Most of us have heard or used traditional credit cards and debit cards. But not many people (especially US immigrants) know of the existence of credit cards with security deposits or also known as “secured” cards.
Debit and Credit Card
As you know, the debit card is a card that uses the money we have deposited in the bank, that is, when you make purchases with that card you are actually using money available in your account.
Credit cards, unlike debit cards, use money from the bank that lends to us for certain number of days and if you pay the total amount purchased in the period, no interest is charged. Interest is only charged when the total amount utilized in the previous billing cycle is not paid fully.
What is a Card with Security Deposit?
This card is most recommended especially for immigrants in the U.S. wanting to build a credit history in USA, as it gives the advantage of being able to purchase services that only people with a history can get.
You basically deposit the amount you want to have as a credit limit, say $500, into an account at the issuing bank. The bank puts this money into a special account that you do not have access to, as long as the card is valid and the bank does not decide that it “already trusts” you and returns the money, changing the card from “secured” to a “regular” credit card.
Why not ask for a regular credit or debit card?
Using a debit card in the U.S. does not help in building credit history. It can only be built by utilizing a credit product, whether it’s a regular, secured, personal, auto, or home loan card.
In the absence of credit history, it is difficult to get a regular credit card (but not impossible), so a good alternative is a secured credit card especially for immigrants.
BankAmericard Secured Deposit Card
One of the best secured cards in the USA is the BankAmericard Secured Credit Card offered by Bank of America and highly recommended for migrants.
This card comes with many advantages:
Credit limit from $300 to $10,000* dollars
The limit is $300 to $4,900, but you can talk to the bank and increase the maximum limit to $10,000*.
Cash Back Rewards Program
This card has the advantage that when you buy gas with it, 3% of what you spend accumulates as cash. Shopping in supermarkets returns 2% of what you buy and everything else 1%. But it is worth mentioning that 3% and 2% requires a quarterly spend of $1,500. If you increase your spend then it drops to 1%.
Extra bonus when cashing out rewards to a Bank of America account
If you have a Bank of America account, either checking or savings, and you request that the accumulated rewards be deposited into that account, you get an extra 10%. So considering the above the rewards, you would actually get 3.3%, 2.2% and 1.1%.
Extra reward program with participating companies
There is an extra bonus program called BankAmeriDeals, these rewards are targeted to specific merchants, usually with some validity and are only for a single use. For example, 5% cash back at Autozone or 10% cash back when paying with the card at Chili’s.
The card can be converted to a regular card after 12 months
Other secured credit cards never change their status and no money is recovered until the card is cancelled. With Bank of America, this card can change to regular after 12 months of good use of the card. This “conversion” is automatic. But people who change their credit card after 10 months and others who ask that their change be considered before 12 months, their applications are marked in their credit report. This lets other credit bureaus know that they made the request. This is known as a ‘hard pull’ in the history which affects the score.
Some of the disadvantages of this card are:
You have to pay an annual charge
The annuity on this card is $39. Not much, if we consider all that it offers and with the rewards you can pay that annuity and most importantly it helps (especially US immigrants) in building credit history. However, there are many cards in the U.S. that do not carry annual fee. On the other hand, even when the card becomes regular, negotiating for waiving-off the annuity in some cases is not possible.
Increasing the limit puts a mark in the credit history
This doesn’t seem right. If you deposit more money to increase the credit limit of the card, you put a hard pull on your credit history in credit report bureaus that registers individual’s credit information (TransUnion, Equifax and Experian). So it is recommended to set the limit at the time of application to avoid any sort of negative points in the history. This helps later when ordering other unsecured cards from BoA or other card companies.
The money deposited is not available for 12 months
This is a point that puts many people at a disadvantage. In the event of an emergency and a need for money, the card must be cancelled (if less than 6 months old) to receive the deposit back. Remember also that, if the card is not used properly, the bank may not want to change the card to a regular one since you are a risky customer.
They usually issue a card with no rewards.
Even though you receive a regular card with no rewards, you can log into your account online and request a secure chat to have it exchanged for a rewards card. If all goes fine (and you are lucky) they will send you a new card.
How do I get my card as a foreigner?
Bank of America allows foreigners to obtain checking accounts, savings and even credit cards with security deposits.
The requirements are:
- Physically visiting Bank of America branch
- Valid passport
- Valid visa
- U.S. Address (indicates that the permanent address is in the country of origin and that you are not a U.S. citizen)
- Mention if you want a savings account too (recommended to get an extra 10% reward and to be able to pay your credit card online)
- Money to maintain the average account balance ($300* in the savings account)
- Money for the desired limit (minimum $300*)
- You do not need to have a Social Security Number (SSN) or an Individual Tax Identification Number (ITIN).
FAQs on BankAmericard Secured Credit Card
Is it true that building a credit history is not possible, if you do not have Social Security Number (SSN)?
Bank of America reports to all 3 major agencies and it reports – the person’s name, date of birth, U.S. address, type of product (credit card and identifies it as a “secured credit card”), card usage, limit, maximum usage and payments (also any delays in payment, which greatly affects history).
Does BoA report information to my origin country?
If there is an agreement of financial communication between country of origin and BoA and the requirements for such exchange are met, then the account, amounts, interest, etc. that generates the money deposited in the U.S. will be reported. Please see your country’s requirements. Sometimes it’s because you have X amount of money deposited and sometimes it’s because you generate Y interest in the account. U.S. savings accounts give very little interest on the money kept in the bank account, so if it’s only for interest, it’s hard to report.
What to mention when there is no income in the United States?
In the United States, people are trusted, and just as there is trust, people who lie in their applications can face many problems. So recommendation is to always speak truth with the bank executive, indicating that there is no income in the U.S. and that the income is equivalent to monthly or annual dollars as requested.
Why proof of income is not asked?
Normally if you report income within the normal range and the use of the card does not show anything different, they do not require proof. If anything changes, this may generate alerts to the bank and may require proof of income or the bank may cancel the credit product.