Battle of secured credit cards: One card that reigns supreme

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Secured credit cards might not get as much attention as lucrative rewards credit cards, but they play a crucial role in the world of credit cards, offering credit to those with less than perfect credit scores.

If your credit could use some work, you still shouldn’t settle for just any secured card. Like any category of cards, secured credit cards aren’t created equal.

We welcome you to the battle of secured credit cards! We’re going to look at the best secured credit cards on the market, compare their value, pros and cons and find the winner.

Let the battle begin.

Picking contenders for the best secured credit cards

Not all secured credit cards have made it to our battle. That doesn’t mean there’s something wrong with them. For instance, the Secured Mastercard® from Capital One is a solid secured card that can help a cardholder create a relationship with one of the top card issuers, and the same applies to the Citi® Secured Mastercard®.

However, the credit card market is becoming more and more competitive. Today, some secured credit cards offer rewards – and these are the credits cards that are going to take part in our battle. Why simply build credit when you can build credit and earn cash back?

It’s also important to mention that all the secured credit cards competing in our battle don’t charge annual fees (and we recommend staying away from secured cards that do). Plus, our contenders all offer free credit tracking tools to help you monitor your progress.

Without further ado, meet our contenders.

Bracket showing all of the battle's credit card contenders

The battle

Round 1: Amazon Secured Card vs. Navy Federal Credit Union® nRewards® Secured Credit Card

Qualifier: Bank of America secured credit cards

Round 2: Discover it® Secured Credit Card vs Bank of America® Customized Cash Rewards Secured Credit Card

Final

Winner

Secured credit cards with membership requirements

In the first round, we’re going to take a look at two secured cards that offer rewards but come with certain requirements or limitations, such as membership requirements or limited card acceptance.

Round 1: Amazon Secured Card vs. Navy Federal Credit Union® nRewards® Secured Credit Card

The Amazon Secured Card and the Navy Federal Credit Union® nRewards® Secured Credit Card both offer rewards and require a membership to be eligible to apply.

The Navy Secured card earns 1 point per dollar and offers a few options to redeem rewards for cash back at a 1-cent-per-point value.

The card requires a deposit of at least $200, which then becomes your credit line. The credit union will review your account for a higher credit limit after three months with the card, and for an upgrade to an unsecured credit card after six months.

There’s no annual fee, and other common credit card fees are quite low: The card only charges up to $20 in late or returned payment fees.

All of this is great news for credit builders. There’s only one catch: You’ll need a Navy Federal Credit Union membership to apply for this card.

Unlike other credit unions, Navy doesn’t offer an option to make a small donation to become a member. To be eligible for a membership, you must be a current or retired armed forces member or have one in your immediate family. Membership is also available to Department of Defense civilian employees. If you don’t fit into any of these categories, you’re out of luck with the Navy nRewards Secured card.

The Amazon Secured Card also requires an eligible membership to earn rewards. This membership, however, is much more accessible – the card earns 2 percent back on all Amazon purchases if you’re subscribed to Amazon Prime.

It’s also a very affordable card. The minimum security deposit is $100, there’s no annual fee and a late fee is only up to $5. On top of that, the purchase APR is just 10 percent, and it’s non-variable, meaning it doesn’t change based on the prime rate, which is a rare feature.

As for graduating to an unsecured card, you may become eligible for the unsecured Amazon Store Card after 12 months of responsible card usage and credit building.

The only caveat is, you can only use the Amazon Secured Card at Amazon.com and Amazon physical stores. That’s rather limiting, but luckily, Amazon sells just about everything. You can even earn rewards on your dining if you buy restaurant gift cards on Amazon.

For that reason, we’re giving this round to the Amazon Secured Card. For those who qualify, the Navy nRewards Secured card is an excellent option, but overall, the Amazon Secured is much more accessible and offers great value.

