OpenSky Secured Visa Review: Good Credit Card for People with Bad Credit?
The OpenSky Secured Visa is a secured credit card that requires a deposit in order to open the card, although you won’t need to undergo a credit check in order to get it.
The fact that the card doesn’t require a credit check is what makes it unique among most credit cards designed for consumers who have no credit history or the history they do have is bad.
Later in this review, we’ll talk about credit history, credit scores and how they affect your chances of getting good credit cards.
But, for now, we want to give you an overview of what we’ll cover in our analysis of the OpenSky Secured Visa:
- Benefits and how they affect your credit
- Rates and fees
- Comparison to similar cards
At the end of our review, we’ll give you a quick wrap-up of what we think the OpenSky’s advantages and disadvantages are.
The Benefits of the OpenSky Secured Visa and How They Affect Your Credit
Based on our research on this card, we believe it has two main benefits.
The first benefit is the fact that you don’t have to undergo a credit check in order to get the card.
Let’s put this in context. You’re applying for the OpenSky card because, most likely, you have bad credit or no credit history and your choices for a credit card are limited. The cards that you may be able to get are specifically designed for people with bad credit scores.
So, in one sense, it really doesn’t matter if the company checks your credit because they know you’re applying for a card for bad credit so your credit must be bad.
Now, a credit check isn’t that big of a deal when it comes to your credit score. In most cases, it will drop your score by one or two points, mainly because lenders believe that you applying for a credit card means that you’re in some sort of financial jam and you have to get a card to make ends meet.
There’s a good chance, though, the drop in points you receive for the credit check will give way to a slight increase from having an open credit card without a balance. You see, one of the main factors in calculating your credit score is something called “utilization ratio,” which is the ratio of your credit card balances to your credit card limits.
Once you’re using at least 30% of your credit limits, your score will drop because it tells lenders you’re in some kind of financial jam, otherwise you wouldn’t have a balance on your card.
The good side to utilization ratio is that opening a new card adds more credit limit, which lowers your utilization ratio.
So, you may actually see your credit score go up even though you took a one- to two-point hit for the credit check. The OpenSky’s no-credit-check benefit means that you can maximize any increase in your credit score, which is a crucial thing since your credit isn’t in as good of shape as it could be.
Now, the second benefit to the card is that OpenSky reports your payments to the credit bureaus, which are the companies who track all the accounts you have – loans and credit cards are the most common. These bureaus plug all that information into a scoring model another company gives them and your credit scores come out on the other side.
Every credit card you get is going to report your account to the credit bureaus, so it’s a benefit that’s not specific to the OpenSky. However, it’s an important thing to remember as you seek to rebuild your credit with the OpenSky.
In general, credit cards for consumers with bad credit or no credit have a very limited set of benefits. Based on our research, we believe this is the result of how credit scores influence lender decisions. Low scores, in theory, mean that you aren’t a reliable borrower and that, over time, you could cost the credit card company more money, time and headaches than the average person.
So, they cut back on rewards and benefits and keep things simple so that they can minimize the risk of losing money because of your account.
The OpenSky Visa’s Rates and Fees
A credit card’s “rates and fees” refers to the interest rates and fees you’ll pay in the event you don’t pay of your balance in full every month, you make cash advance or you pay late or have one of your payments returned.
Here’s a quick list of the OpenSky’s rates and fees:
- APR for purchases and cash advances: 19.14%
- Deposit range: $200 - $3,000
- Annual fee: $35
- Cash advance fee: 5%
- Foreign transaction fee: 3%
- Late payment fee: $27
- Returned payment fee: $25
“APR” is short for “annual percentage rate,” which is the interest rate the credit card company charges you for any remaining balance you have after you make your monthly payment which, according to an OpenSky phone rep, is always the 19th of the month.
OpenSky calculates your interest rate on a daily basis. Basically, they divide your interest rate by 365, then multiply that number by the balance you have every day. At the end of the month, they add up all those little charges to calculate your interest payment.
Therefore, it’s wise to pay your balance in full every month. If you have a $200 balance every day for a year, then your interest payments for the year will be nearly $40. That doesn’t seem like much, but if you graduate to a better credit card with a higher limit, then that $200 balance could easily become $2,000, and your yearly interest payment could be $400 instead of $40.
