Merrick Bank Secured Credit Card review: A low-interest card for credit-builders

If you’re new to credit, the Merrick Bank Secured Credit Card can help. It’s a no-frills card that comes with one of the lowest variable APRs around, making it a good low-interest credit card if you plan to carry a balance each month. And Merrick Bank’s online financial literacy portal comes with an impressive amount of free and easy-to-use content that can empower you to make great financial decisions.

Since it’s a secured credit card, you’ll need to put down a security deposit, which will be your credit limit and acts as collateral in case you’re unable to pay off your balance. This isn’t the best fit if you can’t afford to tie up anywhere from $200 to $3,000 in funds, but with responsible use, the Merrick Bank Secured card can help you raise your credit score and open the door to more credit cards, including unsecured credit cards that can do more for you beyond helping grow your build credit.

Quick highlights

• Rewards rate: None
• Welcome offer:  None
• Annual fee: $36 the first year. Billed $3 per month thereafter.
• Purchase intro APR: N/A
• Balance transfer intro APR: N/A
• Regular APR: 21.70 percent variable

Current welcome offer

The Merrick Bank Secured card doesn’t have a welcome offer, which isn’t unusual for a credit card designed for credit building. The Discover it® Secured Credit Card is one of the few secured credit cards that comes with a welcome offer, automatically matching all the cash back you earn in your first year of use. And since it also offers rewards and charges no annual fee, it’s a viable alternative to the Merrick Bank Secured card, especially if you plan to pay your balance in full each month. If not, Discover’s variable APR is much higher and could make it harder to keep up with your credit card payments, slowing down your progress to better credit.

Rewards rate

This card also doesn’t earn rewards. It instead focuses on providing access to credit and giving you a chance to show off good credit habits. This can lead to better credit cards that come with enhanced features like sign-up bonuses, cash back rewards and intro APR offers.

Most credit cards that earn rewards require good credit and come with higher APRs. So even though it doesn’t earn rewards, the Merrick Bank Secured card is still a standout option for you if you are rebuilding your credit score.

Like most credit-building cards, the Merrick Bank Secured Credit Card doesn’t come with many perks, but its variable APR is a standout feature that will make the card an appealing option for many.

Low interest rate

It’s always a good idea to pay your credit card balance in full each month to avoid interest charges, but that’s not always possible. In fact, most Americans carry a balance, according to data from the American Bankers Association. If you’re in a similar situation, a low-interest credit card can help cut down on the amount of interest you pay over time.

The Merrick Bank Secured card carries a competitive variable APR of 21.70 percent. This is impressive since most credit cards—from the best credit cards for bad credit to the top rewards cards—tend to carry higher rates. Here’s how the Merrick Bank card stacks up against some similar credit cards:

Having a low-interest credit card is just one way to help you better manage your credit card debt, and the Merrick Bank Secured card can help save you a lot of money compared to other credit cards. But despite the impressively low APR, some people may not want to pay interest charges on a secured credit card. Your security deposit is actually collateral, and you’re still borrowing money each time you use the card. But it can still sometimes feel like you’re being charged interest on your own funds

So if you want to avoid interest entirely while carrying a credit card balance, the Secured Chime Credit Builder Visa® Credit Card * could be a better fit. It charges no interest and even skips the annual fee as well, which makes it easier to save money and focus on credit building. Another perk of the Chime card is that you can use the money you deposit in your account to pay your balance instead of having it held as collateral.

Educational tools

Improving your financial literacy is the best way to build credit as quickly as possible and get the most value out of any credit card. The Merrick Bank Secured card comes with an impressive amount of learning tools to help you grow your financial awareness, including articles, videos and Money Sense learning modules. This financial education covers a variety of topics. Depending on your financial goals, you can learn how to pay off debt, buy a car, save for retirement and more. All this is free and easily found on Merrick Bank’s website.

The Merrick Bank Secured card charges an annual fee of $36. For your first year of use, this is charged to you in one lump sum, but after your first year, it’s broken into monthly payments of $3. For a lot of people, having the fee broken up into easily manageable portions can be helpful, as it can save you from having a surprise fee one month that throws your budget off track.

Not all credit-building cards charge an annual fee. But considering the Merrick Bank card’s low variable APR, this could be a small price to pay—especially if you want access to a low-interest credit card, which can help you save money if you aren’t able to pay your balance in full.

