When your credit score is in the lowest range — 579 or below — finding a credit card issuer who will approve you for one of their products can feel impossible. Fortunately, there’s a type of credit card that almost anyone can be approved for. With a secured credit card, consumers with poor credit get the chance to build good habits and prove their creditworthiness over time.

What is a secured credit card?

Secured credit cards are a type of credit card that requires a cash deposit as collateral. This deposit is normally close to the amount of the line of credit you receive. If you apply for a secured credit card and put down a $500 deposit as collateral, for example, you’ll likely qualify for a $500 line of credit as a result.

You may be wondering why anyone would want a credit card that requires a cash deposit upfront, but it’s not too difficult to understand why consumers with poor credit might be willing to apply. Getting approved for a traditional, unsecured credit card can be impossible when your credit score is poor, yet you may not be able to improve your credit over time if you can’t find a lender to give you credit.

With a secured credit card, on the other hand, consumers who need to work on their scores can secure their line of credit with a cash deposit. And since their payments are reported to the three credit bureaus, they get the opportunity to build credit and improve their credit rating over time.

Secured vs. unsecured credit cards

Generally speaking, unsecured credit cards are a better deal for consumers. When a card is unsecured, this means you don’t have to put down a deposit as collateral. Most credit cards are unsecured. Unsecured credit cards tend to come with better perks and rewards, lower fees and lower interest rates.

The following chart explains some of the biggest differences between secured and unsecured credit cards:

Unsecured credit cards Secured credit cards
Deposit required? No Yes
Minimum credit score to qualify Usually 670+ Available for scores below 579
Average APR Over 16 percent APRs tend to be higher for secured credit cards
Annual fee charged? Sometimes Usually not; the security deposit is typically a one-time, refundable fee
Helps you build credit by reporting to credit bureaus Yes Yes
Rewards available? Yes, with many rewards credit cards Sometimes

How to apply for a secured card

Applying for a secured credit card works the same as applying for an unsecured credit card; you’ll start by comparing secured credit cards to find one that offers the benefits you really want, then you’ll follow through with your application.

Information you’ll need to provide in your secured credit card application will include your name, birth date, address, Social Security number, employment information and income. Most secured credit cards will require you to pay your security deposit when you apply, which you can usually fund online with a debit card or a bank account. If your application for a secured credit card is not approved, the cash deposit you put down will be returned to you, usually in a few business days.

How to upgrade an unsecured card

If you have had a secured card for a while and have improved your credit score as a result, you may wonder if it’s time to upgrade to an unsecured credit card. You typically have two options: You can ask your card issuer to transfer your secured line of credit to an unsecured card, or you can simply apply for a new credit card and close your secured credit card account. Note that, when you close an old secured credit card account in good standing, you’ll get your full deposit back.

It’s usually easier to just apply for a new unsecured credit card once your credit score is in an acceptable range. This option lets you choose the right credit card for your needs, whether you want to earn cash back or qualify for 0 percent APR and consolidate debt.

Building credit with a secured card vs. unsecured card

When it comes to building your credit score, the process is the same with secured and unsecured credit cards.

Both types of cards report your movements to the credit bureaus — Experian, Equifax and TransUnion. The bureaus collect information about your purchases, balances and credit card payments and use it to build a history of credit usage in your name.

If your goal is building credit and keeping your score in the best shape possible, you should strive to pay your bill early or on time each month and keep your credit utilization rate below 30 percent.

Best secured credit cards for 2022

In the market for a secured credit card? If so, you should take the time to compare all the top offers to find one with the best benefits and lowest fees. Bankrate compared dozens of secured credit cards to find the best offers available, and here are three top options:

Discover it Secured: Best for everyday rewards

The Discover it® Secured Credit Card is one of the few secured credit cards that lets consumers earn rewards without charging an annual fee. You’ll earn 2 percent cash back at gas stations and restaurants (up to $1,000 in combined spending each quarter, then 1 percent) and an unlimited 1 percent cash back on everything else. The Discover it Secured also allows you to set your own line of credit between $200 and $2,500, depending on the deposit amount you put down.

Additionally, at the end of your first year, Discover will match all of the cash back you’ve earned. You also get a free FICO credit score access on your credit card statement each month, which can help you monitor your credit progress over time.

Capital One Quicksilver Secured Cash Rewards Credit Card: Best for travelers

The Capital One Quicksilver Secured Cash Rewards Credit Card is a solid option if you want to earn a flat rate of rewards on every purchase — 1.5 percent cash back on all purchases is a fair rate even for an unsecured card. There’s an extra perk for frequent travelers, too: unlimited 5 percent cash back on hotels and rental cars booked through Capital One Travel.

The minimum security deposit is a reasonable $200, and there’s no annual fee. Plus, Capital One makes it easy to work toward a better score. You can stay motivated by watching your credit score grow over time with CreditWise from Capital One, and you’ll also be automatically considered for a credit line increase in as little as six months.

Capital One Platinum Secured Credit Card: Best for low deposit requirements

The Capital One Platinum Secured Credit Card lets you secure a line of credit with a $49, $99 or $200 refundable deposit, which makes this card a good option for anyone who doesn’t have a lot of cash to put down. However, Capital One will oversee your account to check if you will be automatically considered for a higher credit line in as little as six months.

You won’t earn any rewards with this card, but you won’t pay an annual fee to carry it, either. You also get the chance to pick your own monthly due date, which can be convenient if you prefer to pay your credit card bill at the end of the month or around payday.