Building credit anew or rebuilding credit after some sort of financial disaster can be a struggle. It’s often a chicken-and-an-egg situation in which you can’t get a good credit card because your credit is so bad – on non-existent – and you can’t build or rebuild your credit because you can’t get a good credit card.
Several credit-card providers have stepped into that void with cards that help you establish credit when you’ve never had it, or which will help you rebuild credit after you’ve destroyed yours originally.
One of those providers – Merrick Bank – is probably best avoided. It offers two cards that are only for consumers who’ve been invited to apply: Merrick Bank Visa and Merrick Bank Double Your Line Visa … but after reviewing these cards, I can assure you that, if you need a credit card for building or rebuilding your credit, far better options exist from Capital One and Citibank.
Merrick bank Credit cards – Everything you Need to Know
First, note that everything below applies only if you’ve received a pre-approved offer for a credit card from Merrick Bank. You cannot simply go online and apply, as you can with most other credit cards.
If, after reading this review you ultimately decided you want a Merrick Bank credit card (and, really, there’s no reason you should want one) then the best approach is to apply for a Merrick Bank Secured Platinum Visa, and then request an upgrade to either the traditional Merrick Bank Platinum Visa (not the secured Visa), or the Merrick Bank Double Your Line credit card.
There’s not a lot of information on either card on the Merrick Bank website. So this information, based largely on previous offers and Merrick Bank credit card agreements, might not be entirely accurate and up-to-date, though Merrick’s current offer will likely be similar.
Let’s start with the Merrick Bank Double Your Line card since it at least has a hook that seems interesting.
Merrick Bank Double Your Line Credit Card
The premise is simple: If you make at least the minimum monthly payment – on time – for the first seven months, then Merrick Bank will automatically double your line of credit.
The benefit of this isn’t just the idea that you have access to more credit … it’s that the access to a higher line of credit will automatically decrease your credit utilization, and a low credit utilization is beneficial to your credit score.
Here how does it work mathematically:
Let’s say your initial credit line is $1,000. And at the end of seven months you have a balance of $200 on your card. That’s a credit utilization rate of 20% ($200 / $1,000).
But if you’ve made timely payments in the first seven consecutive months you own the card, Merrick doubles your credit line to $2,000 … and suddenly your credit utilization immediately falls to just 10% ($200 / $2,000).
And credit reporting services such as Equifax, TransUnion and others like to see a small and falling credit utilization rate. To find more about credit utilization, check out this article.
The problem is that this Merrick Bank credit card is larded with fees.
There is, for instance, a one-time set-up fee of $75, and there’s an annual fee of up to $96 in the first year, and $8 a month thereafter (which is the same $96 a year). And if you want an additional card for a spouse or family member, that’s another $12.
Merrick Bank Platinum Visa Credit Card
There’s nothing to say about this card other than the fact that it charges the exact same fee structure, but does not offer the Double Your Line benefit of the previous card.
Actually, this card offers nothing but fees for access to a credit card. There truly are zero reasons to like this card, and about 171 reasons to hate it – namely the $171 in fees you will pay in the first year just to have this card.
Totally and utterly useless.
What You Need to Know Before You Apply for the Merrick Credit Cards
As I mentioned previously, except for the Secured Visa you cannot apply for any Merrick Bank credit card unless you have received a preapproval offer.
Also, be completely aware of the fee structure Merrick is charging. The setup fee, in particular, I find disquieting. Having written about personal finance for years, I completely understand that consumers with no-credit or bad-credit present a greater default risk. But what Merrick is doing is a pursuing a strategy called “fee harvesting,” which is, to me, as morally repugnant at it sounds.
Fee-harvesting banks regularly target (take advantage of?) consumers who struggle to access credit, knowing that credit and credit scores are imperative these days and that consumers will jump at a chance to obtain a credit card.
These are consumers who often can least afford the fees, and, as such, are hit the hardest financially by the fees that Merrick charges.
If you are one of those consumers, you must consider a different card that will treat you more fairly.
