About Wells Fargo Secured Credit Card

By J.R. Duren
HighYa Staff
Published on: Oct 15, 2018

The Wells Fargo Secured is a credit card for consumers with bad credit scores who are looking for a starter credit card that can help them build their credit and move on to better cards.

The bank includes the card in the “Build Credit” section of credit cards, which also includes the Cash Back College card and the Platinum card.

As someone who has bad credit scores, you aren’t doomed to them for the rest of your life. You can use a card like the Wells Fargo Secured to raise your credit scores but you need to know what the card offers and how it works in order to do that.

In this review, we’ll help you understand the important features and fees of the Wells Fargo Secured and, amid our analysis, we’ll give you some solid tips about how you can use the card to build credit.

We’ll also compare it to other secured credit cards so you can see how it compares and to let you know there are other options aside from this card.

Normally, our credit card reviews cover a card’s rewards and benefits first. In the case of secured cards, we change that up because most cards for bad credit don’t offer rewards. So, we like to start out with the card’s rates and fees to help you see how much it can cost you and to show you what you can do to avoid interest payments and the various fees a card charges.

The Wells Fargo Secured’s Rates and Fees

When you apply for credit cards you should you always take a look at the rates and fees. While this part of credit card shopping isn’t glamorous, it’s essential to your understanding of how the card could hurt you if you, for example, pay late or you carry a balance.

Here is a quick list of this secured card’s interest rates and fees:

  • Minimum deposit: $300
  • Purchase and balance transfer APR: 20.99%
  • Cash advance APR: 25.99%
  • Cash advance/balance transfer fee: 5%
  • Overdraft protection: $12.50/$20
  • Foreign transaction fee: 3%
  • Late/returned payment fee: Up to $37
  • Annual fee: $25

Because the card is a “secured” card, it requires a security deposit, much like you’d have to pay if you were moving into an apartment. The money goes into a Wells Fargo “collateral account,” which is an account that exists only to hold your deposit and allow them to access it if you decide not to pay your credit card bill.

Of note is that Wells Fargo requires you to deposit at least $300, whereas most cards require between $200 and $250 (more on that later).

It’s important to remember that, according to Wells Fargo’s fine print, the bank may take the money out of your account as soon as you’re approved. So, whichever bank account you listed to pay your security deposit needs to have in it the amount you said you’d deposit.

The card’s APR of 20.99% is high when you compare it to mainstream cards for people with good credit but it’s a relatively reasonable APR for a card designed for those with bad credit scores.

An advantage to this card as opposed to a card with a range of APR’s – 11.99%-24.99% – is that you know what your APR will be if Wells Fargo approves you. Cards with a range of APR’s won’t let you know what your rate is until you’re approved – you have no idea what it will be.

Now, remember that your APR only kicks in if you don’t pay off your balance in full every month. So, if your balance is $500 and you only pay $50, the APR will be applied to the remaining $450. One month of 20.99% interest on a balance of $450 is around $7.87, which doesn’t sound like a lot but, if you pay, say $8 a month for a year, you’ll have paid nearly $100 in interest.

Smart consumers will avoid carrying a balance and will only use their card to pay for things they can pay back at the end of the month. Now, if you’re in a financial jam and your credit card is the only way out, 20.99% is decent for a secured card.

Keep in mind that, should you use the card when you’re in a foreign country, Wells Fargo will add a 3% fee to every transaction you make.

The Wells Fargo Secured Card’s Benefits

This credit card’s main benefit is that Wells Fargo is willing to upgrade you to an unsecured credit card (they’ll return your security deposit) at their discretion.

Here’s what their fine print says in regard to this benefit:

“With responsible credit card use, you may become eligible for an upgrade to an unsecured Wells Fargo credit card. There is no pre-set time frame for upgrade and not all accounts will qualify.”

In other words, Wells Fargo can upgrade you but they’re going to decide when and there seems to be no set timetable you can aspire to in order to get the upgrade.