Winner: Amazon Secured Card

Bracket showing the Amazon Secured Card winning over the Navy Federal Credit Union nRewards card

Bank of America secured credit cards

Bank of America currently offers three secured credit cards, but only two have made it to our battle since they offer rewards—the Bank of America® Customized Cash Rewards Secured and the Bank of America® Unlimited Cash Rewards Secured.

Now, it’s time to set these two contenders against each other to pick one to compete in the second round. They’re both general secured credit cards that offer solid rewards—but only one will make it to the ring.

Qualifier: Bank of America® Customized Cash Rewards Secured vs. Bank of America® Unlimited Cash Rewards Secured

Both of these products are secured versions of Bank of America’s unsecured credit cards with identical rewards systems.

The Customized Cash Rewards Secured earns 3 percent cash back in the category of your choice (gas, online shopping, dining, travel, drug stores or home improvement/furnishings) and 2 percent cash back at grocery stores and wholesale clubs. You can earn bonus cash back on up to $2,500 in combined purchases in these categories. All other purchases earn 1 percent back.

The rewards structure on the Unlimited Cash Rewards Secured is much simpler. It’s a traditional 1.5 percent cash back card, meaning it earns 1.5 percent back on all purchases.

Other terms on the two cards are similar. The minimum deposit is $300, and Bank of America will periodically review your account to determine whether you may qualify to have it returned. The purchase APRs are the same, and both cards offer similar benefits, like access to your FICO score from TransUnion.

The difference then lies in value these cards provide.

Crunching the numbers

Consider this scenario: You spend $15,900 on the Customized Cash Rewards Secured annually, which we consider the average credit card spend. You make a point to use the 3 percent category for restaurants and the 2 percent cash back category for grocery stores.

You spend $3,600 on dining and $4,700 on groceries annually, both of which figures are also close to the averages, according to Bureau of Labor Statistics. You’ll earn $108 in the 3 percent category, $94 in the 2 percent category and $76 on the rest of your spending ($7,600).

All in all, you’ll get $278 in cash back per year—even without working to maximize the 3 percent and 2 percent cash back categories.

With the same $15,900 spend, you’ll earn $239 in a year with the Unlimited Cash Rewards Secured.

We have a clear winner.

Winner: Bank of America Customized Cash Rewards Secured

Bracket showing the Bank of America Customized Cash card winning over the Bank of America Unlimited Cash card

Secured credit cards from top issuers

Now that we have a contender from Bank of America, we can set it against the Discover it® Secured Credit Card—a secured card that’s been long considered the best offer in its space by many experts.

Will it hold its top spot? Let’s find out.

Round 2: Discover it® Secured Credit Card vs BofA

The Discover it Secured Credit Card has been reigning supreme in the secured credit card market.

For a while, it was the only general secured credit card from a top issuer that offered rewards: 2 percent cash back at gas stations and restaurants (up to $1,000 in purchases per quarter) and 1 percent cash back on everything else. Additionally, like other rewards cards from Discover, the Discover it Secured matches all the cash back you earn in the first year.

To open the card, you need a security deposit of at least $200. Then, Discover will review your account monthly starting at eight months with the card to determine if you qualify for an upgrade to an unsecured card.

The Discover it Secured doesn’t charge an annual fee. It also “forgives” cardholders for the first late payment, not charging a late payment fee. On top of that, the card comes with a low intro APR of 10.99 percent on balance transfers for the first six months—a great offer if you want to move a balance from another higher-interest card.

As far as secured cards went, this offer was hard to compete with—until Bank of America’s secured cards entered the ring.

As you can see, the Discover it Secured offers some notable perks that the Bank of America Customized Cash Rewards Secured doesn’t.

Now, let’s get to the important part: their value.

Crunching the numbers

Let’s take the same scenario with the $15,900 spend.

As you remember, we got $278 in annual cash back with the Customized Cash.

With the Discover it Secured, you easily maximize the 2 percent category due to the low quarterly spend cap. Using our previous figure, you spend $3,600 on restaurants annually alone, and you can only get 2 percent back on up to $1,000 per quarter.

