5 Things to Know About the Indigo Credit Card

The Indigo credit card is an option if you're hoping to rebuild your credit, but it'll cost you.

Issued by Utah-based Celtic Bank, the card comes in a variety of different colors and designs, but don’t let that distract you from its potentially high fees. It can provide a costly pathway toward building credit. Even for those with poor credit (FICO scores of 629 or lower), better options exist.

Here’s what you need to know about the Indigo Mastercard.

» MORE: NerdWallet’s best credit cards for bad credit

1. It can help you build credit ...

The Indigo credit card reports to all three major credit bureaus: TransUnion, Equifax and Experian. That's ideal for someone trying to build credit because these bureaus collect the information used to calculate your credit scores.

Payment history is a key factor in those scores. As long as you stay on track with payments, you can qualify for better credit cards in the future.

» MORE: What makes up your credit score?

2. ... But it has a costly monthly and annual fee

As of August 2024, the Indigo credit card charges an annual fee: $175 the first year and $49 thereafter. The higher the annual fee, the less appealing this card becomes. And on top of that, there's also a monthly fee to consider: $0 the first year and $12.50 thereafter (a total of $150 annually). With cards like these, monthly fees are a big red flag.

In fact, many credit-builder cards let you avoid fees entirely. For instance, you could apply that money toward a secured credit card deposit, which would allow you to build credit and get that deposit back eventually as long as you make on-time payments. (You will not be able to recover the cost of an annual fee or a monthly fee.)

For lower fees, consider: The $0-annual-fee Capital One Platinum Secured Credit Card can start you off with a credit limit of $200 for a deposit of $49, $99 or $200, depending on what you qualify for. You can also get access to a higher credit line in as little as six months of paying on time. Whatever amount you deposit, you’ll eventually get it back if you maintain a good payment history. And it doesn't have the high fees of the Indigo card.

» MORE: NerdWallet's best secured credit cards

3. And those fees can lower your initial credit limit

Let's say you have an account with a credit limit of $300 and a $49 annual fee. In that case, your initial credit limit is really $251 until you pay the fee. The monthly fee can also slightly decrease your credit line further.

A low credit limit also makes it easy to run a high credit utilization, which can hurt your credit even as you’re working to improve it. It’s not worth paying a high annual fee for a credit limit that’s floor-low.

4. The APR runs high

A high interest rate is not unheard of on a card that caters to applicants with poor credit. Nevertheless, it means that carrying a balance will be expensive.

As of August 2024, the APR on the Indigo credit card was nearly 36% for purchases. This rate can be costly if you can't pay your balance in full each month.

For no interest charges, also consider: The Chime Secured Credit Builder Visa® Credit Card doesn’t charge fees or interest because you can’t carry a balance from one month to the next. There's also no set security deposit required upfront. You must have a qualifying Chime® account to fund the card's flexible security deposit, but you get to choose an amount that aligns with your budget.

5. The optional programs can add to its cost

During the application process, you’re offered the option to enroll in certain programs for a fee.

Overlimit coverage

Rare indeed is the card that charges an overlimit fee these days; those have essentially been extinct for years. But it's an option with the Indigo credit card, and it allows you to go over your credit limit for a fee of up to $41. The issuer may also charge two additional overlimit fees if the new balance continues to exceed the credit limit as of the payment due date in future billing cycles. Only one fee per billing cycle will apply even if you exceed your credit limit several times within that same cycle. It’s a potentially steep cost to pay considering that the issuer may still decline a transaction if you haven’t yet established a payment history, the account isn’t in good standing, or the credit limit is significantly exceeded.

Credit protection

The credit protection option may allow for your minimum payment or monthly statement balance to be canceled for a certain amount of time if you have a qualifying circumstance. Eligible situations may include involuntary unemployment, a disability, hospitalization, loss of life, a natural disaster or an auto repair of $250 or more. If you opt into this protection, a monthly fee of $1.49 per $100 of your ending balance on your billing statement will apply regardless of whether you’re approved for such protection. For instance, if your monthly statement balance is $300, the fee would be $4.47. No fee applies if you pay off your balance in full by the payment due date. Terms apply.

The Indigo credit card is already expensive enough as it is, so It’s not worth paying for these add-ons. Plus, these kinds of features can foster unhealthy habits like exceeding your credit limit, which can negatively impact your credit scores. If you feel you need to enroll in overlimit coverage or credit protection, know that you can cancel at any time.

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