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Look out, Credit Sesame now offers more than just free credit scores and credit report information.
They have a new credit building account called Sesame Cash that works like a debit card and reports like a secured credit card. The debit card aspect allows you to save money by avoiding credit card debt.
And the Sesame Cash account comes with Credit Sesame’s other tools, like credit monitoring, a free credit score, identity theft protection, and resources to help you achieve your financial goals.
But how exactly does the Sesame Cash account work?
What is Sesame Cash?
The Sesame Cash account offered by Credit Sesame is an online banking account that can help you build credit.
Before opening a Sesame Cash account, you will first need to have an account with Credit Sesame. This can be their free credit monitoring account or one of their paid premium accounts.
The initial setup for a Sesame Cash account is just like any other online banking account. You fill out your information, transfer/deposit money, and get a debit card in the mail a few days later. You can even set up direct deposit on your account.
But Sesame Cash offers an additional account feature for building credit. By using some of your bank account balance to set up a credit line, you can start building credit. No credit check is required.
There is nothing special you have to do, just swipe your debit card like normal. Credit Sesame does all the work in building your credit history in the background.
The account will report to the credit bureaus like a credit card.
The Sesame Cash account also comes with a whole host of other features you often find with an online bank account, including cashback offers, a free credit score, rewards for improving your credit score, and more.
If you’d like to see a side by side comparison between Credit Kharma and Credit Sesame, check out our article, Credit Karma vs. Credit Sesame.
How Does Sesame Cash Work?
If you decide to use the credit building feature of the Sesame Cash account, the first thing you will need to do is select a portion of your account balance to transfer over to the credit line. This cash serves as a security deposit and establishes your credit line.
So if you transfer $500 from your bank account to your credit line, your credit limit will be $500.
You then have the option of setting your own utilization rate. The ideal credit utilization rate is 10% or less. So with a credit limit of $500, an ideal utilization rate will be $50 or less.
From here on out, your work is done.
Each month, Credit Sesame will look at your purchases and select ones that total up to less than or equal to your preset credit utilization value. I.E., three $15 purchases to stay below $50.
Then because the purchases have already been paid for using your debit card, Credit Sesame marks this ‘balance’ as paid.
Finally, Credit Sesame sends all of this information, balance, credit limit, and payment history, to all three credit bureaus monthly.
On your credit reports, this information will appear and be weighted like a revolving account and will help you build credit in much the same way a secured credit card would.
Sesame Cash Pros
There are many advantages to opening a Sesame Cash account, particularly if you are looking to improve your credit score.
Free Option for Building Credit
There is no fee charged to open a Sesame Cash account. Nor is there any annual fee, foreign transaction fee, or interest charged.
And if you use one of their 55,000+ ATMs, you can avoid ATM fees as well.
The only kind of fee that you will ever have to pay outside of using an out-of-network ATM is the initial security deposit you need to provide to establish your credit line. And even this cost is 100% refundable if you ever need to close your account.
Set Your Own Utilization Rate
Most revolving accounts require you to keep a close eye on your credit utilization. At most, a credit card might offer you a balance alert.
But the Sesame Cash account actually lets you preset a desired credit utilization limit. This is a bit like a spending limit, but instead of being cut off when you’ve passed your spending threshold, you can keep swiping your debit card as usual.
All other purchases for the month will remain as debit charges.
Account Comes With Lots of Extras
Many banks these days are offering extras with their accounts to help attract more consumers, and Credit Sesame is no exception.
They have a few standard features, like cashback earning with specific merchants and earlier paycheck deposits, and they also have a few unique bonuses.
Few bank accounts out there offer you a way to build your credit and reward you with cash when you succeed. But Sesame Cash does.
Sesame Cash Cons
There are a few downsides to Sesame Cash that can make it a less appealing option when it comes to managing your finances.
Requires A Security Deposit
The biggest downside to opening a Sesame Cash account is the required security deposit.
Even though it is refundable, transferring money from your account to your credit line can take a decent chunk out of your available cash.
And based on your spending habits, you may need to take a close look at how much of a security deposit you need.
If, for instance, you only use the account to pay for bills over $50 and you want to set a utilization rate of 10%, you will need to fork over at least $500 for a deposit.
No Credit Line
Another downside to the Sesame Cash account, especially compared to other types of revolving accounts, is that it’s not an unsecured line of credit.
While keeping a close reign on your debt is important, everyone has unexpected emergencies they need to fund.
Since the Sesame Cash account works like a debit account, you won’t be able to cover these emergency expenses unless you have enough cash on hand to do so.
So you will need to look elsewhere for a product that offers you an unsecured line of credit.
Closing Your Account Can Be Difficult
While setting up a Sesame Cash account is quick and easy, closing your account is not.
To close your credit line, you’ll need to request a refund of your security deposit. Currently, the only way to do this is to call Credit Sesame. Even if you just want a partial refund to lower your reported credit line.
Only after this security deposit has been refunded will you be able to complete closing out your Sesame Cash account. Unfortunately, according to some reviews, this refund process can take several weeks.
