Credit Building > How does the Zopa credit card work?

How does the Zopa credit card work?

Wollit Team3 minute read · Updated 30th June 2024

The Zopa credit card is a credit card offered by the Zopa Bank. The credit card is meant to be mobile-friendly and is managed only through the Zopa app, available on iOS or Android devices.

Here is how it works.

Who owns the Zopa credit card?

The Zopa credit card is offered by Zopa Bank Ltd.

This is a British online bank that offers a range of financial services, including deposit accounts, personal loans, and credit cards. Established in 2005 as one of the world’s first peer-to-peer lending companies, Zopa gained a full banking license in 2020.

If you’re curious, here are the main facts about Zopa Bank:

Zopa initially started as one of the world’s first peer-to-peer lending platforms, which means it is a website that allows individual investors to lend directly to UK consumers and earn interest in return.
The company’s name, “Zopa,” stands for “zone of possible agreement” since it helps lenders and borrowers meet in the middle.
By 2021, the platform claims to have processed around £6 billion in loans, with borrowers being able to get loans between£1,000 to £25,000 for things like car purchases, debt consolidation, home improvements, and even weddings.
Zopa gained a full banking licence in 2020. Since then, besides peer-to-peer lending, Zopa has offered deposit accounts, personal loans, credit cards, and a money management app. The banking licence means that customers’ money held in Zopa accounts is protected up to £85,000 under the Financial Services Compensation Scheme (FSCS). In other words, if Zopa goes under, deposits are insured for up to £85,000.
Zopa Bank is regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) in the UK, which means that it’s a legitimate company and a regulated bank.

What is the interest rate on a Zopa credit card?

The Zopa credit card has a representative APR of 34.9%.

However, some applicants with excellent credit may be offered a lower rate starting from 27.3%. With Zopa, as with all credit card providers, the actual APR you receive will always depend on your individual creditworthiness.

How can I apply for a Zopa credit card?

To apply for a Zopa credit card, you will need to meet a series of minimum requirements:

You’ll have to be over 18 years old;
You’ll need to be a UK resident with at least one year of UK address history;
You’ll also need to show proof of income of at least £10,000 per year;
You’ll need a good credit history with at least two active lines of credit registered to the UK address where you live.

If you meet these requirements, this is how to actually apply for the card:

Visit the Zopa website.
Click on the “apply online” button to start the application process.
Zopa will run an eligibility check to see if you can be pre-approved for the credit card. This check is a soft search and does not harm your credit score.
If you are pre-approved and decide to go ahead with your application, you may be required to send documents to prove your identity, income, or bank accounts. This step may take a few days, but you can easily send the documents online.
After applying, Zopa will run a hard search on your credit file. This is true even if you are pre-approved. Once all checks are completed, if you are approved, you will receive your card within ten working days.
You should also download the Zopa app, which is available on iOS or Android devices. You can’t manage the Zopa credit card without a smartphone.

Is the Zopa credit card a credit builder card?

Zopa isn’t quite a full credit builder card for a few reasons:

You need to have at least two other credit lines active. If you’re new to the UK or have no credit history this will disqualify you.
You also need to have a good credit history. If you have bad credit this will also make you ineligible.

However, all credit cards, including the Zopa credit card, can be used to build or improve credit.

By using the card for everyday spending, clearing the balance each month, and staying within the spending limit, you might be able to see an improvement in your credit score after a few months.

This doesn’t necessarily mean that the Zopa credit card is a great choice:

It has stricter eligibility criteria compared to a credit builder card.
It has a much higher APR, no rewards, and a lower credit limit compared to a regular credit card.

For a better alternative, consider downloading a credit-building app instead.

One such app is Wollit. Building your credit history with a card like Zopa requires you to first buy things on debt and then repay them as soon as possible. With Wollit, you only need to pay a fixed monthly subscription. Wollit then reports this subscription as a loan repayment to the credit reference agencies.

This directly builds your credit history and improves your credit score while keeping you safe from unexpected fees and charges, maxed-out credit limits, or going into more debt.

More importantly, as your credit score increases, you’ll eventually become eligible for credit cards with lower APRs and better rewards and cashback than Zopa.

Also, unlike with Zopa, anyone is eligible for a credit-builder app like Wollit – regardless of your credit history or score.