Upgrade Visa® Card with Cash Rewards review

By combining the fixed payments of a loan with the convenience of a card, Upgrade Visa® Card with Cash Rewards is taking a new approach to paying with credit.

While credit cards regularly offer new perks, rewards and redemption options, they all work in basically the same way. You spend money each month, up to a pre-approved credit limit, and then have the option to pay back the balance over time understanding that you'll pay interest on the amount you don't pay back right away. It's not often that we come across a card that works differently.

However, the Upgrade Visa® Card with Cash Rewards upends that formula. Rather than offering a traditional credit limit, it provides customers with a line of credit designed to make paying off your balance more predictable and even help your credit score thanks to the way the debt is reported to credit bureaus.

Plus, this card sets itself apart from the competition in other ways:

• No fees of any kind
• Available to those with a record of bankruptcy or with a credit score as low as 600, depending on factors such as income and credit history
• Option to transfer money directly to a bank account without incurring a cash advance fee
• Earn 1.5% cash back on your payments
• Earn a $200 welcome bonus when you open and fund a new Upgrade Rewards Checking Account and make three debit card transactions with 60 days of your card opening. (Note: To qualify for the welcome bonus, you must open and fund a new Upgrade Rewards Checking account and make 3 debit card transactions within 60 days of your Upgrade Card account opening. The bonus credit will be posted to your Upgrade Card as a rewards credit within 1-2 billing periods following the third debit transaction on your Rewards Checking account. Your card must be in good standing to receive a bonus.)

HOW DOES THE UPGRADE VISA® CARD WITH CASH REWARDS WORK?

On the surface, Upgrade Visa® Card with Cash Rewards works the same as any other credit card. Cardholders receive a personal line of credit with the amount depending on creditworthiness. That credit can be used online or in stores, wherever Visa is accepted. Money from the line of credit can also be withdrawn directly into a bank account.

Where Upgrade Visa® Card with Cash Rewards differs from traditional credit cards is that at the end of each month, the card combines all your purchases into a single personal loan that has a fixed-rate and a fixed term. That means if you spend $1,000 in a single month, you'll be assigned a payment that allows you to pay off that debt in two, three or more years. This arrangement gives you a predictable payment amount and the assurance that you won't be paying off your debt for decades or accruing unpredictable amounts of interest as can happen when making minimum payments on a traditional credit card.

Each month, the terms of a new personal loan for that month's purchases and withdraws will be calculated. That monthly payment will then be added to the payments from previous months. There is no penalty for early payoff, and any additional payments made above the monthly minimum will be applied on a pro-rata basis to the outstanding balances.

FEATURED CARD

 

Petal® 2 "Cash Back, No Fees" Visa® Credit Card

• No fees whatsoever. No late fee, foreign transaction fee, annual fee, or any-other-kind-of-fee, fee.
• Variable APRs range from 13.24% - 27.24%
• Up to 1.5% cash back on eligible purchases after making 12 on-time monthly payments.
• 1% cash back on eligible purchases right away
• 2% - 10% cash back at select merchants
• $300 - $10,000 credit limits
• No credit score? No problem. If eligible, we'll create your Cash Score instead.
• See if you're pre-approved within minutes without impacting your credit score.
• Build credit alongside hundreds of thousands of Petal card members.
• Petal reports to all 3 major credit bureaus.
• No deposits required
• Card issued by WebBank, Member FDIC

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Credit Needed:

Excellent, Good, Limited History, No History, Limited, No Credit

WHAT IS A CREDIT LINE?

Upgrade Visa® Card with Cash Rewards offers customers a line of credit which is slightly different than the traditional spending limit found on credit cards. The credit line is essentially a pre-approved loan from Upgrade Visa® Card with Cash Rewards that you can access whenever you want.

In practice, a credit line works the same as a traditional limit issued by a credit card, but it is quite different when it comes to credit bureau reporting. Upgrade Visa® Card with Cash Rewards reports its line of credit more similar to a personal loan than a revolving credit card account.

