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Fingerhut Credit Card
5 Jul 2018

Is a Fingerhut Credit Card a Good Option for Bad Credit?

Fingerhut is the second largest catalog retailer in the country, with JC Penney holding the number one spot. It appeals to its customer base of over 31 million people because of the unique opportunity it offers to help you improve your credit score while purchasing items you would have needed to buy anyway.

Fingerhut partnered with WebBank to power its Fingerhut FreshStart Credit Account and the Fingerhut Advantage Revolving Credit Account. Neither line of credit requires shoppers to pay fees outside of interest payments for items they’ve purchased.

But does the Fingerhut credit card live up to its hype? Keep reading to find out!

What is Fingerhut?

Fingerhut was established in 1948 by brothers William and Manny Fingerhut. While the brothers started their business selling and producing seat covers for cars, the Fingerhut catalog and website now have over 450,000 products for purchase.

The available products range from electronics to clothing, jewelry, and furniture. The company doesn’t have a layaway policy set in place. However, it allows you to purchase and have items sent to your home address while you pay them off in monthly installments.

Through its credit card and “FreshStart” program, Fingerhut promises to help customers with poor credit build higher scores. But before you sign up, let us set things straight for you.

Fingerhut Application Process

A huge part of Fingerhut’s appeal is the company’s willingness to approve the majority of credit applications it receives, regardless of credit history. After all, the purpose of the company is to help consumers purchase things they need while strengthening their credit history.

The application can be completed online within a few minutes. The form you’re instructed to fill out will ask for your:

  • Full name
  • Address
  • Phone number
  • Email address
  • Social security number
  • Date of birth
  • Annual income

You will also need to create a unique password for logging into your Fingerhut account. The best part about the application process is you don’t have to wait long for a response. According to the Fingerhut site, you will have an answer instantly.

Fingerhut Payment Options

Whether you are using the Fingerhut FreshStart Program or the Fingerhut Advantage Revolving account, your options for making your monthly payments are flexible. Unlike some other credit products, Fingerhut does allow you to use a credit card to make payments.

The only exception to this rule is that the card cannot be issued by WebBank. You can also use debit cards and bank accounts for payments.

It’s important to remember to pay on time every month because Fingerhut reports to all three credit bureaus regularly. Missing even one payment can hurt the FICO score you’ve been working to improve.

What is Fingerhut FreshStart?

The Fingerhut FreshStart Program is set up for one purchase only. Once you’ve been approved for FreshStart, you can make your first purchase right away.

This account is ideal for you if you have very poor or unestablished credit history. Once your balance is paid in full, you will qualify for a revolving line of credit with Fingerhut.

How Does it Work?

Unlike the Fingerhut credit card, you are required to make a one time down payment of $30. The $30 will be taken from the amount of your first purchase.

The cost of that first purchase needs to be between $50 and your credit limit. The credit limits for Fingerhut Freshstart is from $125 to $230.

When your $30 down payment is processed, Fingerhut will ship your order to you. Your payments every month will include part of the item that was purchased in interest.

If you don’t miss payments, pay late, or have payments returned due to insufficient funds, your status with Fingerhut will move up a tier when your balance is paid in full. In most cases, this will be in 6 to 8 months, unless you pay over the minimum amount due on each of your statements.

The completion of the FreshStart Program earns you a Fingerhut Advantage Credit Account.

The Fingerhut Advantage Credit Account

This credit card doesn’t come with a hefty activation, sign up, or annual fee like many other competing cards. There is also a grace period where you can avoid paying interest at all if your balance is paid in full by a specified amount of time.

Additionally, the monthly payments are typically very low, giving you flexibility while improving your credit. This account is good for you if you have fair to good credit.

If you don’t qualify for the credit card at the time of your application, you will be enrolled into the Fingerhut FreshStart Program which will help you work up to this point.

The credit limit with Fingerhut Advantage is between $200 and $800.

Pros of Using the Advantage Credit Account

This is an ongoing line of credit, which means you can shop as much as you want within your credit limit. If you are a cardholder, Fingerhut will give you perks that aren’t available to other customers.

You can set your own payment due dates to match your payment schedule. With good payment history, you’ll also have opportunities to increase your credit line and there will be offers of deferred payments on some purchases.

Regardless of which Fingerhut account you use, you will have access to live customer service representatives 24-7. This includes holidays too. So, if you ever have questions about your account, you shouldn’t have to wait too long before your questions are answered.

Cons and Restrictions

We can’t go over the pros without telling you about the cons and restrictions of using the Fingerhut Advantage credit account.

