5 Things to Know About the Verve Credit Card

There’s no way to sugarcoat it: The Verve Mastercard is a bittersweet symphony of maintenance fees, high interest rates, confusing terms and low credit limits.

Issued by The Bank of Missouri — and one of several similar products serviced by Continental Finance — the Verve credit card is marketed toward people looking to establish or rebuild credit. It can indeed help you do that, and because it's an unsecured Mastercard, you won't need to put down an upfront security deposit and can use the card essentially anywhere.

But it will cost you in a variety of other ways. Any number of other credit cards for bad credit would be a better choice.

Here are five things to know about the Verve Mastercard.

» MORE: NerdWallet's best starter credit card for no credit

1. You'll owe fees upon fees

Fees are common among many unsecured credit cards for bad credit (FICO scores of 629 or lower) — but the Verve Mastercard is even more expensive than most. Here's what to expect:

• Annual fee: This will range from $99 to $125, and you won’t know what your fee will be until you submit an application. You can apply to have your annual fee reduced to $75 after one year of on-time payments, but there is no guarantee you’ll be approved. Annual fees aren't necessarily a deal-breaker, especially on cards for those with poor credit. But this one is exceptionally high.

• Monthly maintenance fee: This fee, on the other hand, is not common and should be considered a red flag. With the Verve card, you'll also owe $10 every month — an extra $120 per year on top of the annual fee. Although this monthly maintenance fee is waived for the first year, other cards for bad credit don't charge one at all.

• Authorized user fee: If you want to add an authorized user to your account, that'll set you back $30 more per card.

Between the Verve credit card's annual fee and monthly maintenance fee, it could cost you up to $245 a year to hold this card. That's outlandish — and unlike a security deposit, those fees aren't refundable.

For those with limited credit, a better option to avoid fees (and a deposit) might be the Tomo Credit Card. A linked bank account is required, and your card balance will be automatically paid off with that bank account every week, but there's no annual fee, security deposit, credit check or annual percentage rate. On top of that, you'll earn 1% cash back on all eligible purchases with your card.

» MORE: NerdWallet's best 'alternative' credit cards

2. Initial credit limits may be quite low

Initial credit limits on the Verve Mastercard range from $300 to $1,000. But thanks to the card's annual fee, that's not the full story.

Let’s say you’re approved for a credit line of $300 and an annual fee of $125. Because the fee will be assessed before you even receive the physical card, your available credit will be only $175 when you get the card in the mail. That means your initial credit utilization, or how much of the available credit you are using, would be nearly 42%. Credit utilization is a big factor in your credit scores — the lower the better, generally — but your utilization will only grow once you start putting charges on the card.

There is some good news. If you make on-time monthly payments for the first six months without late charges or missed due dates, Continental Finance may double your credit limit (up to a maximum of $2,000).

If you want no fees and flexibility with your credit limit, check out the Chime Credit Builder Visa® Credit Card. To qualify, you must have and link a Chime Spending Account. Instead of making a one-time security deposit to “secure” your credit limit, you move money from your Chime account to the credit card. Whatever amount you move becomes your credit line.

» MORE: Secured credit cards vs. unsecured credit cards

3. The card reports to all three credit bureaus …

Account details, including your payment history for the Verve Mastercard, are reported to the three major credit bureaus, Equifax, Experian and TransUnion. This is beneficial because some creditors may review the credit report from only one of the bureaus when assessing creditworthiness. If account details aren’t reported to the bureau they select, the creditor won’t be able to see your account history.

However, this alone isn’t a reason to select the Verve card. Many other cards with no or lower fees report to all three credit bureaus. The Capital One Platinum Secured Credit Card is one example. It has a $0 annual fee and may require only a $49 deposit to secure a $200 credit line, depending on your creditworthiness. Your account will also be automatically reviewed for a credit limit increase after six months.

4. … But there's no upgrade path

"Subprime" credit cards like the Verve Mastercard are intended to help build or rebuild your credit. As you prove you can responsibly handle credit by making on-time payments, your credit scores will elevate. After enough time, your scores may be good enough to qualify for a better card with lower fees.

But there are no options to upgrade your Verve Mastercard to a better card. So if you want to get rid of those hefty fees, your only option is to close your account and apply for another card. But that may have its own consequences.

Losing the Verve card's credit line could affect your credit utilization as well as your length of credit history, yet another factor in your credit scores. And after the closure, if you apply for another credit card, there'll be another hard inquiry on your credit report.

If you want a card with an upgrade path, a better option would be the Discover it® Secured Credit Card. Though the card requires a security deposit equal to the credit limit you want to establish, you can potentially get that deposit back by consistently paying off your monthly statement and upgrading to an unsecured Discover card in as little as seven months. It has a $0 annual fee, no maintenance fee and no cost for adding an authorized user. You will also earn cash back, including 2% back at gas stations and restaurants (up to $1,000 in purchases per quarter) and 1% back on all other purchases.

5. There is a rewards program, but you must be targeted

The Verve Mastercard has a cash-back rewards program that offers 1% back on all purchases, but it’s available only if you’re targeted for the program directly by mail. When NerdWallet contacted Continental Finance, the company wasn't able to provide additional information on who gets targeted or how frequently Continental targets people for the rewards program.

If you want to earn rewards, an alternative for people with at least some credit is the Capital One Quicksilver Secured Cash Rewards Credit Card. There is a $0 annual fee, and the card earns 1.5% cash back on all purchases. An initial $200 deposit is required to secure your credit line, but that can be refunded by making on-time payments and eventually getting upgraded to a nonsecured version of the card. You may also qualify for a credit limit increase after six months with no required additional deposit.