FingerHut originally started as a mail order catalog, and in the ’90s became an early entry into the e-commerce game.
But what FingerHut is really known for is that it allows customers with poor-to-nonexistent credit to purchase items right away on FingerHut’s line of credit, and then make monthly payments. FingerHut promotes this feature as a way for people to build credit or rehabilitate a bad credit rating. But is FingerHut really the best option for people who are starting out, or trying to start over?
Why is FingerHut suggested for building credit?
The main selling point is that the company is willing to extend a line of credit to people who have a poor credit history. FingerHut makes it a point of pride that they will extend credit to someone even if they’ve been turned down by other credit card companies.
If you can meet your monthly payments and pay your item off within six to eight months, it can help you build your credit history back up, as FingerHut reports your payments to the three major consumer credit bureaus: Equifax, Experian and TransUnion.
How does Fingerhut work?
FingerHut has two different options, both of which can only be used to purchase items from its online store, which offers everything from jewelry to appliances to high definition televisions.
The Fingerhut Advantage Revolving Credit Account comes with a rather high APR (Annual Percentage Rate) of 29.99%, and is designed for people with fair-but-not-bad credit ratings. In order to avoid the high interest rates, you will want to hit your monthly payment on time, using your debit card or linked bank account. You may also be required to make a down payment on your initial purchase. As long as you make your payments, it functions just like a normal credit card.
The second option is the Fingerhut FreshStart Credit Account, which is designed for people with subprime credit ratings who would like to build it back up. If you are approved, you can make one purchase up to your credit limit, which is usually around $125 to $230. You will have to make a $30 down payment with your debit card or linked bank account. You will have six to eight months to make monthly payments, which will include shipping and handling, taxes and finance charges. There is, however, no membership fee or annual fee to use the account. If you pay off your purchase, you might be upgraded to the Advantage Revolving Credit Account.
How to apply to Fingerhut Credit Card
You can apply for a FingerHut Credit Card through the company’s website. You will need to provide your name, date of birth, contact information, income and Social Security number. There’s no application fee, and you will usually get a decision pretty quickly.
The Pros of FingerHut
- The advantage of FingerHut is that they offer credit to people who might not normally be able to get a traditional credit card.
- Application process is quick and easy
- 24/7 customer service
- Because FingerHut reports to the major credit card bureaus, it can be a way to build up a subprime credit history.
The Cons of FingerHut
- The main disadvantage of FingerHut is that an APR of 29.99% is much higher than the industry average for credit cards, which was 14.75% in the first quarter of this year, according to the Federal Reserve. An APR is basically the interest level on your loan, and if you don’t hit your monthly payment, then the interest level on your outstanding balance will increase. This can lead to high late fees.
- Another disadvantage of FingerHut is that the products it offers come with a high mark-up, and as MagnifyMoney points out, you can find them cheaper elsewhere on the internet. For example, the NutriBullet Single-Serve Blender 8-Pc. Set is available for $109.99 on FingerHut, which breaks down to $18.99 per month. The same product is available for $69.99 at Target.
How to get the most out of this card
If you are looking to build credit, you could make one small to medium purchase that you know you have the money to pay off.
How does Fingerhut compare to other Credit Cards for bad credit?
Considering the high price of the items and the limited use of FingerHut’s credit cards, those looking to build their credit ratings might want to consider a few different options instead.
- Apply for a Secured Card, which comes with a deposit (usually around $200) in case you default on payments. They are easier to qualify for if you have subprime credit, though they do come with higher than average APRs. But unlike FingerHut, you aren’t limited to one store, and if you meet your payments you can eventually qualify for an unsecured card.
- If you have a recurring payment such as a utility bill or Netflix, you can use an Experian Boost to link your bank account, and instantly get credit for payments and start quickly raising your credit score.