5 Things to Know About the Kikoff Credit Card

Meant to jump-start your experience with credit, the Kikoff Secured credit card has a lot of initial appeal for credit newbies. It has a $0 annual fee, earns modest rewards and doesn’t require a credit check, meaning you can get the card with bad credit (credit scores of 629 or lower), or even no credit.

But there’s a sneaky hidden cost to the Kikoff card that effectively puts its yearly fee at almost $250. That's a major asterisk.

For the right consumer — namely, renters who generally pay their rent on time — the Kikoff card could be a tool for boosting credit scores. If you don’t want to pay a cent for a credit card, though, there are plenty of alternatives.

Here’s what you need to know about the Kikoff Secured credit card, issued by Coastal Community Bank.

» SEE: Best starter cards for no credit

1. The card itself has few fees, but a paid subscription is required

The Kikoff card doesn’t charge an annual fee, monthly fee, APR or foreign transaction fee. There is a $2.50 ATM withdrawal fee, but only if you withdraw cash from an ATM outside of the Allpoint network.

That's all well and good, but there's a very big caveat.

To qualify for the card, you’ll need either a Kikoff Premium ($20/month) or Ultimate ($35/month) subscription. That means that you’ll pay at least $240 a year to use the Kikoff card, which is an annual fee that rivals some of the most premium credit cards on the market. The Premium and Ultimate plans have rent reporting as one of their primary benefits, which can help boost your credit scores. But if you don’t need that service, you can certainly find another secured card that is truly free to use.

» MORE: How to report your rent to credit bureaus

2. There’s no minimum deposit — but try to put down at least $50

Many secured cards require a security deposit of a few hundred dollars in order to open an account. The Kikoff card doesn’t require a certain deposit amount, but you’ll probably want to have at least $50 to unlock some of the card’s most essential features. A $50 deposit into a linked checking account is required for the Kikoff card to report your credit activity to the three major credit bureaus, and to receive a physical card in the mail. (Upon approval, a virtual card is immediately available in the Kikoff app.)

Deposits may be made via direct deposit, bank transfer or cash deposit into an ATM.

» MORE: ‘Debt-proof’ credit cards lower some barriers but raise their own

3. It has features of a debit and credit card

According to Kikoff, the Kikoff card is a credit card but “works like a checking account and debit card,” which may appeal to those who want some degree of liquidity. You can use the Kikoff card to withdraw cash from the checking account linked to your Kikoff card, but doing so reduces the card’s credit limit.

4. Card balances are automatically paid in full

By design, the Kikoff card makes the credit experience as risk-free as possible. Card balances are automatically paid off using the funds in the linked checking account, which eliminates late fees and interest charges on outstanding balances. However, if and when you upgrade from the Kikoff card to a non-secured credit card, things won’t be so easy. You’ll likely pay high late fees and double-digit interest rates on unpaid balances, and if you want to put your credit card bill on auto-pay, you’ll have to set that up yourself.

The Discover it® Secured Credit Card may be better preparation for the experience of a “real” credit card. The onus is on the cardholder to make on-time payments, and there’s a high APR, but Discover forgives the first late payment. It also earns rewards on every purchase. And Discover, unlike Kikoff, has a number of unsecured credit cards in its portfolio that you can upgrade to once you're ready.

5. The card offers limited rewards

Kikoff cardholders may earn rewards in two ways: online deals and card-linked offers. Participating merchants include Allbirds, Kindle and Jack in the Box.

To redeem an online offer, go to the “Offers” tab in the Kikoff app or by clicking on the unique URL sent in a promotional email. Purchases must be made through the app or via the link from Kikoff to earn rewards.

Card-linked offers are easier to access. Kikoff automatically enrolls cardholders in all available card-linked offers. To earn rewards, simply make an eligible transaction according to the offer’s terms and conditions.

It’s possible to earn extra rewards on certain offers by having at least $500 in direct deposits to your Kikoff-linked checking account each month.

The only redemption option is to add rewards as a credit to your Kikoff account balance.