Building credit is essential for financial freedom, but it's not always easy to find the right tools. Today let’s dive into how Zopa Credit Card works, its benefits and drawbacks, and how it stacks up against the competition.

About Zopa

Zopa Bank Ltd, founded in 2005, started as one of the world’s first peer-to-peer lending platforms. Evolving into a full-fledged bank in 2020, Zopa now offers a range of financial services, including the Zopa credit card.

What is the Zopa Credit Card?

The Zopa credit card is designed to be user-friendly and accessible via the Zopa app on your smartphone. It’s geared towards helping you improve your credit rating conveniently. Here's a breakdown of everything you need to know about the Zopa credit card.

How the Zopa Credit Card Works

The first step is to apply online for a soft pre-approval check. If pre-approved, proceed with a full application that involves a hard credit check. All card transactions, from payments to tracking expenses, can be handled directly through the app. The card offers a representative APR of 34.9%, with rates starting at 27.3% for those with excellent credit.

Building Credit with Zopa

While Zopa isn't marketed as a traditional credit builder card, it can still help you improve your credit score:

• Timely Payments: Using the card for everyday purchases and paying off the balance in full each month helps demonstrate financial responsibility.

• Credit Utilisation: Keeping your credit utilisation low (using less than 30% of your available credit) positively impacts your credit score.

• Spending Control: The app's features also make it easier to manage your spending and avoid missed payments.

What are the benefits?

• Mobile-Friendly: Easy management through the Zopa app, including features like PIN resets, instant spending notifications, and the ability to freeze your card instantly.

• Contactless Payment: Adding the Zopa credit card to these digital wallet services enhances convenience and security. 

• No Annual Fee: Keeps costs low for cardholders. Also offers fee-free overseas spending.

• Regulated and Secure: Protected by the Financial Services Compensation Scheme (FSCS).

What are the drawbacks?

• High APR: 34.9% representative APR can become expensive if you carry a balance.

• Strict Eligibility: Requires a good credit history and at least two other active credit lines.

• No Rewards: Lacks cashback or rewards programs common in other credit cards.

• Cash Withdrawal Fees: £3 charge for cash withdrawals both domestically and abroad.

Comparison to Other Products

Compared to dedicated credit builder cards, such as the Asda Money Select or Tesco Foundation cards, the Zopa credit card offers a modern, app-centric approach. However, it comes with higher APR, stricter eligibility criteria, and lacks rewards, making it less accessible for those with poor credit.

What do people think of Zopa?

Zopa enjoys positive feedback on Trustpilot, with an overall rating of 4.5 out of 5 stars by 25,000+ customers. Customers appreciate the straightforward application process, user-friendly app, and helpful customer service. However, some reviews note concerns about the fraudulent charges not being reversed, poorly managed direct debits and stringent eligibility criteria, reflecting the varied experiences across Zopa’s offerings.

Conclusion

The Zopa credit card provides a modern, user-friendly way to manage finances and build credit. Despite its drawbacks like high APR and strict eligibility, it remains a solid option for those looking to improve their credit scores responsibly. 

Always explore different credit-building products to find the best fit for your financial needs.

Please note: this is not financial advice, and you shouldn't rely on it to make any financial decision.

If you are in debt or struggling, StepChange or MoneyAdvice are able to provide free advice and help: StepChange Debt Charity | Money Advice