Home > Credit Card Reviews > A Credit Card That Wants to Teach You How to Use It

Comments 0 Comments

Consumers with low credit scores often have to deal with limited access to credit. After all, they are by definition risky customers for creditors to do business with because their history has shown they are less likely to repay their debts than borrowers with good credit.

Unfortunately, that also means that when credit is available to subprime borrowers (traditionally, those with credit scores lower than 680), loans and credit cards tend to come with higher interest rates and far fewer perks. And some subprime credit cards can be downright predatory in the extra fees they heap onto borrowers.

LendUp, a Silicon Valley-based startup focused on expanding access to safe credit for traditionally underbanked consumers, is trying to change that through its new L Card, which is currently available on a limited basis only.

The card offers credit lines between $300 and $1,000, features an annual percentage rate (APR) between 19.99% and 29.99% with annual fees between $0 and $60 (based on creditworthiness), according to Leslie Payne, head of corporate affairs and social impact for LendUp.

Those interest rates are significantly higher than the average interest rate for all credit card accounts, which is just over 12%, according to the Federal Reserve, but are in keeping with subprime credit card rates, which are traditionally higher.

Where LendUp really stands apart is in their education offerings. Accountholders can take roughly a dozen classes aimed at improving their credit scores and understanding of everything from reading a credit report to protecting their identity online. Those classes can count toward a customer’s increased credit line or lowered APR, Payne said, as can on-time payments and general good management of the card.

“With other cards, you don’t know what you have to do for how long to know when you get a credit increase or a reduction in [APR],” Payne said. “We want to make that process as clear as possible.”

The card has no hidden fees and a grace period for payments, which, as Payne pointed out, can be uncommon among subprime cards. LendUp also provides a smartphone app that lets users freeze charges in case of loss or theft, and a “financial health meter” that TechCrunch.com said “clearly shows how much credit the customer has left to spend.”

“LendUp’s mission is to provide anyone with a path to better financial health,” Payne said.

Besides the L Card, LendUp also offers a variety of loan products. Payne said the company is still focused on learning and will make the L Card more widely available at a later time.

Looking for Credit? 

Remember, no matter what credit card you are considering, it’s important to read the full terms and conditions carefully to be sure it’s right for you. And it’s also a good idea to avoid charging more than you can afford to pay off in full (and on-time) at the end of the month, particularly if you’re focused on building your credit. High credit card balances can hurt your scores. Not to mention, credit card interest can quickly add up. (You can calculate the lifetime cost of your current debts here.)

If you have so-so credit, there are many steps you can take to make improvements, starting with checking your credit scores regularly and requesting your free annual credit reports every year at AnnualCreditReport.com. You can also get your own personal credit report card at Credit.com, which offers you two free credit scores, updated every 14 days, plus a personalized report that tells you how you’re doing in the five key areas that are included on your credit report and determine your credit score: payment history, debt usage, credit age, account mix and inquiries.

Image: ASIFE

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team