Based on our research, though, we believe that the best way to set yourself up for an upgrade to an unsecured card is to pay your bill on time every month and, when possible, in full. Doing these two things will show Wells Fargo that you have the financial discipline to make on-time payments and that you have enough money in to pay off your balance, two things that point to financial stability.

Other benefits the bank gives you are access to your credit score, which is really helpful for you to check once a week to find out how your credit scores are doing. Granted, this benefit is something every mainstream credit card gives you but, either way, it’s a crucial part of you building good credit.

Checking your credit scores every week keeps you aware of increases as well as decreases that may result from late accounts you forgot about or accounts someone else opened in your name.

How the Wells Fargo Secured Card Compares to Other Secured Cards

There are dozens of options for secured credit cards. The following table includes some of the secured cards we’ve reviewed, along with data regarding their most important features, rates, and fees:

Wells Fargo Secured OpenSky Citi Secured Discover it Secured Harley Davidson Secured
APR 20.99% 19.14% 24.49% 24.74% 24.99%
Penalty APR None None 29.99% None None
Annual Fee $25 $35 None None None
Late Fee Up to $37 $27 Up to $35 $0/$37 Up to $38
Rewards None None None 2% on gas, 1% everything else 1% on everything
Security Deposit At least $300 $200 - $3,000 $200 - $2,500 $200 - $2,500 $300 - $5,000

It’s best to view this table as a way to figure out which card would be best for your particular financial situation. For example, one very easy way to separate these cards is by their security deposit. If you’re someone who has $200 to spare but not $300, then the Wells Fargo card is not the right card for you.

If you’re someone who always pays late, then the OpenSky is a great choice because the late fee is only $27 which can save you $50 over the Wells Fargo card if you pay late five times a year.

If you want to try out a card with rewards, the Discover it secured card is the way to go because it offers the most rewards per year and, as a bonus, they’ll double the rewards you earn the first year.

Where does the Wells Fargo card fit in all of this? We think it's a great card for someone who carries a balance, as the APR is low compared to the other secured cards. We also think it’s a great card if you want to build your credit and “graduate” to an unsecured card. The OpenSky, Harley, and Citi cards don’t offer that option.

Another scenario in which this card is a good fit is if you’re loyal to Wells Fargo and you want to keep all your financial products in-house, including any cards you might graduate to in the future.

» See Also: Best Credit Cards for Bad Credit: Pros and Cons of 5 Popular Cards

How You Can Use the Wells Fargo Secured Card to Your Advantage

As we’ve pointed out in this review, the Wells Fargo card is a good fit if you’re loyal to the bank, you carry a balance or you want a card that will help you move up to an unsecured card.

In general, we believe that the point of cards like these is to build your credit so you can, one day, get a credit card that doesn’t require a security deposit, has lower interest rates and provides rewards.

So, as a Wells Fargo Secured cardholder, you need to remember a few things. First, your credit scores are the main determining factor when a lender is deciding to give you a credit card and what your interest rates will be.

With that in mind, when you get this card, only spend what you can pay back. This way, you’ll have the financial means to pay off your balance every month. If you really want to speed up raising your credit scores, then pay the card off every week instead of every month. The lower you can keep your balance in relation to your credit limit, the higher your scores will be.

Second, always pay on time. The occasional late payment won’t hurt your credit scores but it will cost you up to $37 in late fees. When you’re more than 30 days late, your credit scores will drop and you’ll lose all the progress you made previous to the late payment.

Our advice is to sign up for automatic payments, which will be an easy thing to do if you have a Wells Fargo checking account. The bank will give you the option of making the minimum payment, the entire balance or an amount of your choosing.

At the very least, choose to make the minimum payment, as that payment will rise and fall depending on how big of a balance you have and how much interest you owe.

If you’re able to pay on time and keep your balances low, there’s a good chance Wells Fargo will upgrade you to an unsecured card, which means you’ll get your security deposit back and you’ll get a better credit card.

» For Further Reading: How to Get and Keep a Good Credit Score

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