Is Building Credit with Merrick Bank Credit Cards a Good Strategy?
The short answer: absolutely, unequivocally no!
Fee-harvesting banks regularly target (take advantage of?) consumers who struggle to access credit, knowing that credit and credit scores are imperative these days and that consumers will jump at a chance to obtain a credit card.
These are consumers who often can least afford the fees, and, as such, are hit the hardest financially by the fees that Merrick charges.
If you are one of those consumers, you must consider a different card that will treat you more fairly.
Which Credit Cards Are Better than Merrick Bank Credit Cards for Building / Rebuilding Credit?
There are two approaches here: a secured credit card or a traditional credit card.
Secured cards require that you essentially prepay your spending. With most of these cards, you pay a security deposit equal to your credit line, and you can then spend during the month up to that secured credit limit.
You pay off the card each month, just as you would with a normal card – which helps you build your credit score. When you close the account, your security deposit is returned.
A traditional credit card is, well, a traditional credit card, though usually with a very low limit that serves a couple of purposes:
- It helps you keep from getting yourself into trouble while still allowing you access to credit, and without having to tie up money in a security deposit
- And it limits the bank’s financial risk tied your potential default.
Best Secured Credit Cards to Consider
If you want to start with a secured credit card, then one of the absolute best is the Capital One Secured Mastercard.
First and foremost, if charges no setup fee and no annual fee, unlike the Merrick Bank credit cards.
Moreover, the Capital One Secured Mastercard requires that you deposit just $49 for access to a $200 credit line – one of the only secured credit cards that doesn’t require a dollar-for-dollar match between deposit and credit line. (Depending on your current creditworthiness, the initial deposit can be as much as $99 to $200).
Also, Capital One will double your credit line after just five months of consecutive, on-time payments.
It’s crystal clear that a Capital One Secured Mastercard is, hands down, a far better option than any Merrick Bank credit card.
Citibank offers a similar Citi Secured Mastercard that imposed no annual fee or startup costs. However, it requires an initial security deposit of $200 to $2500 and the follows the traditional dollar-for-dollar approach to your credit line, meaning that if Citi requires, say, a $250 security deposit, then your credit line is $250.
That makes the Capital One Secured Card a better option, to me. It’s best for people who are rebuilding bad credit.
Best Traditional Credit Card for Bad/No Credit
In terms of a traditional credit card – especially for consumers who are just starting out with their first credit card – you can’t go wrong with the Capital One Platinum card.
This Capital One credit card offers a higher initial credit limit of at least $300. There’s no annual fee, and you get the same benefit of Capital One automatically doubling your credit after five consecutive, on-time monthly payments.
For a more complete roundup of the best credit cards for consumers just starting out with credit check out this article: The Best First Credit Cards You Should Apply For.
The Wrap Up
The bottom line, here, is, I hope you see, plainly obvious.
The Merrick Bank credit cards – both the Merrick Bank Double Your Line Visa, and the Merrick Bank Platinum Visa – are not consumer friendly credit cards.
Sure, the Double Your Line card doubles your credit limit after seven months, and while that can be beneficial, both the Capital One Secured Mastercard and the Capital One Platinum Credit Card off the same benefit after just five months.
More importantly, as fee-harvester credit cards, the Merrick Bank credit cards, in my opinion, do more to benefit Merrick Bank than do to benefit you, the consumer.
If you are a consumer who is just starting out building credit – or you’re a consumer who’s trying to repair severely damaged credit – I see absolutely no logical argument for owning a credit card that charges you these kinds of fees when cards from Capital One, Citibank and others charge you no fees.
At the end of the day, the Merrick Bank credit cards a hard no / hard pass. If you need your first credit card or a credit card to rebuild your credit score and you happen to receive a preapproval letter from Merrick Bank announcing that you’re eligible for one of the Merrick Bank credit cards … do yourself a favor: Trash that preapproval letter (or trash the email) and, instead, signup for a Capital One Secured Mastercard or a Capital One Platinum Mastercard. They’re better for your financial health.