TD Bank Has a Pretty Dumb New Idea for a Credit Card Product
Doing what I do, I’ve seen several new credit card products come down the pike in recent years. Some of these are fairly boring (like 2% flat rate cards — they have a use but they’re not exciting), others as more interesting but not for me (see: Ness Card), and yet others just sound downright awful. In the case of TD Bank’s new Clear card, it’s definitely the lattermost option. So what makes it so bad?
Rather than charging customers interest on the balance they carry over, TD Bank’s idea is to simply charge a flat monthly fee instead. With that in mind, the new TD Clear card comes in two flavors: one with a $1,000 credit limit and another with a $2,000 limit. For the former, you’ll pay $10 a month, while the higher limit comes with a $20 monthly fee. Doing the quickest of math, that would mean you’d pay between $120 and $240 a year just for the right to have the Clear card.
As for the rewards that TD Clear offers… wait, you thought they were rewards? Nope. You just get a card with a $1,000 or $2,000 credit limit.
Okay, to be fair, there are a couple of other minor perks. For one, the card doesn’t charge any foreign transaction fees or even cash advance fees. Also, since it’s a Visa Platinum card (which is below the more popular Signature and Infinite varieties), you do enjoy apparently some basic perks, such as cell phone protection when you pay your cell phone bill with your TD Clear card.
Obviously, I’m not really the target market for the TD Clear. In fact, I could see how someone looking to build credit could see the card as a simple solution. Unfortunately, I don’t think it fares too well in that aspect either. That’s because, in theory, you’d want to put more on the card in order to get the most value out of your monthly fee. Yet, doing so would lead to higher utilization that will then be reported to credit bureaus.
Rather than going the monthly payment route with TD Clear, I feel like most customers would probably be better served by a traditional secured card or even one of the hybrid debit-secured cards that have popped up from FinTechs, such as Credit Sesame and Cred.ai.
Heck, even a base-level Self credit builder account comes out to a lower fee than TD Clear (although you’ll pay $25 a month for Self, you’ll get all but $89 of that money back afterward). There’s also the oft-mocked Credit One, which offers “Rebuilding” credit cards with some cashback rewards and fees lower than Clear’s.
On the one hand, I have some respect for TD’s attempt to think outside of the box. Alas, as the kids say, this ain’t it. So, TD, please go back to the drawing board and cook up something that’s actually helpful to people. Hint: think competitive, not predatory.