consumer credit

One of my students came across Cred.ai when researching business credit cards, and the flashy website stopped us both in our tracks. And, the offer is buzzing right now, so I wanted to write about it…for fun.

In short, Cred.ai is a fintech company that offers a premium, 100% mobile, fee-free credit card with a metal design, along with cutting-edge technology that helps you manage your finances, build credit, and protect against fraud. You can use it to spend like a debit card while building your credit score “like a pro.” With Cred.ai, you can also access your paycheck up to two days early, get cash from ATMs, make instant deposits and mobile check deposits at no fee, and all deposits are FDIC insured.

This all sounds exciting, but it leaves a lot of questions unanswered.

So, let’s find out what this offer is really all about — the company, the card, and more.

Here’s what’s in store:

What is Cred.ai?
The Unicorn Card™ (Metal Credit Card)
The Stealth Card™ (Virtual Card)
- What is High-Security™ Mode?
Is Cred.ai Good for Businesses?
Cred.ai vs Chime
Frequently Asked Questions
Conclusion: Are You Better Than Your Bank?

So, let’s go!

What is Cred.ai?

A couple of years ago, when they revealed their ai-powered credit card, Forbes called Cred.ai “the Tesla of Banking.” But, with all of the chatter, that still doesn’t tell you what the offer can do for you in comparison to other cards on the market.

So basically, Cred.ai is a high-tech and premium everyday spending experience that offers a free metal card — They guarantee that you’ll never pay fees or interest and never overspend. Plus, they offer cutting-edge technology like Check Please™ and Flux Capacitor to help you optimize your credit utilization and even get your paycheck up to two days early.

Cred.ai is touted to be “100% mobile” and offers 24/7 support, real-time control, and virtual Stealth Cards™ that activate instantly upon approval. The company offers exclusive features like High-Security Mode™ and a Friend & Foe List™ to keep users safe and protected.

The metal card (this is why ‘100% mobile’ might not be the right word choice) is free and it’s heavier than those other fancy black cards, but you don’t have to pay a fee to get it. You can use it like a debit card and build your credit (“because it’s a real credit card,” according to their website).

Cred.ai also offers original content through Crednews™ (where they produce documentaries about important topics like UBI and psilocybin…seriously).

With Cred.ai, you can get the spending power of your paycheck and other automatic deposits up to two days before they hit your bank account. And, you can get cash at free ATMs within their network, make instant deposits, and mobile check deposits with no fees. All, as previously mentioned, deposits are FDIC-insured up to $250K.

There are also some really cool features like Flux Capacitor, which gives you early access to future deposits and helps you budget for future charges before they happen. There’s also Stealth Card™ (virtual card), which is helpful for risky transactions like ordering tacos over the phone or signing up for free trials. You can regenerate your Stealth Card when you feel like you’re at risk or use it in High-Security Mode™ for ultimate protection.

So, in summary, Cred.ai is a high-tech, mobile spending experience that offers a free metal card and exclusive features like Check Please™, Flux Capacitor, and Stealth Card™. Cred.ai guarantees you’ll never pay fees or interest and you’ll never overspend.

The Unicorn Card™ (Metal Credit Card)

Cred.ai’s Unicorn Card is not your typical credit card. With a sleek black metal design and a unicorn image, it’s definitely eye-catching. But the real magic happens when you start using it.

Unlike traditional credit cards, you need to deposit cash upfront, similar to a secured card. But don’t worry, your money isn’t just sitting there as a hostage to your good behavior. Instead, cred.ai uses your deposit to pay off your monthly statement balance as you make purchases, effectively extending your credit without requiring cash on hand to cover each transaction.

WSFS Bank — a member of the FDIC — provides the Deposit Account for cred.ai. Additionally, WSFS Bank has issued the Unicorn Card credit card under the license from Visa® U.S.A. Inc. The credit card can be used wherever Visa® credit cards are accepted.

Fee-Free ATM Network

Cred.ai has a cool feature where you can find free ATMs using their mobile app.

When you withdraw cash from an ATM, it’s considered a cash advance against your Unicorn Card credit card. But the good news is, you won’t have to pay any interest on those cash advances as long as you enable the Cred.ai service to manage your Unicorn Card payments automatically in the background.

Plus, they have a huge network of over 55K ATMs, so you’ll have plenty of options to choose from.

Early Access to Paychecks

If you’re a Cred.ai user and have set up direct deposit, there’s a way to access those funds earlier than your scheduled payment date — Cred.ai allows you to access the spending power of your direct deposit funds as soon as they receive the deposit file from your payer!

This could be up to two days before your scheduled payment date, depending on when your payer submits the deposit. Just keep in mind that the timing and schedule of your direct deposit depend on the payer, so it’s always a good idea to check with them first.

Minimum Deposit, Credit Limit, & Fees

So here’s the deal with Cred.ai: it’s kind of like a secured card, so you’ll need to put some cash onto the card to start using it. The smallest amount you can deposit is $100, and unfortunately, you can’t add any authorized users to the account.

Here’s the cool part though — Cred.ai reports to credit bureaus each cycle with a $1.5K credit limit and a 2-3% credit utilization rate (0% if you have a $0 balance), which can help boost your credit score. Plus, they have an auto-reload function to make sure you have enough funds to cover your transactions.

Now, while they say they have “no fees,” there is an APR and interest rate of 17.76% on spending and 24.99% on cash advances. But don’t worry, they won’t charge you unless you turn off their automated system.

Some folks suggest using the card more as an emergency fund, and instead using a secured credit card from a credit union for regular spending. But hey, everyone’s financial situation is different, so it’s up to you to figure out what’s best for you!

