Destiny Mastercard Cashback Rewards $700 Credit Limit
REVIEW

At A Glance

The Destiny Mastercard with Cash Back has two features that the regular Destiny credit card does not ave. Firstly, the starting credit limit is $700 versus $300 for the regular Destiny Mastercard. Secondly, it is a flat rate cash back of 1.5% on all purchases. However, the fees are higher because they do charge a monthly fee from the second year onwards and one of the key decisions you have to make is if it is worth paying their fees for a higher credit limit.

Advantages and Disadvantages

Pros	Cons
$700 Credit Limit 1.5% cash back on all purchases	High Fees Credit Limit does not increase over time No Mobile App

Requirements

Here are the minimum requirements (including credit score) to get approved for the Destiny Mastercard CashBack Rewards.

• Credit Score - You would need a minimum credit score of at least 510. Obviously, you stand a better chance if your score is higher.


• No Current Delinquencies - You must be paying all your bills on time at the moment and preferably for the last six months.


• At Least 6 Months of Rebuilding history - You must have been rebuilding for at least six months to a year and your scores must be on an upward trend. If you have just taken a hit to your score (say from 700s to 500s or even 600s) because of circumstances like divorce, job loss, medical bills etc, you will most likely be denied for this card. If you are in this situation, you should be looking at cards that do not look at credit cards with no credit checks and those that guarantee approval.


• Debt to Income Ratio - Your total monthly debt payment to monthly income ratio should not exceed 40%. Anything higher and your chances of approval are low regardless of your credit score.

Card Details

Annual Fee	$175 during first year $49 from second year onwards
Monthly Fee	None during first year. $12.50/month which totals $150 annually from second year onwards
Regular APR	35.9%
Starting Credit Limit	$700

I would like to highlight the fee aspect of this card and also the cash back program.

There are two fees that this Destiny credit card charge, an annual fee and a monthly fee.

Fees During the First Year - During the first year, the annual fee is $175. There is no monthly fee during the first year so the total fee you have to pay during the first year is $175. The annual fee will appear on your first statement so your $700 credit limit will be reduced by this amount.

Fees from Second Year Onwards - From the second year onwards, the $175 annual fee is reduced to $49. But the monthly fee starts to kick in. You have to pay $12.50 a month (which totals $150 a year) from the second year onwards.That means that the total fee you have to pay from Year 2 is $199 ($49 + $150).

1.5% Cash Back - Card member will also earn 1.5% cash back on all purchases. The cash back you earn will be credited to your next statement.

Key Benefits

1.5% Cash Back - Not many unsecured credit cards targeting those with bad credit have cash back programs. However, this version of the Destiny credit card allows you to earn 1.5% flat rate cash back on all purchases . And 1.5% cash back is very competitive as well. The cash back are redeemed via statement credit and you cannot have the cash back that you have earned deposited into your checking account.

$700 is a very decent credit limit - This version of the Destiny card comes with a starting credit limit of $700. This is higher than the usual $300 credit limit that most unsecured credit cards for bad credit come with. During the first year, your total fee is $175 (which is the annual fee). From the second year onwards, the total fee is $199 (which consists of a reduced $49 annual fee and $12.50 monthly fee which adds up to $150 for the year).

Some Drawbacks

High Fees - Though the Destiny Mastercard with Cash Back comes with a higher credit limit of $700, the total fees you hvae to pay more fees for this card compared to Destiny's other $300 credit limit version .

Credit Limit does not increase - While $700 is a great starting credit limit for people with bad credit, Destiny is known not to increase your credit limit over time. So you are stuck with this credit limit as long as you keep this card.

No Mobile App - Another thing to be aware of is that Destiny does not ave a mobile app. For those of you who are used to managing your other credit cards on a mobile app, the lack of a mobile app can be a real inconvenience.

Analysis

Whenever I perform any analysis on subprime credit cards, I like to look at the ratio between the total fees and credit limit. In this analysis, we need to look at this ratio for the first year and another one for subsequent year. The reason is because the first year fee differs from the second year onwards.

Total Fees to Credit Limit Ratio - 1st Year. During the first year of your card membership, you will be charged an annual fee of $175. There is no monthly fee. So the total fee you pay for the first year is $175. The Fee/Credit Limit Ratio is $175/$700 = 25%. The way to interpret this is that a quarter of your credit limit is taken up in fees.

Total Fees to Credit Limit Ratio - 2nd Year Onwards - From the second year onwards, the annual fee is reduced to $49. However, you will now be charged a monthly fee of $12.50, which works out to $150 a year. That means that your total fees from the second year onwards is $49 + $150 = $199. Hence, the Total Fee to Credit Limit Ratio is $199/$700 = 28%. This means that you will be paying 28% of your credit limit in fees.

What if We Consider the 1.5% Cash Back

Let us assume that you max out your credit limit every month and spend $700 on the card. Each month, you will earn $10.50. In a year, the total cash back you will earn is $126. This will go some way to offset the fees that you will pay. So let's see how the Total Fee to Credit Limit ratio works after factoring in any cash back you will earn.

Total Fees Less Cash Back Earned / Credit Limit - 1st Year - If we assume that you max out your cash back ($700) and pay in full (PIF) every month, then the Total Fees to Credit LImit Ratio would be ($175 - $126) / $700 = 7%.

Total Fees Less Cash Back / Credit Limit - 2nd Year Onwards - As a refresher, from the second year onwards, the annual fee declines from $175 to $49. However, a $150 fee in charged to be paid monthly at $12.50.Therefore the ratio of Total Fees less Cash Back Earned to Credit Limit is ($49 + $150 - $126) / $700 = 10.42%.

Year	Annual Fee	Monthly Fee	Fees/Credit Limit Ratio No Cash Back	Fees/Credit Limit Ratio Cash Back
Year 1	$175	$0	$175/$700 = 25%	($175-$126)/$700 = 7%
Year 2	$49	$12.50/month = $150 a year	($49 + $150)/$700 = 28.4%	($199 - $126)/$700 = 10.4%

Our Take: Who should get this card?

If you are sick and tired of unsecured credit cards that only give you or start you off with a $300 credit limit, then the $700 credit limit for the Destiny Mastercard Cash Back might appeal to you. The card does have high fees on an absolute basis but it compensates for that with a 1.5% cash back program on all purchases. A 1.5% flat rate cash back is a very are feature in credit cards for people with bad credit.

As you can see from our analysis above, when you factor in the cash back you can potentially earn, it goes quite a long way to offsetting the fees (both annual fee and monthly fee). The total fee to credit limit ratio (which is the main number that we use to describe the whether you are paying too much in fees relative to your credit limit) is very reasonable because of the cash back feature.

The one thing you have to bear in mid is that Destiny does not have any mobile app. Furthermore, their desktop portal is not mobile friendly. So you have to manage your account from a desktop computer. Your $700 initial credit limit also does not change or increase over time.

To sum up, if you a rebuilder and looking for your first unsecured credit card, then you might want to consider the Destiny Mastercard Cash Back. Though the fees are quite high on an absolute basis, you can offset that by earning cash back on all purchases.

Reminder - As a reminder, as with all unsecured credit cards for bad credit, you should only apply for this card is you have been rebuilding for at least six months and have seen an improvement in your credit score and also have been paying on time. If you have just faced a sharp drop in your credit, you should consider credit cards that do not check your credit and guarantee approval.