As a result, the balance on your Upgrade Visa® Card with Cash Rewards doesn't get counted toward your debt utilization ratio, a significant factor in determining your credit score. This ratio refers to what percentage of available credit a person is using. A higher percentage can negatively impact someone's credit score. For someone who is trying to improve their score, a credit line from Upgrade Visa® Card with Cash Rewards could be more beneficial than using a traditional credit card. Given recent changes to how FICO is calculating scores– that is, taking a longer view of your payment history and credit utilization over time rather than in a one to two-month snapshot– the fact that the Upgrade Visa® Card with Cash Rewards line of credit doesn't affect your credit utilization could be quite important.

HOW TO SAVE WITH THE UPGRADE VISA® CARD WITH CASH REWARDS

The fixed payments offered by Upgrade Visa® Card with Cash Rewards can save thousands of dollars and shave years off a debt repayment schedule.

For example, an Upgrade Visa® Card with Cash Rewards customer who pays off a $10,000 balance with a plan that charges an 18% APR over a 24-month loan term would make fixed monthly payments of $504.29 and spend $2,102.71 in interest in the process. However, making minimum payments (assuming interest plus 1% of the principal to find your minimum payment due) on a $10,000 credit card balance at the interest rate of 18% could mean you pay $14,423.16 in interest and don't pay off the balance for more than 28 years.

As a side note, this is an excellent illustration of why making the minimum payment on a credit card balance can doom you to years and years of debt. Also, keep in mind that, in addition to saving you a ton in interest charges, the Upgrade Visa® Card with Cash Rewardsline of credit balance won't count against your credit utilization ratio during the two years you're paying off that loan. Twenty-eight years is a long time to have such a chunk of debt raising your ratio should you go the traditional credit card route.

The Upgrade Visa® Card with Cash Rewards also saves money by eliminating many of the fees you might find with some credit cards. There are no balance transfer fees, foreign transaction fees or annual fees.

POTENTIAL DOWNSIDES OF THE UPGRADE VISA® CARD WITH CASH REWARDS

Although the Upgrade Visa® Card with Cash Rewards can be a good choice for many people, it does have some downsides.

While money from a credit line can be transferred to a bank account, it can't be accessed from an ATM. That eliminates the possibility of instant access to cash from your credit line although that could be a benefit in deterring some impulse spending and it means you don't have to think about cash advance fees.

Another drawback is that this rewards-earning version of the card is geared toward people with at least fair credit. The rewards themselves are modest, though, so if you're primarily looking for a rewards card and you have at least fair credit, there are likely better options.

UPGRADE CARD CARDHOLDER SCORES

CardRatings conducts a survey annually to learn what actual cardholders think of their cards. Here are the results:

HOW DOES THE UPGRADE VISA® CARD WITH CASH REWARDS COMPARE TO OTHER CARDS FOR FAIR CREDIT?

Upgrade vs. Capital One QuicksilverOne Cash Rewards Credit Card

Both the Upgrade Visa® Card with Cash Rewards and Capital One QuicksilverOne Cash Rewards Credit Card can be used to build credit, but there are notable differences between these two options.

For starters, you'll pay a $39 annual fee for the QuicksilverOne card while there is no annual fee for the Upgrade Card. However, in exchange for that fee, Capital One cardholders get 1.5% cash back on all their purchases. The Upgrade Visa® Card with Cash Rewards offers 1.5% cash back on card payments, with no fees.

In terms of interest, the default rate for the QuicksilverOne card is 26.99% (Variable). Interest rates on the Upgrade Card currently range from 8.99%-29.99% Fixed, which could lead to significant interest savings if you qualify for the lower end of that spectrum.

Upgrade Visa® Card with Cash Rewards vs. Capital One Platinum Credit Card

The Upgrade Visa® Card with Cash Rewards and Capital One Platinum Credit Card have a few similar features.

Neither card charges an annual fee. However, you will pay a late fee on late payments with the Capital One Platinum, and there is a cash advance fee for the card as well. With the Upgrade Visa® Card with Cash Rewards, there is no fee to withdraw cash from your credit line to your bank account.

If you're choosing between the two cards, interest may be the biggest factor to consider. The Upgrade Visa® Card with Cash Rewards will charge you from 8.99%-29.99% in interest but provides a fixed payback period that limits how much you pay overall. However, the default rate on the Capital One Platinum Mastercard is 26.99% (Variable) and may be paid off over a longer period and at a greater expense if only minimum payments are made.