For those with less-than-perfect credit or those just starting their credit journey, finding a credit card can be challenging. Enter the Indigo Mastercard, an unsecured credit card designed for individuals with new credit, bad credit, or those rebuilding their credit profile. In this comprehensive review, we’ll explore the features, benefits, and potential drawbacks of the Indigo Mastercard to help you determine if it’s the right choice for your financial situation.
Who is the Indigo Mastercard For?
The Indigo Mastercard caters to a specific segment of the credit market. It’s ideal for:
- People with new credit looking to establish a credit history
- Individuals trying to rebuild their credit after financial setbacks
- Those with bad credit, including collections or past bankruptcies on their credit report
- Consumers who have been denied by other credit card issuers
Interestingly, the card can also be useful for frequent travelers who prefer to carry a low-limit card for added security when abroad. This strategy can help minimize potential losses if the card information is compromised.
Credit Reporting and Initial Credit Limits
One of the key benefits of the Indigo Mastercard is its reporting practices. The card reports to all three major credit bureaus: Experian, Equifax, and TransUnion. This is crucial for building or rebuilding credit, as it ensures your responsible card use is reflected across all your credit reports.
Initial credit limits for the Indigo Mastercard typically range from $300 to $1,000. While $300 may seem low, it’s a reasonable starting point for an unsecured card aimed at the subprime market. For those struggling to get approved elsewhere, this card offers a foot in the door of the credit world.
Application Process and Prequalification
The Indigo Mastercard has streamlined its application process to make it more accessible to potential cardholders. Here’s what you need to know:
- Online prequalification tool available
- Soft pull for prequalification, which doesn’t affect your credit score
- Full application results in a hard inquiry on your credit report
- Approval decision often provided quickly
- Card typically arrives within 7 business days of approval
The prequalification feature is particularly valuable, as it allows you to gauge your approval odds without risking a hard inquiry on your credit report. However, remember that prequalification doesn’t guarantee approval, and the final application will still require a hard pull.
Card Versions and Fee Structures
The Indigo Mastercard offers different versions based on your creditworthiness. Understanding these options can help you anticipate what you might qualify for:
Version 1: Good Credit
- No annual fee
- Credit limit: $300 – $1,000
- APR: 24.9%
Version 2: Decent Credit
- $59 annual fee
- Credit limit: $400 – $500
- APR: 24.9%
Version 3: Bad or New Credit
- $75 first-year annual fee, $99 thereafter
- Credit limit: $300
- APR: 24.9%
It’s important to note that for Version 3, the annual fee is deducted from your initial credit limit. For example, with a $300 limit and a $75 fee, your initial available credit would be $225.
Interest Rates and Fees
The Indigo Mastercard has made some positive changes to its fee structure, but it’s still important to understand the costs associated with the card:
- APR: 24.9% (reduced from previous 29.9%)
- Cash advance fee: $0 for the first year, then 5% of the transaction amount
- Late payment fee: $40
- Over-limit fee: $40
- Returned payment fee: $40
While the reduction in APR is welcome, 24.9% is still relatively high compared to prime credit cards. However, it’s competitive within the subprime market. The first-year waiver of cash advance fees is a unique feature, but be cautious about using this option as cash advances can be costly in the long run.
Additional Features and Protections
The Indigo Mastercard offers some additional features that add value to the card:
Identity Theft Protection
Included at no extra cost, this feature provides:
- Identity theft resolution services
- Alert notifications for suspicious activity
- Credit report monitoring for potential fraud indicators
Indigo Credit Protection
This optional program offers coverage for unforeseen events:
- Involuntary unemployment
- Disability and permanent disability
- Loss of life
- Natural disasters
- Unforeseen auto services
The Indigo Credit Protection comes with a fee of $1.49 per $100 of your ending balance each billing cycle. In qualifying events, it may cancel your monthly statement balance or minimum payment. While this can provide peace of mind, carefully consider if the cost is worth it for your situation.
Pros and Cons of the Indigo Mastercard
Pros:
- Accessible for those with bad credit or limited credit history
- Reports to all three major credit bureaus
- Unsecured card – no security deposit required
- Prequalification with soft pull available
- Identity theft protection included
- First-year cash advance fee waiver
Cons:
- High APR of 24.9%
- Potential for high annual fees, depending on creditworthiness
- Low initial credit limits
- No credit limit increases offered
- Limited rewards or perks compared to prime credit cards
Is the Indigo Mastercard Right for You?
The Indigo Mastercard can be a valuable tool for those struggling to get approved for other credit cards. It offers a chance to build or rebuild credit without the need for a security deposit. However, it’s important to use this card strategically:
- Consider it a stepping stone to better credit and more favorable card terms
- Use it responsibly to improve your credit score
- Pay the balance in full each month to avoid high interest charges
- Reassess your credit card needs after 12-18 months of responsible use
If you’re approved for a version with an annual fee, weigh the cost against the benefit of building your credit. Once your credit improves, you may want to explore cards with better terms and lower fees.
Conclusion
The Indigo Mastercard serves a specific purpose in the credit card market. For those with limited options due to poor or limited credit history, it provides an opportunity to access credit and begin the process of building a positive credit profile. While it comes with potential drawbacks like high fees and APR, when used responsibly, it can be an effective tool in your credit-building journey.
Remember, the goal should be to graduate to better credit cards as your credit improves. Use the Indigo Mastercard as a temporary solution, make timely payments, keep your balance low, and monitor your credit progress. With diligence, you can use this card as a springboard to better financial products and a stronger credit future.