For starters, you don’t have full control or buying power regarding where you can swipe this card. If you aren’t using it directly through Fingerhut, you will only ever be able to use it with specific companies Fingerhut has partnered with.

This isn’t the credit card for you if you’re looking for something with a Visa or Mastercard logo that’s accepted everywhere. You can also find credit cards that are specifically designed for helping people with bad credit that have lower interest rates.

So, Is Fingerhut a Good Way to Improve Your Bad Credit?

The biggest difference between Fingerhut and other online retailers is that Fingerhut requires you to apply for one of their lines of credit before you can shop on their site or through their catalog. So, if you aren’t interested in a line of credit and just want to take advantage of a rare sale, you will still be forced to extend your relationship with Fingerhut.

Because the company approves applicants with extremely poor credit histories, its offer is attractive to people who have been declined before. This point, however, doesn’t mean that Fingerhut has your best interest in mind.

No, we don’t think you should use Fingerhut to build your credit score for many reasons.

Inflation

Fingerhut has tons of products from major brands from Keurig to Nike. When you see that you can purchase these items with monthly payments as low as $6.99, you can’t help but feel eager to try your luck with them.

But be warned, the majority of the prices on Fingerhut are terribly inflated. And no, there isn’t a price match option.

High Interest

Not only do you have to cope with inflated prices from Fingerhut, you will have to add a high-interest percentage of 29.99. In addition to the interest, Fingerhut will charge you a finance charge that varies based on the amount of money you’ve spent.

Low Credit Lines

Fingerhut promises to help you improve your credit score, but some of the company’s practices don’t fall in line with that mission. The credit lines are a prime example.

Let’s say you have a FreshStart account with a credit limit of $150. You see you are required to make a first purchase of at least $50. The $50 purchase you’re making is 75% of your $150 credit limit.

If you have bad credit, chances are this FreshStart account is the only line of credit you have. Well, to keep from having a negative impact on your credit score, your credit utilization should always be at 30% or less.

High utilization makes lower credit scores because people with high utilization are less likely to pay their balances in full.

Lack of Flexibility

Fingerhut’s credit card won’t do you much good if you have an emergency and need to make a quick purchase for something like a car repair. You can only use your credit card for Fingerhut telephone, website, or catalog purchases.

If you have a high-interest card like this one, you should be able to fill your gas tank with it at the very least.

Realistic Ways to Improve Bad Credit

Don’t feel discouraged by the disadvantages of the credit products offered by Fingerhut. You still have great options to improve your poor credit score. With these, you will get more bang for your buck.

Secured Credit Cards

secured credit card uses the money you transfer from your bank account as your credit limit. For example, if you choose to transfer $300, that amount will be your credit limit.

You can use a secured credit card anywhere credit cards are accepted. They look and act just like regular cards and even allow you to make cash advances.

Depending on the card issuer, you can qualify for balance increases every five months or so by making your payments on time. Some secured cards give you the opportunity to earn rewards points too.

Do some research to learn which secured credit card works best for your financial goals. You can apply for a secured credit card online within a few minutes and receive approval the same day.

Pay off Debt

Instead of moving your debts around from card to card, contact your creditors and make payment arrangements, especially if the account has been outsourced to an agency. These phone calls are uncomfortable for many people. Here are a few tips:

  • Have a realistic payment arrangement in mind before you call
  • Ask about payment plans for people going through financial hardships (most collections agencies keep these as a last resort)
  • Ask what it will take to settle a delinquent account
  • Control the conversation, don’t fall for intimidation tactics

Paying off old debt can improve your overall credit score. However, you should be mindful that they won’t disappear right away. These accounts will remain part of your credit history for seven years.

Know Your Numbers

It won’t hurt your score to frequently check your credit through a site like Credit Karma. Utilize this resource to stay on top of all your credit changes.

If you see something on the report that doesn’t look quite right, dispute it. Keep in mind that disputes can take quite a bit of time and you will need proof that shows you aren’t responsible for the balance that’s being asked for.

Written correspondence like letters, emails, and receipts that show an account was paid off will help.

We’re Here to Help

We understand the toll that having a poor credit score can take on your quality of life. Rejections from credit card companies and lenders can make it seem like it is impossible to reach your goals whether you’d like to buy a nice home for your family, purchase a car, or start a business.

Our goal is to offer solutions that will bring you closer to meeting your financial goals, no matter what they are. Continue reading on our site for tips and advice. And if you have questions, send us a message. We would love to help.

Repairing your credit takes a lot of work and commitment. Don’t allow yourself to be sucked in by companies with unrealistic promises like the Fingerhut credit card.