5 Issues to Know Concerning the Varo Consider Secured Credit score Card

The Varo Consider Secured Credit score Card, issued by the net financial institution Varo, shares many similarities with different playing cards supposed for customers who wish to construct or rebuild their credit score. Its closest relative would be the Chime Credit score Builder Visa® Credit score Card. Like that card — which can also be geared toward freshmen — the Varo bank card doesn’t have an annual share price, or APR; options no annual charge or minimal safety deposit; and doesn’t conduct a tough credit score test once you apply. These options can prevent cash and spare you from shedding factors out of your credit score rating, which frequently occurs after a onerous inquiry. 

The Varo Consider Secured Credit score Card is designed to keep at bay overspending and missed or late funds, and it is even attainable to earn rewards. Nevertheless, the safeguards constructed into the cardboard could really feel restrictive and even overbearing to some. 

Listed below are 5 issues to know concerning the Varo bank card. 

There isn’t any charge for establishing a Varo checking account, but it surely’s nonetheless a hoop you may want to leap by means of. And whereas there’s additionally no safety deposit required for the Varo bank card itself, you are solely eligible to get one in case your Varo account has acquired direct deposits of not less than $500 previously 90 days. Deposits from an employer or the federal government depend; transfers from peer-to-peer apps like Venmo don’t. 

In case your Varo checking account meets these necessities, you’ll be invited to use for the Varo Consider Secured Credit score Card within the Varo Financial institution app.

To make use of the Varo Consider Secured Credit score Card, you’ll must switch cash out of your Varo checking account to your Varo Consider secured account, which might solely be achieved within the Varo app. The quantity within the secured account turns into your credit score restrict. 

However not like a conventional bank card, the Varo bank card imposes spending caps. You will be restricted to $2,500 per day for purchases and $1,000 per day for money advances, and the full of purchases and money advances can not exceed $10,000 per billing cycle.

One large buy, akin to new furnishings, might put you over the spending restrict and would require you to make use of one other fee methodology in the event you wanted to purchase one thing else on the identical day. 

The steadiness in your Varo Consider secured account is your credit score restrict, but it surely’s additionally the funding supply for bank card funds. To make sure that you may all the time come up with the money for to pay your month-to-month invoice in full, Varo mechanically deducts the quantity of any bank card transactions from the accessible steadiness within the secured account. That approach, it’s inconceivable to overspend with the Varo bank card. Varo additionally locks your card in the event you miss a fee and received’t restore entry till all the steadiness is paid off. 

To make sure well timed funds, Varo presents a “SafePay” choice. With SafePay enabled, balances are mechanically paid in full on the finish of the billing cycle. 

The Varo bank card experiences to all three main U.S. credit score bureaus. So these measures undoubtedly can profit cardholders who’re constructing or repairing a credit score historical past as a result of they incentivize paying off the bank card steadiness, and fee historical past is a significant factor in credit score scores. Nevertheless, such hand-holding is often absent from conventional unsecured bank cards. If and once you improve from the Varo Consider Secured Credit score Card to a conventional card, know that you simply’ll seemingly should be extra conscientious about paying off your month-to-month statements. (The secured product is the one bank card that Varo presents, so there is no improve path inside its portfolio.)

Even in the event you miss a bank card fee, your steadiness won’t develop as a result of curiosity as a result of the APR on the Varo Consider Secured Credit score Card is 0%. That’s an extremely uncommon, doubtlessly money-saving perk and one of many highlights of this card.

However once more, it isn’t how conventional bank cards work. So once you’re prepared for an improve from the Varo bank card, be sure you know your new card’s APR.

The Varo Consider Secured Credit score Card earns money again in two alternative ways: on-line presents and card-linked presents. Varo’s on-line presents — akin to a bank card bonus mall with a conventional bank card — award money again from purchases at retailers that you simply’ve accessed by means of the Varo app or by means of a promotional e-mail from Varo.

Or you can use a card-linked supply to get money again, which capabilities like a coupon. Card-linked presents have to be activated first, and the acquisition have to be made along with your Varo bank card to qualify for the low cost. 

Money again is mechanically deposited into your Varo checking account when you’ve earned greater than $5. Money-back earnings with the Varo Consider Credit score Card are capped at $50 per 30 days, whereas different secured bank cards supply limitless money again and customarily do not require that you simply store by means of a particular portal or activate particular person presents.

Card artwork courtesy of Varo.