High fees
The Imagine® Visa® Credit Card charges not just an annual fee, but it also charges a monthly account maintenance fee after the first year. Fee amounts differ depending on the credit limit you qualify for.
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Account maintenance fee |
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$175 for the first year, then $49 per year. |
$180 annually, billed at $15 per month. |
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$175 for the first year, then $49 per year. |
$180 annually, billed at $15 per month. |
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$125 for the first year, then $49 per year. |
$180 annually, billed at $15 per month. |
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$99 for the first year, then $49 per year. |
$180 annually, billed at $15 per month. |
Let’s say you’re granted a $500 credit limit. That means in the first year, the card will cost $125 to carry (that’s just the first-year annual fee; the account maintenance fee won’t kick in until year two). You would need to spend $347.22 per month, or around $86.81 per week, on gas and groceries to earn $125 in cash back.
Now let’s look at the second year with the same $500 credit limit. The annual fee will now be $49, and the account maintenance fee will cost $180 for the year, so the card now costs $229. Now, you’ll need to spend $636.11 per month, or around $159.03 per week, on gas and groceries to earn $229 in cash back.
Depending on your typical food and transportation spending, it could be possible to more than offset the card’s cost. But if you don’t usually spend that much, those fees will exceed the value of the cash back you would earn.
Secured card may cost less over time
While the initial security deposit on a secured credit card can be steep, you’ll get it back once you’re ready to graduate to an unsecured card. Annual fees, on the other hand, are nonrefundable, so any money you sink into carrying the Imagine® Visa® Credit Card is gone forever.
The $0-annual-fee Discover it® Secured Credit Card could be a better alternative. It requires a $200 minimum security deposit, but and after seven months, Discover will begin reviewing your account monthly to determine if you’d be eligible to switch to an unsecured card and get your deposit back. You’ll earn 2% cash back at gas stations and restaurants on up to $1,000 in combined spending each quarter, and 1% cash back on all other purchases. Plus, new cardholders can get a welcome bonus: INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
The $0-annual-fee Capital One Quicksilver Secured Cash Rewards Credit Card also requires a $200 minimum security deposit that’s refundable once you switch to an unsecured card. Capital One will consider you for a higher credit limit in as little as six months with no extra security deposit. The card earns 1.5% cash back on all purchases.
Potentially high interest rate
Carrying a balance on the Imagine® Visa® Credit Card will not be cheap: The ongoing APR is 29.99%-36.00% Fixed APR. It’s not unusual to see high interest rates on unsecured starter cards, but that upper limit is especially eye-opening. Since you can prequalify without affecting your credit scores, shopping around for lower-interest cards can potentially unlock some savings.
Long wait for reward redemptions
With the Imagine® Visa® Credit Card, cash back is automatically redeemed just once a year as a statement credit. Other cash-back cards let you redeem whenever you accumulate a certain minimum amount of rewards, and some even let you redeem as little as a penny’s worth.
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