Here’s a look at how much more it would cost to carry a credit card with no annual fee but one with a higher variable APR:

If you can’t pay your balance in full, you could save more money each year with a low-interest credit card with a low annual fee like the Merrick Bank Secured card, especially if you carry a lot of debt on the card. To get a better idea of how much your could save with a low-interest credit card, use a credit card payoff calculator to get an idea of how much it will cost to pay off debt for different credit cards based on the card’s variable APR and your own budget.

On top of the annual fee and variable APR, the Merrick Bank Secured card also comes with a few other fees like a foreign transaction fee, late payment fee and returned check fee, which are pretty typical. There are credit cards that can help you avoid foreign transaction fees, but you’ll need to make sure you’re able to pay your credit card bill on time each month to avoid the other fees.

The Merrick Bank Secured card is a solid pick, thanks mainly to its low APR. Even if you were hoping for an unsecured credit card, this card is worth considering if you don’t think you can pay your monthly credit card balances in full. But if you don’t plan on using a credit card often and can keep your balance paid off each month, the Merrick Bank Secured card may not be the best fit for you. Here’s a look at two credit-building alternatives that can’t consistently match this card’s low APR but charge no annual fee and offer rewards.

Merrick Bank Secured Credit Card vs. Discover it® Secured Credit Card

The Discover it Secured card stands out from other secured credit cards because it does more than just help build credit. Depending on your spending habits, the card’s Cashback Match offer gives you the chance to earn one of the highest cash back sign-up bonuses around, which is an impressive perk to find with a secured card or any credit-building card.

This card also earns rewards on all of your purchases and even offers bonus cash back on gas and dining purchases. As long as you can pay your balance in full and avoid the card’s high 27.24 variable APR rate, this is a great chance for credit-builders to practice good credit habits and enjoy a couple of features not typically found with the best secured credit cards.

Merrick Bank Secured Credit Card vs. Petal® 2 “Cash Back, No Fees” Visa® Credit Card

The Petal 2 “Cash Back, No Fees” Visa Credit Card is one of the best credit-building cards available thanks to the fact that it doesn’t charge many of the common credit card fees. Unlike the Merrick Bank Secured card, you don’t have to worry about an annual fee, late payment fee, returned payment fee, or foreign transaction fee. On top of that, you can earn up to 1.5 percent cash back on all purchases with good credit behavior. Earning higher rewards after making a number of consecutive payments can be a helpful way to encourage good credit card habits.

The Merrick Bank Secured Credit Card is more accessible, so even if you are rebuilding credit, it’s an option for you. But the Petal 2 card is geared toward people with no credit or fair credit. It’s a card you can get if you don’t have a credit history, but if you do have one, and your credit report shows a history of late payments or bankruptcies, you may not qualify for the card.

Best cards to pair with the Merrick Bank Secured Credit Card

Learning how to use multiple credit cards can take some time. Since this is a credit-building card, it’s a good idea to avoid trying to pair this with other credit cards. Instead, practice good credit habits with just one card: Make on-time payments and keep your credit utilization to a minimum since these are the two biggest factors that can impact your credit score. Once you’ve grown your credit score, you’ll be ready to choose a new credit card. You should apply for an unsecured credit card that fits your new credit score and offers better features and benefits. Once you’ve been approved for that card, you’ll need to start thinking about whether you’re going to keep your secured credit card open.

Merrick Bank may offer you a chance to upgrade to its unsecured credit card, but it comes with a higher APR and doesn’t come with many perks. So you may not want this card and will probably want to close your account once you’ve upgraded to an unsecured credit card. After all, if your account is in good standing, you’ll get your deposit back, which may bring some much-needed relief to your budget. But it may also cause your credit score to drop since your available credit will decrease when you close the account. This may impact your ability in the short term to add any more cards to your wallet.

No matter what you decide to do with your secured card, before pairing credit cards, it’s a good idea to wait between credit card applications. Applying for too many credit cards at once can lead to denials since each hard credit check could decrease your credit score, but also because too many applications in a short period of time doesn’t look good to credit card issuers.

Yes, this is a solid option for building credit, especially if you are working on your score and struggle to qualify for unsecured credit cards. But even if you’re new to credit or have fair credit, this card may still make sense if you are like a lot of people who tend to carry a credit card balance.

Despite the card’s annual fee, the variable APR is one of the best available rates around, and you could end up saving more money with a low-interest secured card like the Merrick Bank Secured card than you would with a no-annual-fee credit card that comes with sky-high interest rates.

*The information about Secured Chime Credit Builder Visa® Credit Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.