5 Things to Know About the Upgrade Life Rewards Card

The Upgrade Life Rewards Card is one of several credit card/personal loan hybrid products from the financial technology company Upgrade. With no annual fee and the ability to earn an unlimited 3% cash back on gas, groceries, health services, streaming, and utility bill expenses, this card can upgrade the rewards earnings of even those with fair or average credit.

Those varied bonus categories make it a versatile card, and if you pair it with an Upgrade checking account, you can earn a $200 sign-up bonus (as of this writing).

But with a potentially sky-high annual percentage rate for those with lower credit, you won't want to carry a balance on this card.

Here are five things to know about the Upgrade Life Rewards Card.

1. Bonus cash-back categories are highly useful

Have you been feeling the squeeze from soaring prices? The Upgrade Life Rewards bonus categories can help, as it earns an unlimited 3% cash back on:

• Gas and electric vehicle charging stations.

• Grocery stores, supermarkets and eligible convenience stores (excluding Target and Walmart).

• Streaming and cable services like Comcast, Netflix and AT&T.

• Utilities and telecommunication services.

• Health services, including gyms, spas, pharmacies, doctor visits and sporting goods stores.

All other purchases earn 1% cash back. Cash back is issued once you pay off a charge. And unlike the Upgrade OneCard — which features some of the same bonus categories — there is no $500 cap on rewards earned per year with the Upgrade Life Rewards Card.

That's a nice mix of broad and popular bonus categories (like food and fuel) and more specialized spending areas (utilities and doctor visits, for instance).

» MORE: Is the Upgrade Card legit?

2. 'Early Pay' allows you to avoid interest penalties

Like other Upgrade cards, the Upgrade Life Rewards Card has an "Early Pay" feature that will enable you to avoid interest by automatically paying off your statement balance in two days when the statement period ends. This requires a linked checking account.

Also, as with other Upgrade cards, unpaid balances with this one will automatically convert to a fixed-rate loan with a set repayment time frame. However, unlike a traditional credit card with a minimum monthly payment for any carried balance, you will pay equal installments similar to a personal loan.

Your APR and repayment time frame will be determined based on your creditworthiness at the time of application (more on that below).

But with a published APR ranging from 14.99% to 29.99%, you won't want to carry a balance on this card. If you plan to carry a balance and have at least good credit (typically a FICO score of 690 or higher), you might qualify for a card like the Wells Fargo Reflect® Card, which offers 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers, and then the ongoing APR of 17.49%, 23.99%, or 29.24% Variable APR and a with $0 annual fee.

» MORE: Best 0% APR credit cards and best low-interest credit cards

3. You can earn a bonus when you open an Upgrade checking account

Similar to other Upgrade Card products, you can earn a $200 bonus (as of the time of this writing) when you apply concurrently for the Upgrade Life Rewards Card and an Upgrade Rewards Checking Plus account. The bonus will be applied as a statement credit to your Upgrade Life Rewards Card after making three transactions with your Rewards Checking debit card.

Unlike the Upgrade OneCard, an Upgrade Rewards Checking Plus account is not required to earn 3% cash back in bonus categories with the Upgrade Life Rewards Card.

According to Upgrade, no geographic restrictions apply to checking accounts and debit cards. However, all Upgrade Cards (including the Upgrade Life Rewards Card) are unavailable in West Virginia, Wisconsin, Iowa, and the District of Columbia.

4. Check your approval terms before the hard pull; use the card immediately after

Have you ever applied for a credit card just to receive a pitifully low credit line along with a hard pull on your credit report? Upgrade allows you to potentially avoid that situation by allowing you to check what credit line you qualify for before the hard pull is initiated. You will also access your APR and installment loan payback period before agreeing to apply. The hard inquiry is completed once you approve the terms of the offer.

The approval process is similar to the Apple Card, allowing you to see your credit line without a hard pull. Also similar to the Apple Card, Upgrade will provide you with immediate access to a virtual card number you can use while waiting for the physical card to arrive in the mail.

» MORE: Credit cards that offer pre-qual or preapproval without a hard pull

5. Available to those with fair credit

Before applying for the Upgrade Life Rewards Card, it's recommended that you have at least fair credit (FICO scores of 630 or above). That's welcome news for what has historically been an underserved market.

But a lower credit score will generally translate to a higher APR. If you are diligent in paying off your monthly balance, the Upgrade Life Rewards Card could be a good option for building your credit while earning credit card rewards with little to no fees. But as discussed above, if there's a chance you will carry a balance, you'd be better off with a card featuring a 0% APR offer.

Upgrade's other credit cards

Upgrade offers several other credit cards, including:

• The Upgrade Select Visa®, which doesn't earn rewards and carries an annual fee of $39.

• The Upgrade OneCard: You can earn 3% cash back on everyday purchases, defined as purchases from convenience stores, drugstores, restaurants and gas stations. Utilities and payments for phone, cable, TV and streaming services also qualify for the 3% rate. (The 3% cash back is limited to $500 in rewards per calendar year; after you hit $500 in rewards, you'll drop down to 2% back.) You'll earn 2% back on all other purchases. But to qualify for those rates, you must open an Upgrade Rewards Checking Plus account. In addition, you must maintain an average daily balance of at least $2,500; have direct deposits of at least $1,000 per month; or make at least eight eligible purchases with your Rewards Checking Plus debit card each month. Otherwise, you’ll earn 1.5% cash back.

• The Upgrade Secured OneCard, which has the same benefits and rewards structure as the standard OneCard. Your credit line is secured by the balance in an Upgrade deposit account (up to $5,000). This card is not available for direct application, but qualified applicants can apply for the card when they open an Upgrade Rewards Checking Plus account.

• The Upgrade Cash Rewards Visa®, which earns 1.5% cash back on all purchases. Cash back will be applied to the next month’s balance on your card.

• The Upgrade Triple Cash Rewards Visa®, which earns 3% cash back on home, auto and health purchases, and 1% back on everything else. Cash back will be applied to the next month’s balance on your card.

» LEARN: Which Upgrade card is right for you?