Green Dot offers accessible secured credit card as part of GO2bank launch
In launching its new challenger bank brand, GO2bank, to take on Chime and others, Green Dot has taken the opportunity to lower the barrier to obtaining a secured card for the underserved.
Green Dot is taking a unique approach to stand out from a sea of digital-only bank competitors with its new challenger bank brand by offering a more accessible line of credit in the form of a secured card.
Secured cards are typically tailored for consumers with poor credit or little credit history, and require a deposit to establish a spending limit. This market overlaps that of prepaid cards, where Green Dot built its name.
The new secured credit card lowers the amount needed to open it compared to a pre-existing Green Dot card, going from $200 to $100, coupling it with rewards which gives up to 7% cash back and consumers can apply for it within the GO2bank app.
“We are creating a GO2bank ecosystem where the secured credit card is tied to the DDA,” said Abhijit Chaudhary, general manager of direct to consumer products at Green Dot. “Our customers live paycheck to paycheck. We created a new secured card because we understand their need for credit and how difficult it is for them to come with the deposit. We dropped the minimum deposit to $100, there’s no annual fee and you apply for it directly in the GO2bank app with no credit check performed.”
This approach is meant to make the card more accessible to those in need of credit. According to credit card comparison website WalletHub, most secured cards charge an annual fee ranging from $29 to $49 and require a minimum deposit of at least $200.
Despite years of economic growth since the great recession of 2008-2010, U.S. households have continued to struggle with amassing an emergency savings cushion that would help them pay for a major unexpected expense such as a car repair or appliance replacement. According to the Federal Reserve, 37% of U.S. households would be unable to cover an unexpected $400 bill without having to borrow, sell something or outright default. In fact, 12% of adults said that they would be unable to pay for such a bill under any circumstances.
“This card provides consumers with the ability to build credit with small dollar amounts,” noted Bill Coats, head of banking products for direct to consumer at Green Dot. “We are trying to create a one-stop shop for our customers by giving them empowering tools. We report to the three credit bureaus and offer them a free monthly credit score from Equifax so that they can see how they are building credit.”
The GO2bank brand launch was first announced in Green Dot’s November earnings call, when the company said it had opened a waiting list for prospective customers. The new GO2bank challenger brand is part of an initiative to fuel Green Dot’s deposit growth by tapping into the unmet needs of the unbanked and underbanked communities, often collectively referred to as underserved.
GO2bank isn’t Green Dot's first foray into offering checking accounts. It launched GoBank back in 2013 as it was seeking to break out from being primarily a prepaid card provider.