While the Indigo card can help you build credit, it can come at a cost. You could face a high annual fee, and for a card dedicated to credit-building, the Indigo card lacks some standard features. Similar cards with lower fees and better credit-building benefits might be more appealing.
Credit limit: Hard to keep credit utilization low
You gain access to the Indigo Mastercard credit limit without a security deposit, making it an unsecured card.
But the small $300 credit limit can be inconvenient because it doesn’t give you much flexibility to make purchases. Your annual fee and purchases will all cut into your credit line. For instance, carrying a balance of just $90 would give you a 30 percent utilization ratio. A balance any higher than that could result in a credit utilization ratio that might negatively impact your credit score.
Fees: Additional costs add up
When you apply for this card, the issuer will assign you one of three possible annual fees:
- $0
- $59
- $75 the first year, $99 thereafter
Your credit score ultimately determines your annual fee, and Indigo doesn’t specify in the cardholder terms whether your annual fee will change as your credit score changes.
Keep in mind that your annual fee initially eats into your $300 credit limit, which can make it more difficult to maintain a low credit utilization ratio.
If you are approved for the card but have an annual fee and your credit score improves while you’re an Indigo Mastercard cardholder, consider applying for another card. Find a new card that’s available with fair or good credit and consider closing your Indigo card account once you get the new card. Keeping your sights on better, more affordable cards will give you a milestone to work toward and familiarize you with the many rewards and perks available.
One highlight of the card’s rates and fees is its foreign transaction fee. The Indigo card comes with a low 1 percent fee for every international transaction, outpacing the typical 3 percent fee found on most other cards. Although the card is not exactly a no-foreign-transaction-fee card, 1 percent is a solid rate for a non-travel credit card.
Ongoing APR: Expensive for carrying a balance
The Indigo Mastercard has a regular APR of 24.90 percent for purchases and a 29.90 percent APR for a cash advance, and missing a payment can bump your interest rate up to the 29.90 percent penalty APR. You’ll also face a late payment fee of up to $40. These rates and fees could hinder your credit-building progress if you happen to carry a balance on your card or miss a payment.
However, you do receive a 0 percent cash advance fee for your first year (then $5 or 5 percent of the total transaction amount, whichever is greater, but must not exceed $100). Despite this first-year offer, you might want to avoid large cash advances if you have bad credit. After the first year, you will pay interest on the cash advance starting on the transaction date, which can really stretch your credit limit. When rebuilding credit, you should keep costs low within a manageable budget.
Credit-building features: Limited benefits
This card lacks some attractive features that could be helpful for people working on their credit history. You won't find perks like an automatic review of your account for a credit line increase, free monthly credit reports or customizable payment plans.
Instead, the Indigo card only offers two basic benefits for credit-builders: a soft credit pull to prequalify and reporting credit activity to all three credit bureaus. These two features can be advantageous. For instance, by prequalifying you can get a sense of your approval odds for this card and it won’t impact your credit score.
However, prequalification does not equal approval. Formal approval will still require a hard credit check, which may lower your score a bit.
Also, building your credit becomes easier when a card reports your activities to all three major credit bureaus (TransUnion, Equifax and Experian). If you use the card responsibly by making payments on time, you’ll be on the road to establishing good credit and getting credit cards with valuable rewards programs and other benefits.
However, you can find these same features on credit-building cards that offer additional benefits such as credit line increases. While you may have to switch to a secured credit card to enjoy extra credit-building perks, there are plenty of unsecured cards, like the Mission Lane Visa® Credit Card, that carry these benefits too.