Fingerhut lets you shop, pay in installments, and build credit. The goods Fingerhut sells are typically priced well above the price of the same items in other stores. Keep that in mind when you shop. You will receive a hard pull on your Experian credit report which can have an initial negative effect on your overall credit.
Easy to qualify
No annual fee
Credit building tool
Reports to all credit bureaus
A hard pull on your credit report
Can only use credit with Fingerhut
Fingerhut is an online retailer. You can buy items and pay in installments. Your payments are reported to all 3 credit reporting agencies, helping you build credit. Approval is instant and you can qualify with poor credit. Be careful, though: the goods in the store are heavily overpriced.
A Fingerhut account is a useful credit-building tool. It’s free to open an account, it boosts your credit quickly, and just about anyone can qualify. The downside is that you can only shop in the Fingerhut store and goods in the Fingerhut store are very expensive.
You may feel that the extra cost is worth it for the credit-building impact, but be sure you’re weighing the costs accurately.
Here’s our Fingerhut review showing how it works and how to get started.
Who Is Fingerhut?
Fingerhut was started back in 1948 by William Fingerhut as an automobile seat cover firm. In 1952 they became a mail-order catalog company. Their site carries everything from furniture, bedding, and jewelry to the latest electronics.
They also offer two different credit accounts through WebBank. One is called the Fetti Account, the other is the more accessible Fresh Start plan, designed for people with no credit or badly damaged credit..
Who Is WebBank?
WebBank is an FDIC-insured, state-chartered industrial bank located in Salt Lake City, Utah.
They offer a wide variety of products like savings accounts and time deposits. They also partner with companies like Fingerhut to provide niche financing solutions to businesses and consumers.
⚠️ Important note: There’s no such thing as a free lunch in the credit-building world. A Fingerhut account can help you build credit, but the goods you’ll purchase are much more expensive than they’d be in other stores. Keep that in mind, and buy only inexpensive items and as few items as possible.
Fingerhut Fetti Credit Account Review
The Fingerhut Fetti Account is an unsecured store credit card, which means that you can only use the card to shop with Fingerhut or its partners.
You can shop for over 400,000 items, but this account is primarily used to help people establish or rebuild their credit. You would not want to use it for day-to-day shopping.
The main features of the Fingerhut Fetti Credit Account include:
- No Annual Fee
- 35.99% Interest Rate
- SafeLine Insurance Benefit (Optional)
- Up to $41 Fee For Late Payments Or Returned Payments
- Account Reported To All 3 Credit Reporting Agencies
- Easy Approval Even With Limited Or No Credit History
After you have been approved you’ll be given a credit limit, based on your credit profile. You can make purchases up to that limit.
You won’t receive a physical card. All transactions are online and you can access your account through the member portal area.
You have the option to pay off your purchases over time or in full.
If you choose to pay over time, avoid making only the minimum payment. Minimum payments will barely reduce your balance and your interest costs will escalate.
If you aren’t approved for this account, your application will automatically be considered for a FreshStart® Credit Account.
Fingerhut FreshStart Credit Account Review
If your credit is poor you could initially get approved for the Fingerhut FreshStart® Account.
This account is a type of Installment loan. It involves 3 steps:
- Make a one-time purchase of at least $50.
- Put a minimum of $30 as a down payment on your order. Only a debit card, ACH payment, paper check, or money order can be used for your down payment.
- Pay off the balance in monthly payments split into either six or eight payments.
If you make your payments on time you can get your account upgraded to aFetti Account.
💡 Don’t pay off the item all at one time or you won’t be able to qualify for the upgrade.
This should give you an idea of the fees involved:
|FreshStart Account Fees|
|Required Down Payment||$30.00||$30.00|
|Repayment terms||6 monthly payments of $3.63||6 monthly payments of $21.78|
Fingerhut Credit Pros & Cons
- No Annual Fee
- Improves Payment History
- May Improve Credit Score
- Costs Money
- Credit Check Required
- High APR
- High priced goods.
The Big Downside: Overpriced Goods
A Fingerhut account carries no annual fee. It will put a revolving credit account on your credit file and report to all three credit bureaus. If you make all payments on time and keep your credit utilization low, you will help your credit score.
There’s still a big cost: a substantial markup on the goods you buy.
Look at this common household purchase from the Fingerhut catalog.
Now look at the same item on Amazon.
That’s a $70 difference in the price of one item. That’s already more than enough to cover the annual fee on a good secured card for people with no credit or bad credit, which will let you shop anywhere.
If you qualify for a Fetti account from Fingerhut you might even qualify for a no-fee secured card, which would be a much better deal.
Steps To Take After Approval
Getting approved for something, no matter what it is, feels good. You feel like you have just won something. Getting approved is just the start.
The point of a Fingerhut account is to build credit. With the prices they charge you would not want to use it for everyday shopping. If you want to build credit effectively there are some things you should be doing with your account.
Remember that the goods sold in the Fingerhut store are more expensive than the same goods in other stores. That’s how they make their money and cover the risk of extending credit to borrowers with poor credit scores.
You can minimize the price damage with a few steps.
- Buy only what you need.
- Buy only inexpensive items. The higher the price, the bigger the markup.
- Select the longest possible payment term.
- Don’t buy again until the last item you bought is paid off.
This will maximize the benefit to your credit score and minimize the damage that the overpriced items do to your budget.
Make On Time Payments
I am sure you are tired of seeing everyone saying “on-time payments”. It gets repeated for a reason: it’s the single most important part of building your credit score.
If you use a product designed to build credit but fail to make on-time payments you will damage your credit instead of building it.
No matter what, avoid late payments.
Don’t Make Minimum Payments
Making the minimum payment will keep your account in good standing and avoid damage to your credit. It can also cost you a lot of money.
When you make a minimum payment you are paying off the interest and a small amount of the cost of your purchase. You are barely reducing your balance. If you get in the habit of making minimum payments you will pay more and more interest and the total cost of your purchase will rise dramatically.
A minimum payment may be a way out of you are in a short-term cash crunch, but do everything you can to stay out of the minimum payment trap. It’s a very expensive way to build credit.
Keep Credit Utilization Low
Another factor to consider is credit utilization. This is the percentage of your credit limit that you actually use. If you have a $500 limit on your Fingerhut card and you charge $250 worth of items, your credit utilization is 50%.
You want to keep your credit utilization low, and you want to avoid spending a lot of money in a store that has high prices. You can do that by buying only inexpensive items and buying only one thing at a time. Make another purchase only when you have paid your previous purchase off.
Try to use no more than 30% of your approved limit at any given time.
How Do I Cancel My Fingerhut Account?
You can close your account at any time by writing to them at:
WebBank, Fingerhut Credit Account Services
P.O. Box 0260
St Cloud, MN 56395-0260
You cannot use your account for any purchases after you cancel or close your account.
If you don’t pay any remaining balance in full when you cancel, your outstanding balances will continue to accrue interest charges.
Is There A Fee For Closing My Fingerhut Account?
Outside of the fees associated with your remaining balance, there is no fee for closing your account.
A Better Alternative
A Fingerhut account is easy to open and will place a revolving credit account on your credit record. If you make your payments on time that will help you build credit.
The downside is that the goods you buy are more expensive than they would be in other stores.
If you want to build credit without buying overpriced goods, consider applying for a secured credit card. You’ll get the same impact on your credit and you can use your card in any store. That means better deals on the goods you buy!