Advertiser Disclosure: Many of the companies featured here provide compensation to us. This is how we maintain our free service. 

Advertiser Disclosure: Many of the companies featured here provide compensation to us. This is how we maintain our free service. Compensation and in-depth editorial research, determines where & how companies appear below. 

Advertiser Disclosure: Many of the companies featured here provide compensation to us. This is how we maintain our free service. 

Advertiser Disclosure: Many of the companies featured here provide compensation to us. This is how we maintain our free service. Compensation and in-depth editorial research, determines where & how companies appear below. 

Learn More

Prosper® Card Review

Build credit with no security deposit. Annual Fee can be waived for one year and you may not wait long for a credit limit increase.

Prosper® Card Review

Learn More

Build credit with no security deposit. Annual Fee can be waived for one year and you may not wait long for a credit limit increase.

Editorial Disclosure: Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

Introduction

The Prosper Card emerges as a beacon of hope for individuals seeking to build or rehabilitate their credit history without the need for a security deposit. Crafted with the consumer’s financial progress in mind, this unsecured credit card offers the dual benefits of conventional credit access while fostering credit health. Its unique features, tailored for those with fair credit scores, aim to incentivize responsible financial behavior. This review dives into the specifics of the Prosper Card, providing insights into its welcome bonuses, rewards program, and the various perks it entails.

Welcome Bonus

One of the drawing attractions for new credit card users is the welcome bonus, a feature used by many issuers to lure potential customers into the fold. The Prosper Card takes a different route in this arena—instead of points or cash back, the incentive comes in the form of a financial reprieve. New cardholders are greeted with a $0 introductory annual fee if they sign up for automatic payments, a savvy move that not only spares them an immediate cost but also instills a habit of timely payments, which is crucial for credit score improvement.

Though the Prosper Card doesn’t offer the traditional points or cash bonuses found with other credit cards, this initial cost-saving measure is a substantial welcome offering for those keen on minimizing expenses while working on their credit. After the first year, a modest fee is introduced, which makes the initial waiver even more attractive. This welcome bonus does hinge on the cardholder’s commitment to using the auto-pay feature, thus aligning both the issuer and the consumer’s interests in a mutually beneficial way.

Earning Rewards

The Prosper Card is not your typical rewards card, as it places a significant focus on its function as a tool for credit building rather than on earning points or cash back. While some credit cards on the market are overtly designed to incentivize spending through reward programs, the Prosper Card takes a more strategic approach.

Instead of offering rewards for spending, the Prosper Card’s program emphasizes financial health and responsible usage. Cardholders are encouraged to make consistent payments and manage their credit effectively. The real reward here is the improvement of one’s credit score and the potential for a brighter financial future. By utilizing this card wisely, consumers can prove their creditworthiness, which, over time, can lead to offers from other credit products with more lucrative rewards systems.

In essence, while the Prosper Card may not provide the instant gratification of a points-based rewards program, it offers the foundational reward of building or repairing credit, which can be far more valuable in the long run for those working towards achieving a better financial stance.

Redeeming Rewards

When it comes to the Prosper Card, the concept of redeeming rewards takes a different shape compared to more traditional rewards credit cards. As noted earlier, the Prosper Card does not offer points, miles, or cash-back rewards which can be accumulated and redeemed. Hence, you won’t find a catalog of merchandise, travel packages, or gift card options typically associated with reward redemption.

What the Prosper Card offers instead is intangible yet potentially far more impactful in the long term. Each on-time payment and responsible use of credit is an investment in your creditworthiness. By maintaining a positive payment history and keeping balances low, cardholders effectively ‘redeem’ their good behavior for positive marks on their credit reports.

While this benefit might not provide the instant satisfaction of traditional reward redemption, the incremental improvements to one’s credit score can open doors to lower interest rates, higher credit limits, and approval for loans or credit cards that were previously out of reach. In the realm of credit rehabilitation, these strides are the real rewards, offering long-term value that can surpass the immediate gratification of redeemable points or cash back.