Sesame Cash Features
The Sesame Cash account is more than just your traditional online bank account. The parent company, Credit Sesame, offers many additional features and rewards earning opportunities with their Sesame Cash account:
- Build credit using a debit card – using a portion of your bank account balance, you can establish a credit line that will report as a credit card.
- Set your own utilization rate – optimize the credit utilization part of your credit score by presetting your utilization rate on this account.
- Reports to all three credit bureaus – your account information is reported to all three major credit bureaus: TransUnion, Equifax, and Experian.
- No credit check – no credit check or minimum credit score is required to open a Sesame Cash Account.
- Free credit score – receive your free TransUnion VantageScore updated once a month. Or you can upgrade to one of their premium credit monitoring plans to receive your score more often and/or from all three credit bureaus.
- Credit monitoring – get alerts on changes to your credit reports.
- Education Resources – from building credit to saving money on taxes, Credit Sesame offers different resources and tools.
- Cashback offers – earn up to 15% cash back at certain retailers every time you swipe your Sesame Cash debit card.
- Rewards for improving credit – each month that your score goes up by 10 points, you will be rewarded with $10, and if your score goes up by 100 points within 30 days, you’ll get $100.
- Quicker paycheck deposit – using direct deposit, you could gain access to your funds up to 2 days earlier.
- No fees ever – over 55,000 free ATMs nationwide and no interest charges makes Sesame Cash a fee-free checking account.
- Identity theft protection – your account comes with $1 million in identity theft insurance, and identity theft restoration is free.
Is It Worth It?
Sure, if you are looking to build credit, especially if you have bad credit (can’t qualify or have too high utilization), no credit, or prefer using debit cards.
If you are trying to build credit and having trouble qualifying for a credit card or loan, then the Sesame Cash account could be a worthwhile alternative.
Because there is no credit check, you can’t be turned down. So even if you have poor credit or no credit, you will be able to open a Sesame Cash account.
In addition to reporting a credit limit and payment history, the Sesame Cash feature for setting your own utilization rate can really help boost your credit score. Your “amounts owed” makes up 30% percent of your credit score, and your credit utilization rate is a huge part of that.
By setting a custom utilization rate on this account, you can help lower your overall credit utilization rate.
Add in the feature for earning rewards to improve your credit, and the fact that the account never charges interest or any other fees, and opening a Sesame Cash account can be a no-brainer when it comes to building your credit.
But, if you already have decent credit or are looking for an unsecured credit line that you can actually use (i.e., make a large purchase and pay it off over time), then opening a Sesame Cash account will not be worthwhile.
Does Sesame Cash Help Build Credit?
If you set up the credit building feature, using the Sesame Cash account can help you build credit.
You use your debit card like you normally would, and Credit Sesame does all of the work in the background to create your balance and payment history. They then report your account information to all three credit bureaus each month.
This can improve the payment history and credit utilization portions of your score.
Using the Sesame Cash account to build credit will be best for those with no credit, a thin profile (only one or two reporting accounts), and those with bad credit. It can even help those with too high of a credit utilization rate lower it.
Or, if you prefer to use cash or debit, the Sesame Cash account can be a good resource for helping you establish credit without going into debt.
Is Credit Sesame a Legit Site?
Credit Sesame, the company that issues the Sesame Cash account, is a legitimate name in the credit monitoring market.
Credit Sesame was established in 2010 and began providing consumers a free monthly credit score along with educational resources on how to improve your score.
Their services have since expanded, and they now offer multiple credit scores, credit score monitoring, mobile banking, resources for loans, and several other financial resources and calculators. They also offer an Apple and Android Credit Sesame app.
Credit Sesame funds the free score and free banking account they offer through paid premium credit monitoring service subscriptions as well as through credit card (and other credit product) referrals.
Credit Sesame currently has an A+ on the BBB website with a 3.72 out of 5 on customer reviews.
It is worth noting that the Sesame Cash service is one of the newer services Credit Sesame offers, and its reviews are mixed.
Additionally, the credit line offered through Sesame Cash is backed by Community Federal Savings Bank, a New York-based institution established in 2001.
How Do I Withdraw Money from Sesame Cash?
If you want to draw money out of your account, you will need to use an ATM as there are no brick-and-mortar Credit Sesame banking locations.
The upside is that Credit Sesame has a partnership with ATM providers allowing you to withdraw money for free from over 55,000 ATM locations nationwide.
If you want to withdraw part or all of your security deposit for your Sesame Cash credit line, this process will be more complicated.
While you can transfer money into your credit line via their website or app, you’ll need to call customer service to request a refund of your deposit. And this refund may take a while to hit your available cash.
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Amanda Garland is a personal finance blogger living in Dallas, TX. 10 years ago she was living paycheck to paycheck and knew nothing about how credit works. She learned some hard lessons in her fight for financial stability. Now she has a friendly competition going with her husband to see who can reach a credit score of 850 first. She is also a poet, having obtained a Bachelor of Fine Arts degree in Creative Writing.