The second most important part of the card’s fees is the security deposit of between $200 and $3,000. The security deposit is what makes this a “secured” card instead of an unsecured card. Your credit limit is equal to your security deposit and, in the event that you don’t pay your bill within five days of your due date, OpenSky can make your payment with the money from your deposit.
If everything goes well and you pay your bills on time, then you'll get your money back when you close your account. As OpenSky points out, your security deposit is pretty much identical to a security deposit you’d put down on an apartment.
As far as interest rates go for cards made for people with bad credit 19.14% is actually a pretty good rate, something we’ll cover in more detail in the comparison section of this review.
The card’s $35 annual fee is also reasonable, but there are other cards with better fees.
» For Further Reading: The Complete Guide to Credit Card Fees and How You Can Avoid Them
Comparing the OpenSky Secured Visa to Other Credit Cards for Bad Credit
There are dozens of credit cards for people with bad credit, so it’s important for you to know how the OpenSky compares to them.
The following chart shows you the some of the most important features of cards similar to the OpenSky:
|OpenSky||Indigo Platinum||Total Visa||Discover it Secured||Credit One Platinum|
|APR||19.14%||23.90%||29.99%||24.74%||19.74% - 25.74%|
|Rewards||None||None||None||2% on gas, 1% everything else||1% on everything|
|Security Deposit||$200 - $3,000||None||None||$200 - $500||None|
|Extra Yearly Fees||None||None||$75||None||None|
The OpenSky is the clear winner in this category because it has a single APR that’s lower than the best APR’s of competing cards. It is a full 10% lower than the Total Visa and 0.6% lower than the Credit One Platinum.
We also like how the card has no penalty APR, which is something that kicks in after your first late payment. The Indigo Platinum is the only card in the chart with a penalty APR. If you tend to pay late, then you’ll want to avoid that card.
The Discover it Secured is the best choice for annual fee because it has no annual fee. The Indigo and Credit One Platinum cards might give you a $0 annual fee but you’ll have to have better credit scores in order to get. Otherwise, your annual fee will most likely be higher than the OpenSky’s.
The OpenSky card has no rewards. In fact, only two of the cards in the chart have rewards. When we say “rewards”, we’re referring to cards that give you cash back or travel miles every time you make a purchase.
The rewards rate is usually expressed with a percentage. For example, the Discover it Secured has a 2% rewards rate on gas and 1% on everything else.
Normally, the fact that the OpenSky doesn’t have a rewards rate would be a huge drawback but, since most of these cards have a lower credit limit, you can’t really spend too much on the card at once and that limits your rewards-earning potential.
So, while this card has no rewards rate, we don’t see it as a huge drawback.
Security Deposit/Extra Fees
One of the defining factors for cards made for people with bad credit or no credit is the security deposit. Of the five cards in the chart, the OpenSky and the Discover it Secured are the only ones that require a security deposit. This might be a drawback for you if you don’t have any money in the bank or you don’t have enough extra money to make a security deposit and have money in your savings account.
In general, we believe the Open Sky is the best card without rewards and is on par with the Discover it and Capital One Platinum, especially considering that the card’s interest rate is so low and, in some cases, the annual fee will be lower than both the Discover and Platinum cards.
Also, of note is that the card has no annual fee, which gives it a distinct advantage over the Total Visa.
Bottom Line: Strengths and Weaknesses of the OpenSky Secured Visa
In our opinion, the strong points of this credit card are that it doesn’t require a credit check and its APR is lower than many of the credit cards made for consumers with bad credit.
The lack of a credit check means you’ll get the full benefit of any credit-score increases you get from adding unused credit to your credit report. The low APR means you’ll be paying less interest over time than you would with other cards.
The downside to the card is that there are no rewards. For example, the Discover it Secured’s rewards rate can earn you at least $60 in rewards each year if you can spend $500 a month.
In general, we think this card is an excellent choice because it provides a good mix of APR, annual fee and yearly fees. If you want to learn more about the other options you have, read through our breakdown of the pros and cons of some of the best secured credit cards for bad credit.