Perks and Benefits

While the Prosper Card might not entice with a typical rewards program, it does offer a range of perks and benefits that are valuable for cardholders focusing on credit improvement. These benefits include:

  • Credit Building Without a Deposit: Unlike secured credit cards that require a security deposit, the Prosper Card is unsecured, which means that cardholders can work on improving their credit without tying up their funds.
  • Automatic Credit Line Reviews: Prosper Card offers automatic account reviews to consider cardholders for credit line increases. This encourages users to maintain good financial habits, as responsible use can be rewarded with more credit availability.
  • Free Credit Score Access: Cardholders can access their credit score for free, promoting transparency and allowing them to track their credit-building progress.
  • Fraud Protection: The card includes standard fraud protection, which can give users peace of mind in case their card details are compromised.
  • Online Financial Education: Prosper provides cardholders access to financial education resources, helping them to better understand credit and learn how to manage it effectively.
  • Flexible Payment Options: The card offers flexibility with payment dates, which can be valuable for budgeting and ensuring payments are made on time.
  • $0 Liability on Unauthorized Charges: In the case of unauthorized transactions, cardholders are not held responsible, providing additional security.
  • Ability to Freeze Card: If the Prosper Card is lost or stolen, cardholders have the ability to freeze the card, preventing new purchases, cash advances, and balance transfers.
  • Annual Fee Waiver with AutoPay: By committing to automatic payments, cardholders benefit from a waived annual fee in the first year, which is a cost-saving perk for budget-conscious individuals.

While these ancillary perks do not equate to the tangible rewards that many other credit cards offer, they provide substantial support for individuals on the path to improved financial literacy and credit health. By leveraging these tools, cardholders can carve out a clearer path towards achieving their credit goals.

These benefits demonstrate Prosper’s commitment to helping consumers build or rebuild their credit mindfully and sustainably, rather than simply offering short-lived incentives. For the target audience of the Prosper Card, these financial education tools and security features can become cornerstones of a robust financial foundation going forward.

Pros and Cons

To provide a comprehensive review of the Prosper Card, let’s dissect its various advantages and limitations:

Pros:

  • Credit Building Without a Deposit: One major advantage is that the Prosper Card does not require a security deposit, which is a typical requirement for many credit-building cards.
  • No Initial Annual Fee with AutoPay: For new cardholders who set up AutoPay, the annual fee is waived in the first year, making it a cost-effective option.
  • Credit Line Increase Reviews: Responsible usage can lead to automatic reviews for credit line increases, rewarding good financial habits.
  • Access to Credit Score: Continuous access to one’s credit score helps individuals monitor and understand how their financial decisions impact their credit health.
  • Fraud Protection: The card comes equipped with standard fraud protection measures that safeguard against unauthorized transactions.
  • Freeze the Card Feature: The option to freeze your card can be invaluable in the case of loss or theft.
  • Educational Resources: Prosper provides resources aimed at educating cardholders on credit management and financial health, which can be instrumental for long-term success.

Cons:

  • Lack of Reward Points: Unlike many credit cards, the Prosper Card does not offer a points-based rewards program, which may be a deterrent for those looking for more immediate perks.
  • Annual Fee After First Year: Although the first year’s fee is waived with AutoPay, a fee applies in subsequent years which may be unappealing for some.
  • Potentially High APR: The card may come with a higher-than-average annual percentage rate (APR), which could be costly for those who carry a balance.
  • Limited Extra Perks: Besides the educational tools and fraud protection, it lacks many of the additional perks, like travel insurance and extensive concierge services, that other cards offer.
  • Potential Credit Limit Reduction: As noted in some reviews, the card issuer may lower your credit limit after approval which could impact your utilization rate—a key factor in your credit score.
  • Credit Score Impact: Applying for and opening new credit cards can temporarily lower your credit score due to the hard inquiry and reduction in the average age of accounts.
  • Foreign Transaction Fee: Prosper Credit Card charges a foreign transaction fee of 1%. For example, if you spend $2,000 on a week vacation abroad you would pay a foreign transaction fee of $20. If you travel abroad you may want to leave this card at home and apply for one that doesn’t charge foreign transaction fees.

In-depth Cons Analysis:

  • Rewards and Incentives: For those accustomed to reward-driven cards, the absence of cash back or travel points can be disappointing. However, the focus here is credit building, not spending.
  • Annual Costs: While the annual fee is modest compared to many premium cards, it is still something to consider, especially after the first year when the waiver no longer applies.
  • Interest Rates: The higher APR underscores the importance of paying off the balance each month to prevent accruing interest, which can overshadow the credit-building purpose of the card.
  • Benefit Limitations: Those expecting a variety of luxury benefits and perks may find the offerings of the Prosper Card quite basic. It’s more utility-driven than feature-rich.
  • Credit Limit Adjustments: Such actions by the card issuer can be unsettling and may require careful management of one’s credit to avoid potential adverse effects on the credit score.

