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5 Things to Know About the Grow Credit Mastercard

With eligible subscriptions or bill payments, the Grow Credit Mastercard will help you create credit. There are no fines or interest charges. It also bypasses the credit search.

There's a fresh generation of "alternative" credit cards on the market, offerings from startup issuers that look past standard FICO ratings and credit histories to evaluate creditworthiness in new ways. The Grow Credit Mastercard stands out among these items.

Customers may select one of three loyalty plans offered by Grow Credit and issued by Sutton Bank to help them develop credit by qualified subscriptions or bill payments. This isn't something you'll see on any credit cards. 

Other noteworthy features include:
  • No fees.
  • No security deposit.
  • No interest charges.
  • No credit check.

The card does have certain drawbacks due to its peculiar form, so it might not be suitable for all. You won't be able to bear a balance, for example, and your spending capacity would be limited.

The Grow Credit Mastercard has five features that you should be aware of.

1. No credit check is required, but you’ll have to link a bank account

For authentication purposes, there would be a "soft" background search that will not change your credit scores. Grow Credit, on the other hand, has its own patented technologies that can look at income to ascertain creditworthiness, rather than relying on a hard investigation on the credit records, as most credit card firms do when evaluating applications, according to Joe Bayen, CEO and founder of Grow Credit.

The business does this in a number of ways, including needing access to your bank account details through Plaid, a third-party provider. According to the company's website, passwords are neither exchanged nor stored on its servers.

The card's lack of a background check makes it perfect for those with no credit or bad credit (FICO scores of 629 or lower) who want to build a credit history without risking debt.

2. You can build credit with qualifying bills or subscriptions

Payments for premium programs aren't usually included in credit records, but the Grow Credit Mastercard does:

Instead of providing a conventional line of credit, the card is an installment loan that helps you to build credit when paying for qualified monthly subscriptions such as approved bills, TV, music, and other streaming services. You pay your bill in full per month, which helps you create credit.

Based on your qualifications, the virtual card is linked to one of three membership schemes. In these programs, you can create credit by purchasing qualifying subscriptions, each with a different credit cap. The organization will tell you which programs you qualify for, and you can choose which ones you choose, but the subscription tiers are as follows:
  • "Build" membership (free): Subscriptions like Netflix, Hulu, Spotify, and Pandora, to name a few, have a $17 monthly spending cap for this package. According to Bayen, applicants must have direct deposits of at least $1,200 a month (for at least two months) to be eligible for this free account.
  • "Grow" membership ($4.99 per month): The Grow membership comes with a $50 monthly spending cap and access to "premium" subscriptions such as Verizon Wireless, AT&T, Sprint, T-Mobile, and Coursera fees.
  • "Accelerate" membership ($9.99 per month): This plan offers a $150 monthly spending limit toward these same premium subscriptions.

JustFab, Dollar Shave Club, HBO Now, HBO Max, PlayStation Plus, Xbox Live, ESPN+, CBS, Showtime, iHeartRadio, Amazon Prime, Disney+, MasterClass, YouTube Premium, Starz, and DirecTV are among the many subscriptions that are available.

According to Bayen, applicants must have direct deposits of at least $1,200 a month (for at least two months) to be eligible for the free package.

If you apply, the free package is the better alternative of the three. Otherwise, the Grow membership plan costs almost $60 a year, while the Accelerate membership plan costs about $120. Under any scenario, you’re best off saving up to cover the security fee on a covered credit card so you will get that money back when you close the card if you maintain a consistent payment history.

The Chime Credit Builder Visa Secured credit card, for example, does not require an upfront security deposit, but it does require a Chime Spending Account to apply. The Tomo Card, another card of a similar model, allows you to make deposits on a seven-day payment plan at first. There are no interest or penalties on any of these cards.

3. It has a low spending limit

The Grow Credit Mastercard's monthly spending cap will only be used to pay for subscriptions included in the membership package.

Each membership package has a different monthly spending cap, but it's just a fraction of the card's credit limit. For example, the free subscription package allows you to pay up to $17 a month, but your card cap is $204.

4. You can’t carry a balance, so there’s no APR or fees

Carrying a debt from one month to the next is impractical with the Grow Credit Mastercard. You may only use the card to pay for qualifying subscriptions up to the monthly spending cap. As a result, Grow Credit does not charge any interest or fees. Interchange payments and the expense of paid subscription schemes are how Grow Credit makes profits.

You can't get through a loan trap on this card and you have to pay on time and in full. Its prime aim is to assist you in establishing credit.

5. It reports to all three credit bureaus

Payments are posted to TransUnion, Equifax, and Experian, the three main credit bureaus that keep track of the details used to determine your credit ratings.

However, such payments are recorded as an interest loan, rather than a revolving line of credit, as is the case for regular credit cards. In contrast to the unpredictability of a typical credit card bill, an installment loan helps you to borrow money and repay it with fixed payments.

The installment loan is for a period of 12 months, so you can extend it at any time. You'll be able to keep the age of your active accounts, which is a big factor in your credit ratings, if you do so. If you don't have other sources of credit, not renewing the loan can result in a temporary drop in your credit score. This is a common occurrence for installment loans.

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