secured card is a “fully secured” card, which means that your credit line is exactly equal to your security deposit. The range here is shifted high: $300 all the way up to a whopping $10,000. A relatively high range can be a good or bad thing depending on what you’re looking for. While some like the guarantee of at least a few hundred bucks of credit, others simply can’t afford putting away $300. There are other secured cards out there that have minimum deposits around $50 — not to mention the “partially secured” ones that will give you a credit line that is larger than the deposit.
Now, what about that high upper limit? If you are are able to, should you go ahead and deposit the full $10,000? The answer depends on how much you value increasing your credit score quickly. The downside is that the Wells Fargo Secured card does not pay interest on your deposit, unlike some other secured cards. The upside is that the higher credit limit will decrease your credit utilization ratio (assuming your spending remains the same), which will improve your credit score further. If you want to take advantage of this mechanic, the Wells Fargo Secured card is unbeatable with how high its upper limit is, compared to other secured cards.
To illustrate, let’s compare this to Citibank’s Secured card, which puts the deposit in a CD that pays about 1% APY. (Note: this isn’t quite fair because the Citi card has an upper limit of just $5000, but let’s pretend.) By putting $10,000 in the Wells Fargo Secured card, you are losing out on interest to the tune of: $10,000 * .01 = $100. So what you need to ask yourself is: over the course of a year, would I rather have a hundred bucks, or would I rather accelerate my credit building?
The Other Details
The Wells Fargo Secured card comes with pretty normal benefits as far as credit cards go, including things such as zero liability for fraud, purchase protection, travel accident insurance, and car rental insurance. Not all secured cards offer those, but most of the ones from major banks do. One relatively unique benefit here is the cell phone insurance that you get when paying your cell phone bills with the card.
Like many other secured cards, the Wells Fargo one offers the opportunity to graduate to a non-secured card after you’ve demonstrated responsible behavior for a while. (And yes, that means you get the security deposit back.) However, unlike some other cards, Wells Fargo isn’t clear about when you are likely to be graduated or even put up for review. They simply say that secured accounts are “reviewed periodically.” Most people seem to be reporting that it takes 12 months or sometimes more.
Probably the most annoying thing about this card — aside from the lack of interest — is that you have to have a Wells Fargo checking or saving account to transfer the deposit out of. These accounts are easy and free to open, but it’s still an extra hassle that we’re pretty sure you don’t need.