Review of the Wells Fargo Secured Credit Card

A Secured Card With a Modest Annual Fee But High Interest Rate

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If you're a Wells Fargo customer who needs to either build your credit or rebuild a bad credit history, then a Wells Fargo Secured Card may be the way to go. With Wells Fargo, a deposit is required to secure the credit limit, which makes you more likely to be approved for one. Also, the interest rate and annual fee are relatively low for a secured credit card.

About the Wells Fargo Secured Card

To get the card, you'll need to pay a minimum security deposit of $300. Your deposit is placed in a collateral account and held there in case you default on your payments. Once you make the security deposit, you can't use those funds for anything else until your account is closed or upgraded to an unsecured card.

Even though you're making a deposit to secure the credit limit, you're still required to make your monthly payments on time. Keeping your account in good standing will help you qualify for an upgrade. The good news is, if your account is upgraded, Wells Fargo will refund your security deposit.

The advantage of going with Wells Fargo is that it has the distinction of allowing customers to make a higher maximum security deposit than most other financial institutions do for secured credit cards. You can make a security deposit of up to $10,000 and receive a credit limit in the same amount.

Also, the bank will share your credit card account activity—including your credit limit, balance and payment history—with the three major credit bureaus. Therefore, if you use your credit card responsibly, this will help you qualify for a better-unsecured credit card in the future.

Wells Fargo Secured Card Pricing

Interest rates on the Wells Fargo Secured Card fluctuate, but if you're considering signing up for the card, you should compare the bank's interest rate to current interest rates for other institutions competing for secured credit cards. Typically, the interest rate is 19.99 percent which is considered fairly high. You should also find out the interest rate Wells Fargo has set for purchases, balance transfers, cash advances, and overdraft protection advances made with the card. Of course, you can (and should) avoid paying interest on your account by paying your balance in full each month.

Also, don't forget to find out what, if any, the annual fee is for the secured credit card. It most cases it is a modest $25. With the exception of the annual payment, you can avoid fees on the Wells Fargo Secured Card based on how you use your card. If you pay in full—and on time—each month you can avoid interest and late fees. If you can, avoid balance transfers and cash advances (which are 5 percent of the balance) and don't use your card for overdraft protection—these all incur interest fees which can add up.

Also, avoid using the card for purchases in a foreign currency which can be costly.

The Bottomline

The Wells Fargo Secured Card is an option worth considering if your goal is to build a bigger credit limit. That said, if the restrictions of a secured credit card aren't a good fit for you and you don't qualify for a traditional credit card, you'll need to have to rebuild your credit the old-fashioned way. That means paying off all of your debts, scrutinizing your credit report to remove any errors, and waiting the necessary amount of time (which could be up to 10 years) until all blemishes fall off of your credit report.

If that process doesn't appeal to you, you might want to rethink your position on secured credit cards.