The Orchard credit card was for a long time one of the few options for consumers who need to rebuild credit.
Know as a lender for consumers with bad credit, Orchard Bank credit cards often have processing fees of $39 as well as high interest rates that display the high risk of enders to those with poor credit. The best known Orchard Bank credit card is the secured card offered by this lender.
Other banks and lending institutions offered secured credit cards but the fees and small print associated with the offers made them useless as a credit building tool. Most of them were also of limited use as they were not associated with Visa or MasterCard and thus were not accepted widely by merchants.
The big problem with many of the offers for secured credit cards was the failure of the lenders to report regularly to the three major credit rating agencies. These secured credit accounts were offered to people with no credit or bad credit and yet they provided no help for those consumers.
Secured Cards From Orchard Bank Are Different
Orchard Bank secured credit cards are the exception. The company is a reputable lender and although there are fees associated with the cards, this bank reports reliably to the three credit bureaus on a monthly basis.
A secured credit card operates just like a standard account with one major exception. For a standard account, the lender has issued a credit card with a spending limit after approving your application.
If you have bad credit, you will be denied. Low credit ratings tell lenders you are a high risk credit account and in this economy banks are not willing to take a risk on any but the best qualified credit card applicants.
In other words, there is no point to submitting multiple applications in the hope that some bank will approve you for a new credit card.
It won’t happen. Every time you submit a new application for credit you place another mark on your credit file. If your application is approved, that mark is no problem for you.
However, if your credit file shows you are submitting many applications for credit cards and lenders are declining your applications, this can further damage your shaky credit rating. It is another behavior that lenders view as high risk.
Advantages
An HSBC Orchard Bank credit card review will have little negative information to offer. After you make application for an Orchard Bank credit card, the bank will tell you which credit accounts you can qualify for.
This is extremely helpful for those who aren’t certain how good (or bad) their credit is. In the past, it was possible to open a secured credit account and find your entire spending limit filled with the various fees and charges associated with the new account.
It was understandable that lenders taking a chance on applicants with bad credit might charge higher interest rates and have more fees associated with their credit cards.
That made sense until you realized a secured credit card is secured by your money which is held in an untouchable account to guarantee payment on the credit debt.
Today, lenders such as Orchard Bank cannot charge more for opening and administering a secured credit card than 25% of the spending limit of that card. Those restricted fees apply only to the first year after the account was opened.
Thus, lenders are free to charge additional fees in the second and succeeding years. Orchard Bank credit cards are advertised as a way to build credit for those with no credit history and to repair credit for consumers who have black marks in their files.
If you obtain a new Orchard Bank secured credit card and use it monthly for one year it is very likely you could then qualify for a standard credit card account that is not secured.
One year of on time payments on your new secured credit card would result in 12 monthly reports from Orchard Bank to the credit rating bureaus that put good payment at the top of your credit file.
If your goal is to create or repair a credit rating, you will need to use the charge card for purchases each month and pay the bill before the due day every single month. You can avoid interest charges if you pay the amount in full each month when the statement arrives.
Disadvantages
Orchard cards have avoided many of the negative consumer complaints so often made about sub-prime credit card banks.
In large part that is due to the customer service associated with Orchard cards. Rates are high but still reasonable for the credit challenged customers who apply for the credit cards.
It’s difficult for a sub-prime lending bank to achieve a good reputation with the public but the Orchard card seem to have accomplished exactly that.