For the target audience, the Prosper Card offers a strategic tool for improving financial literacy and credit scores. The lack of traditional rewards can be seen as an opportunity to focus more on credit utilization and timely payments rather than on accruing points. Its benefits align with the objectives of credit building and responsibility, making it a potentially smart choice for those looking to create a stronger financial future.

Comparison to Other Cards

When evaluating a credit card like the Prosper Card, one must consider how it stands up against other offerings in the market, especially those targeting individuals with fair or rebuilding credit. Here, we’ll contrast the Prosper Card with other similar credit cards to understand its place in the financial landscape.

Secured Credit Cards

Secured cards require a deposit, which often serves as your credit limit. This financial safety net allows issuers to offer these cards to individuals with poor or no credit history. While the Prosper Card doesn’t provide the same rewards as some secured cards, it also doesn’t necessitate an upfront deposit—making it a more accessible option.

Traditional Unsecured Credit Cards

Traditional unsecured cards often have rewards programs and may have higher credit limits, but they typically require good to excellent credit. For those with fair credit, the Prosper Card may be more attainable and can still provide the opportunity to build credit.

Credit Cards for Rebuilding Credit

Many cards designed for rebuilding credit, like the Prosper Card, tend to have higher interest rates and fewer rewards. The Prosper Card’s automatic credit line reviews for good financial behavior make it stand out amongst these options.

Store Credit Cards

Store cards often have high approval odds for those with fair credit, but they usually carry high interest and are limited to a specific retailer. The Prosper Card’s flexibility and wider acceptance give it a practical edge over most store cards.

Student Credit Cards

For students with limited credit history, student credit cards can be a good start. These cards often have educational resources and some rewards but are restricted to current students. The Prosper Card can serve a broader audience, including non-students looking to build credit.

Cash Back and Rewards Cards

Cashback and rewards cards generally target those with higher credit scores, offering a percentage back on purchases or points for travel. The Prosper Card does not compete in rewards but is easier to qualify for and focuses on credit building instead of spending.

Comparison Summary:

  • Deposits: No deposit needed for Prosper Card vs. required for secured credit cards.
  • Credit Requirements: Fair credit accepted for Prosper Card vs. good to excellent for many traditional unsecured cards.
  • Purpose: Credit building for Prosper Card vs. rewards/spending for cash back and rewards cards.
  • Benefits: Prosper Card offers credit-building tools, whereas others might focus more on rewards or interest rates.
  • Accessibility: Greater accessibility of the Prosper Card compared to store or student cards due to broader usage and less stringent requirements.

In summary, the Prosper Card is best suited for individuals who are looking to build or improve their credit and who may not be eligible for reward-heavy credit cards due to their current credit score. It trades off immediate rewards for the long-term benefit of credit repair, offering a viable pathway for financial growth not commonly found in other credit card offerings.

Conclusion

The Prosper Card presents a practical opportunity for individuals with fair credit to enhance their credit history without the burden of an upfront security deposit. Despite the absence of a conventional rewards program, the cardholder benefits from educational resources and features that promote financial health. While it may not dazzle with lavish perks or bonuses, its true value lies in its ability to encourage responsible credit behavior and potentially lead to improved financial standing. This makes the Prosper Card a commendable option for those dedicated to building a solid credit foundation for their future.

Frequently Asked Questions

What credit score do I need to qualify for a credit-building credit card?
Typically, credit-building credit cards are available to individuals with fair to poor credit scores, generally in the range of 300 to 669 according to the FICO scoring model. However, some cards are more lenient and may not require a credit check at all.

Can credit-building credit cards really improve my credit score?
Yes, responsible use of credit-building credit cards, which includes making payments on time and keeping balances low, can positively impact your credit score over time by contributing to a good payment history and credit utilization ratio.

How can I avoid high APR fees on credit-building credit cards?
To avoid paying high APR fees, you should aim to pay your credit card bill in full each month. This prevents you from carrying a balance and incurring interest charges on your purchases.

What happens if my credit limit gets reduced on my credit card?
If your credit limit is reduced, it’s important to adjust your spending to maintain a low credit utilization ratio, as this can impact your credit score. You should also reach out to the card issuer to understand the reason behind the reduction.

Why are educational resources important for credit-building credit cards?
Educational resources are essential as they equip cardholders with the knowledge to understand credit scores, how credit works, and how to manage debt effectively. This education is pivotal in establishing long-term responsible credit habits.

Leave A Reply