This means, you’ll get $80 in the 2 percent categories and $119 on the rest of your spending ($11,900), totaling to $199 in yearly cash back.

That’s not great news for Discover it Secured. However, it still has an ace up its sleeve—the CashBack Match bonus in the first year.

CashBack Match turns your $199 earned in the first year into $398. That’s $120 more than what we got with the Customized Cash in the first year.

The Customized Cash wouldn’t even catch up in the second year. After two years, keeping the same spend, you would have earned $556 with the Customized Cash and $597 with the Discover it Secured.

After three years, the Customized Cash would start offering you more in long-term value. However, remember that three years is a long time in the credit world. Hard inquiries fall off your credit reports, missed payments begin to have less weight and credit scores keep going up (if you’re responsible managing and building your credit, that is).

If things go well, after two years you may very well product change your secured card to a better rewards credit card or even have a few good cards in your wallet.

Considering this, as well as extra benefits that Discover offers, the Discover it Secured wins this round.

Winner: Discover it Secured

Bracket showing the Discover it Secured winning over the Bank of America Customized Cash card

Final: Discover it Secured vs. Amazon Secured Card

We have made it to the closing round of our battle with our two outstanding contenders: the Discover it Secured and the Amazon Secured Card.

In truth, the Amazon Secured Card has plenty to offer to cardholders with a Prime membership. The convenience of Amazon is in its ability to offer just about any kind of product. You can shop for groceries, clothing, household supplies, electronics and much more—and earn unlimited 2 percent cash back.

Still, it’s a closed loop retail card, and you won’t be able to use it anywhere outside of Amazon. Staying tied to one merchant is rarely a good idea, even as big as Amazon. You may end up missing out on better deals from other stores or find that a brand you love isn’t available on the site.

Plus, you’ll miss out earning rewards on some common expenses, like gas, insurance charges, streaming services, entertainment and more.

The card also won’t help you create a relationship with any of the top card issuers. The Amazon Secured Card is issued by Synchrony Bank, known for its store credits cards from many brands. The only way up from the Amazon Secured Card is to the Store Card from the same issuer, which offers generous 5 percent back on Amazon purchases – but also only works on Amazon.

The Discover it Secured, on the other hand, can be used at any merchant that accepts Discover. And as your credit grows, the issuer may be open to offer you its other popular products, such as the Discover it® Cash Back, one of the best 5 percent cash back cards, or the Discover it® Miles, a convenient flat-rate travel card.

Considering all this, it’s clear that victory belongs to the Discover it Secured once again.

Bracket showing all the match-ups and the Discover it Secured winning overall

The battle winner: Discover it Secured Card

All of our competitors are outstanding secured credit cards with no annual fees, credit tracking tools and excellent rewards. You can’t go wrong adding any of them to your wallet while you’re building credit.

However, the Discover it Secured still holds first place, thanks to its cash back rates, CashBack Match—an intro offer rare for this class of cards—and an opportunity to create a relationship with one of the top credit card issuers.

Whichever secured credit card you choose, make sure to use it as a tool to practice responsible card usage and remember about credit utilization (how much balance you carry compared to how much available credit you have). A low deposit may be attractive, but if you’re trying to keep your credit utilization ratio under 30 percent to help your credit, it may prove challenging—think of always keeping your balance under $60 because your credit limit is only $200.

If you’ve saved up for a security deposit and want to check your credit card options, head over to CardMatch. With this handy tool, you can browse credit card offers matched to your credit profile. Checking CardMatch won’t hurt your credit, and you’ll get offers you have a good chance of being approved for.

Written by
Ana Staples
Credit Cards Reporter and Young Credit Analyst
Ana Staples is a reporter for Bankrate and an expert on all things credit basics and personal finance for the younger generation.
Edited by
Senior Editor, Credit Card Product News