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Updated on Monday, February 2, 2015
Green Dot pre-paid cards offer alternatives for America’s unbanked, which includes everyone from scammers to prison inmates and those on the bottom of the socio-economic ladder. Now, Green Dot may soon be making a move to re-enter the credit card space with secured credit cards and unsecured lines of credit.
In 2006, Green Dot piloted a credit card program with Rite Aid. The credit cards didn’t require a credit check, which made it ideal for those marginalized by the banks due to low or non-existent credit scores. In order to combat the high risk of offering credit cards to people without a credit check, Green Dot only provided a $200 credit limit and charged steep fees for the cards, including an annual fee of $70 on top of a monthly fee of $4.95. It cost $129.40 a year to own a Green Dot credit card; a steep cost for customers who often lived paycheck-to-paycheck.
Today, Green Dot deals in the pre-paid debit card space. Users must jump through a lot of hoops in order to use the card for free, including access to the Internet in order to check balances and apply for the card online. Most people who need Green Dot in order to load cash onto a prepaid card cannot escape the inevitable $4.95 charge to reload the card in the store. This fee is waived if you can set up a direct deposit.
American Banker reported Green Dot Chief Executive Officer Steve Streit announced the company’s intention of offering a secured credit card and unsecured line of credit to the marginalized consumer who get shut out of bank loans due to FICO requirements. Unlike last time Green Dot offered a line of credit, consumers would need to verify the ability to repay prior to approval.
Well be keeping an eye on this story as it develops, but we’re interested to see the requirements for a secured card and line of credit from Green Dot.