The Navy Federal Credit Union nRewards® Secured Credit Card is a secured credit card with no annual fee and a cash back rewards program that pays you back on every dollar you spend. However, it’s not for everyone – Navy Federal Credit Union membership is limited to active duty and honorably discharged or retired members of the Armed Forces, civilian Department of Defense employees, and immediate family members of people in those two groups.
This card has a solid rewards program, at least compared with other secured cards. Every dollar spent earns 1 reward point, with no limit on how much you can earn. Points can be redeemed for gift cards and merchandise, typically at or near a $0.01-per-point rate.
Setting the rewards program aside, NFCU nRewards Secured Credit Card is designed to help people with poor or even middling credit improve and rebuild their credit after setbacks such as delinquencies, foreclosures, and personal bankruptcies. If you use your card responsibly for at least a year after opening your account, you may automatically be upgraded to a non-secured Navy Federal Credit Union card (the Navy Federal Credit Union cashRewards Credit Card, which earns 1.5% cash back on every purchase). So, as long as you can scrounge up at least $500 to cover the initial deposit, this card is definitely worth a closer look.
Initial Deposit Requirement and Refund
Navy Federal Credit Union nRewards Secured Credit Card requires a minimum security deposit of $500. Your deposit amount is always equal to your credit limit, provided Navy Federal Credit Union deems your creditworthiness and income sufficient to handle the limit for which you’ve applied. Your deposit is held in an FDIC-insured account for as long as your account remains open.
Once 12 billing cycles (1 year) have passed, Navy Federal Credit Union automatically reviews your account and, if it deems you have used your credit responsibly and paid your bills in a timely manner, upgrades your account to the non-secured Navy Federal Credit Union cashRewards Credit Card. Once the upgrade is completed, your security deposit is released.
Credit Limits and Limit Increases
You can apply for a higher credit limit at any time, though you’re not guaranteed approval. If you do qualify for an increase, you must make another deposit equal to the difference between your old and new credit limit.
This card earns 1 point per $1 spent on all purchases, with no limits or restrictions on how much you can earn.
You can redeem your rewards online for restaurant and retail gift cards, plus general merchandise at the Navy Federal Credit Union Member Mall, usually at a value of $0.01 per point or less. Larger redemptions generally offer more favorable redemption values – for instance, you need 3,500 points for a $25 Applebee’s gift card and 7,500 points for a $75 Home Depot gift card. You can start redeeming once you accumulate 1,000 points.
If not redeemed within 4 years of the date they’re earned, points expire and lose all value. Importantly, points cannot be redeemed for statement credits, bank account deposits, or other forms of cash.
Credit Bureau Reporting
Every billing cycle, Navy Federal Credit Union reports your payment patterns (or lack thereof) and credit utilization to all three major credit reporting bureaus. If you use your credit card responsibly and consistently pay your bills on time, this regular reporting is likely to raise your credit score over time.
There is no annual fee, foreign transaction fee, or balance transfer fee. The cash advance fee is a nominal $0.50 to $1 per advance, depending on how it’s executed.
This card is designed for people with poor to below average credit. Your application may be disqualified if you’ve recently declared bankruptcy, but other serious credit issues are not likely to hurt your chances of qualifying.
- No Annual Fee. The Navy Federal Credit Union nRewards Secured Credit Card does not charge an annual fee. That’s a big advantage over many competing secured cards, whose annual fees can range as high as $40. It’s also great news for those seeking to maximize the value of their earned rewards.
- Virtually No Other Card Fees. Aside from the nonexistent annual fee, this card has an impressively light schedule of other card fees. It has no foreign transaction fee or balance transfer fee, and its cash advance fee is a piddling $0.50 to $1, depending on how the advance is executed. By contrast, most other secured credit cards have 3% foreign transaction fees, plus balance transfer and cash advance fees ranging from 3% to 5% of the transaction amount.
- Every Dollar Spent Earns Rewards. The Navy Federal Credit Union nRewards Secured Credit Card is one of the few secured cards out there with any sort of rewards program. While its rewards pale in comparison to those offered by leading cash back cards such as Citi Double Cash or Chase Freedom Unlimited, it’s nice that cardholders with less-than-stellar credit can earn real rewards on every dollar spent with this card.
- Automatic Upgrade to Non-secured Card. Once you’ve had this card for a year, you’re automatically considered for an upgrade to a non-secured card with a more generous rewards program. Some competing secured cards are essentially dead ends – you can keep them active as long as you want, but you can’t graduate to a non-secured account.
- Reward Points Expire. The Navy Federal Credit Union nRewards Secured Credit Card’s rewards points do not last forever. If left unused, they expire 4 years after they’re earned. While 4 years is a long time, this remains an inconvenience for infrequent card users. Most other rewards credit cards don’t allow their points to expire, no matter how infrequently they’re used.
- Points Can Be Worth Less Than $0.01 Apiece at Redemption. This card’s points aren’t particularly valuable come redemption time. When redeemed for gift cards and merchandise, they’re often worth less than $0.01 per point. By contrast, Discover it Secured Credit Card’s cash back points are always worth $0.01 apiece at redemption.
- Must Deposit at Least $500. This card requires a $500 minimum security deposit. That’s a tough ask for prospective cardholders with modest incomes and paycheck-to-paycheck budgets. Some competing cards, such as Capital One Secured MasterCard, require far smaller initial deposits – just $49, in Capital One’s case.
- Rewards Can’t Be Redeemed for Hard Cash. Though this card’s rewards program is unusually generous for a secured card, it does have an Achilles’ heel: its points can’t be redeemed for hard cash, only gift cards and merchandise. That’s a drawback relative to Discover it Secured Credit Card, which earns actual cash back that can be redeemed for statement credits and bank account deposits.
- Eligibility Limited to Armed Forces, DoD Employees, and Family Members. Navy Federal Credit Union eligibility is limited to active duty and honorably discharged members of the Armed Forces, civilian Department of Defense employees, and immediate family members of people who belong to those two groups. While those categories collectively include millions of people, they’re still a small minority of American consumers. If you’re excluded, you’ll need to look to another secured option.
The Navy Federal Credit Union nRewards® Secured Credit Card is an unusually generous secured credit card with a solid rewards program, low fees, and favorable interest rates. It’s a pretty good deal – if you can get it. Until Navy Federal Credit Union loosens its eligibility requirements to allow more of the general public to open accounts, this card is going to be off-limits to most Americans.
On the other hand, if you’ve provided for the United States’ defense in a civilian or military capacity, or you have immediate family members who clear that threshold, Navy Federal Credit Union nRewards Secured Credit Card is one way to get paid back.