How Does Cred.ai Help You Build Credit?

First of all, Cred.ai reports to the three main credit reporting agencies, showing a $1500 revolving line of credit and your utilization every month. The best part? It doesn’t require a hard credit pull or an initial credit score, making it accessible to a wide range of consumers.

Let’s say you have one credit card with an $800 limit and you’re using 80% of that limit ($640). That’s not so great for your credit score because it looks like you’re relying too much on credit. But if you get the cred.ai card and deposit, say, $1.5K onto it — now you have a total credit limit of $2.3K and only use 27% of it. That’s a big improvement!

When you apply for credit in the future, having a higher credit limit and lower usage percentage looks really good to lenders. It shows them that you’re responsible with credit and can handle having more available to you. Plus, since the cred.ai card doesn’t require a hard credit check, applying for it won’t hurt your credit score.

Furthermore, the AI technology behind the card also learns your spending patterns and helps prevent you from overspending. If you try to make a purchase that would leave you overdrawn, the card will decline the transaction, acting like a protective parent.

Think of the cred.ai card as a helpful friend who gives you some money to use, but keeps an eye on you so you don’t overspend and get into trouble. You can only use the money that you deposit onto the card, but it still helps your credit score because it looks like a regular credit card to the credit bureaus.

On the contrary, if you turn off this feature, you can charge up to your cash limit and even beyond, though there’s a somewhat high APR for unpaid balances (17.76%+ on cash purchases).

So, what if your deposits are unpredictable?

If you get paid in cash, or you don’t use Cred.ai’s deposit account as your main cash flow account, the system will still attempt to predict your income, likely unsuccessfully — in which case you will essentially be able to use it like a debit card and spend your deposits, dollar-for-dollar. You would still be able to use it as a credit card, though (you won’t have to walk inside to pay for gas at stations where only credit cards are accepted at the pump).

The bottom line is that it always reports to credit bureaus as a $1,500 line of credit.

The Stealth Card™ (Virtual Card)

One neat feature of the Unicorn Card is the virtual card number for risk mitigation — Cred.ai just calls theirs a Stealth Card™. If you’re hesitant to make a purchase on a sketchy website, or you don’t want to commit to recurring monthly charges, you can use a virtual card number that won’t work for anything else, minimizing the risk of fraud.

In general terms, a virtual card is a digital version of a physical credit or debit card that is used for a single transaction or for a limited period of time. It typically consists of a randomly generated number, expiration date, and security code, which can be used for online or phone purchases where the actual card is not present.

The idea behind virtual cards is to provide an additional layer of security for online transactions, as the virtual number is typically different from the actual card number and can be easily deactivated if compromised. This makes it less risky to use your credit or debit card for online shopping or on unfamiliar websites, as your actual card number is not shared and the virtual card can be easily canceled if there is any suspicious activity.

Several banks and credit card issuers also offer virtual cards as a separate feature that can be generated and managed through their mobile apps or online banking portals.

What is High-Security™ Mode?

Cred.ai’s High-Security mode is a feature that adds an extra layer of security to your transactions. By enabling High-Security mode, the authorization window for each transaction becomes very small, usually only a few seconds, and expires automatically — This means that even if someone were to gain access to your card information, they would not be able to use it for fraudulent transactions because the authorization window would have expired by the time they tried to make a purchase.

Essentially, this feature is controlled by you and minimizes the risk of unauthorized transactions on your Cred.ai card. It is available for both physical and virtual Stealth cards.

Is Cred.ai Good for Businesses?

Cred.ai’s features are mainly geared towards individual consumers, such as access to early direct deposit, free ATM network, and virtual card capabilities. While businesses may be able to use the service, there are no specific features or benefits designed for business use.

Additionally, Cred.ai is not currently set up to handle business accounts or multiple authorized users, so it may not be the most practical option for businesses. Therefore, it may be better for businesses to look into alternative banking solutions that offer features specifically tailored to their needs.

Business owners who are curious about Cred.ai might want to look into a (more relevant) corporate offer like Brex or Divvy.

Cred.ai vs Chime

Cred.ai is most often compared to Chime, but these are two very different offers — let’s see how they stack up side by side:

*Please note that this information is subject to change, and you should always refer to the official websites of Cred.ai and Chime for the latest and most accurate information.

Frequently Asked Questions

What credit score is required for Cred.ai?

According to the information available on the Cred.ai website, there is no minimum credit score required to apply for an account. However, they may perform a soft credit check during the application process to verify your identity and determine your initial credit limit.

Does Cred.ai do a hard pull?

No. Cred.ai does not do a hard pull to approve your account.

Is Cred.ai a secured credit card?

Sort of… you do have to deposit money to use a Cred.ai card, but your money isn’t subject to the same terms as traditional secured credit card accounts.

How does Cred.ai affect your credit score?

The cred.ai card requires you to deposit money before you can use it. Your spending on the card is reported to credit agencies as a credit card with a $1500 limit and 3% usage. This increases your available credit and decreases your overall credit usage, which can improve your credit score.

For example, if you previously had one credit card with high usage, adding the cred.ai card would increase your available credit to $1800 with a 30% usage rate, which looks better to lenders.

Conclusion: Are You Better Than Your Bank?

Yeah, you are better than your bank, but that doesn’t mean you need to apply for a Cred.ai card. The tech is certainly cool for a certain demographic. If you need to improve your consumer credit utilization ratio, this might do the trick — The offer is fun and users seem to like it.

If you’re a business owner, however, you might want to look into a credit card designed specifically for business operations.

If you want to learn how to get up to $100K in business credit in as few as 30 days, join Business Credit Workshop today.

Cred AI Review: Are You Really Better Than Your Bank?