You may have heard of the Tomo credit card. Discover if it is right for you and everything else you need to know about it.
The Tomo credit card is a great choice for those who need to build their credit. It doesn't pull your credit score for approval yet reports to the credit agencies. There are no fees nor APR, and you even get cashback.
Discover more about the Tomo credit card, including the caveats you should be aware of before applying.
Tomo Credit Card Review
Tomo is a credit card designed for those with poor or no credit. But it doesn't follow the traditional model of a secured card. This card takes a unique approach.
Learn more about the Tomo credit card, including whether it is legit, who it is good for, and everything else you need to know.
Tomo Credit Card: What Is It?
The founders of TomoCredit are young immigrants who struggled to build their credit without any history to speak of. They decided to create another way for people to be approved for a credit card. They also wanted to make sure that cardholders could build their credit score with the card.
Tomo's credit card stands out because it doesn't check your credit history to approve you. Additionally, there are no fees or interest rates.
You can be approved for a credit limit of anywhere from $100 to $10,000. Your limit depends on the information Tomo gets from your bank account. We will go into more detail about the approval process later.
How You Pay the Card
When you apply for and set up your Tomo credit card, you will have to link a bank account. Tomo will automatically withdraw the appropriate amount from your bank account when a payment is due. This autopay means that you don't have to worry about remembering to pay your statement.
The process includes third-party service providers like Plaid and Finicity that integrate your bank accounts. This means that Tomo doesn't store your bank account's login details.
Autopay Is Weekly
One important point to keep in mind is that Tomo uses weekly autopay, triggered every Monday. This contrasts with the traditional model of monthly payments for credit cards.
This helps your credit score since more on-time payments are reported to the credit bureaus.
It also minimizes Tomo's risk. After all, a week gives you much less time to accumulate a credit balance than a month does. This is especially important given that Tomo helps people with poor credit scores.
While the weekly payments help your credit score and reduce Tomo's risk, there are some caveats to be aware of. Most importantly, you can't use the card and expect to have several weeks to pay it off. This gives you less flexibility if your paycheck isn't coming for a few weeks.
More to learn: Land's End Credit Card: Everything You Need to Know
You Cannot Carry a Balance
Tomo is different from traditional cards in that you cannot carry a balance. If you don't pay off the balance, Tomo will freeze your card. It will be unfrozen once the balance is paid off.
It Offers Cashback
The other highlight of Tomo is that it offers 1% cashback. This is especially impressive given that the card has no fees. You will be hard-pressed to find another card without fees or interest rates that can give you cashback.
The cashback comes in the form of Tomo points. You can redeem these through your dashboard at any time. They become redeemable 28 days after you pay the previous month's statement.
It Is a Mastercard
Tomo is a Mastercard. This means it will be accepted anywhere that Mastercard is accepted.
As mentioned, Tomo does not charge annual fees or interest rates. This leads many to wonder how the company makes money. The company earns a small fee from merchants when you buy something with your card.
How Tomo Boosts Your Credit Score
The main way that Tomo boosts your credit score is by reporting your on-time payments to all three of the major credit bureaus.
In addition to this, the fact that you automatically pay Tomo weekly further helps your score. As mentioned, it increases your number of on-time payments. And the autopay function means that you will not miss a payment as long as you have enough funds in your bank account.
Paying your balance weekly also helps keep your credit utilization ratio low. This is another significant factor affecting your credit score.
Is Tomo Credit Card Legit?
Yes, the Tomo credit card is legit. The company already has more than 18,000 customers. Additionally, it has positive reviews online.
As with any other credit card, Tomo offers a method of disputing charges. You can do this online via your Tomo dashboard. You will have to fill out a form. Just remember that disputes can take 60 or more days for a resolution.
Additional reading: Charge Card VS Credit Card: How Are These Different?
Is Tomo Credit Card Good?
The short answer is that the Tomo credit card is good for some people. Others should not necessarily consider it.
Who It is Good For
If you have a bad credit score or no credit history, Tomo may be an excellent choice. The caveat is that you will need to have a bank account. While many people have a bank account, there are still others without them. If you don't have one, you can potentially find a secured credit card that works for you, as you cannot get a Tomo card.
Assuming you have a bank account, Tomo can be an excellent option for those with poor credit. The company reports your on-time payments to all three major credit bureaus. Additionally, those payments are weekly. This combination means that you will notice your payment history on your credit score increase more quickly.
If You Don't Have a Security Deposit
Another popular option for people with poor credit is a secured credit card. With these, you make a deposit, and that deposit becomes your credit limit. This is another way to build credit, but it also reduces your cash flow.
You essentially tie up some of your funds in that security deposit. Depending on your finances, this may not be possible.
Tomo is a good alternative to these cards if you don't have the liquid funds to make a security deposit. This comes from the fact that there are no security deposits needed.
Additionally, Tomo doesn't check your credit score or history as part of the application process. This means you will not notice the temporary drop in your score that comes with a hard inquiry.
If You Don't Have an SSN
Tomo is also rare because it offers its card to people without an SSN. This means that non-Americans can also qualify. To apply, you will need an Individual Taxpayer Identification Number (ITIN) if you don't have an SSN.
Anyone Who Doesn't Want Fees or APR
Even if you have a good credit score, you may benefit from Tomo. The 0% APR and lack of annual fees make it attractive for anyone.
The caveat is that t other credit cards offer better rewards than the 1% cashback from Tomo.
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Who It Isn't Ideal For
As mentioned, if you don't have a bank account, Tomo is not ideal for you.
Tomo is also not the best option for anyone who prefers not to link their bank account. While Tomo is legitimate, some people feel that connecting accounts violates their privacy.
If you have a good credit score, you may not want to use Tomo. You would likely be approved for a card with a higher credit limit or better rewards. The 1% cashback is the only reward from Tomo. Many cards offer more rewards and benefits.
You also do not want Tomo if you carry a balance on your credit card. Tomo will automatically pay your balance off every week using your bank account. If you have a balance, Tomo will freeze your account. So, this is not a card you can use when funds are short, and you don't know when you will have more.
Tomo Credit Card Pre-approval
As mentioned, Tomo's approval process will involve looking at your bank account. Tomo uses this and other factors to determine your financial responsibility. From there, they choose the appropriate credit limit for you, up to $10,000.
Tomo uses a proprietary algorithm to figure out how credit-worthy you are. This is based on your financial history as well as other sources. Tomo also considers your email address, phone number, income amount and stability, and any potential red flags.
You Can Update Your Credit Limit
You can contact Tomo to update or increase your credit limit. There are a few main situations when you are likely to be approved for an increased limit, including:
- You link additional bank accounts
- You link a different bank account that has a higher balance
- You make on-time payments with Tomo
The application for Tomo is very quick. You can complete it online in less than five minutes.
Tomo is a unique credit card that determines your approval based on your bank account balance and other factors. It is an excellent option for those with poor credit, and it will help you build your credit score.
Keep in mind that the payments are weekly, and you cannot carry a balance. You get no fees, 0% APR, and 1% cashback in exchange.
Further Reading: What Are The Four C's of Credit?
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.