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The credit-builder’s guide to secured credit cards
A secured credit card is a type of card backed by collateral, usually in the form of a deposit from the cardholder. The typical person who gets a secured card has no credit history or a low credit score, but the deposit makes a secured card easier to qualify for.
A secured card can be more than a convenient way to pay for the things you buy every day. It can also give you an opportunity to establish or rebuild credit. Whether you need to build your credit history or get back on track financially, responsible use of a secured card could provide a starting point.
Check out the expert advice and recommendations on this page to get the information you need to know.
Compare our top picks for secured credit cards
| Card Name |
Best for |
Annual fee |
Bankrate Review Score |
| OpenSky® Secured Visa® Credit Card |
No minimum credit score requirement |
$35 |
3.4 / 5
(Read full card review) |
| Secured Mastercard® from Capital One |
Building credit |
$0 |
4.2 / 5
(Read full card review) |
| Discover it® Secured |
Secured card with rewards |
$0 |
4.8 / 5
(Read full card review) |
| First Progress Platinum Prestige Mastercard® Secured Credit Card |
No required credit check |
$49 |
3.3 / 5
(Read full card review) |
| Self – Credit Builder Account + Secured Visa Credit Card |
Best for building credit with savings |
One Time $9 + Secured Card $25 |
Coming Soon
|
| First Progress Platinum Elite Mastercard® Secured Credit Card |
Best for easy application and processing |
$29 |
3.2 / 5
(Read full card review) |
| Citi® Secured Mastercard® (not currently available) |
No monthly maintenance fee |
$0 |
2.8 / 5
(Read full card review) |
A closer look at our best secured credit cards for 2020
Secured Mastercard® from Capital One
Why it’s the best secured card for building credit
This card offers a $200 credit limit, and your deposit could be as low as $49. Those with extremely low scores may be better off with a different secured card, but if you’re on the higher end of “bad” consider this card.
Highlights:
- You can establish your credit line with your tax return by providing a refundable security deposit of $49, $99 or $200. Your initial credit line starts at $200 but you can increase up to $1,000 within 35 days of approval. You must provide your bank information when submitting your deposit.
- The APR is a variable 26.99%, but there are no annual fees, application fees or foreign transaction charges.
- You’ll be automatically considered for a higher credit line after 6 months with on-time monthly payments.
Best credit-building feature: Capital One will regularly report your card activity to the three major credit bureaus.
See more details and find out how to apply.
Discover it® Secured
Why it’s the best secured card with rewards
Discover’s secured credit card has tremendous upside in terms of cash back rewards. With responsible use, this card can help you earn cash back on a variety of everyday purchases as you build or repair your credit.
Highlights:
- Earn 2 percent back on gas stations and restaurants on up to $1,000 in combined purchases every quarter and get 1 percent back on everything else.
- Establish your credit line with your tax return by providing a refundable security deposit from $200-$2,500 after being approved. Bank information must be provided when submitting your deposit.
Best credit-building feature: Discover provides free access to your FICO Score on your monthly statement so that you can keep track of your credit score.
See more details and find out how to apply.
OpenSky® Secured Visa® Credit Card
Why it’s the best secured card for no minimum credit score requirement
Here’s a card that acts as a lifeline for those in serious credit trouble. There’s no minimum credit score to be approved and no credit check, both rare in the credit card world. If your credit options are very limited, this might be the right card for you.
Highlights:
- The card reports monthly to all three credit bureaus.
- You can choose a credit limit as low as $200.
- The APR on this card(17.39% variable) is less than that of a typical secured card, which typically falls into the mid-20 percent to mid-30 percent range.
Best credit-building feature: This card’s affordability and low barriers of entry make for a great starting point for someone just beginning their journey toward good credit.
See more details and find out how to apply.
First Progress Platinum Prestige Mastercard® Secured Credit Card
Why it’s the best secured card for no required credit check
Both bad credit and no credit are non-issues when it comes to applying for this card. After being approved, it’s important to pay your balance in full as often as possible to improve your credit. However, in the extreme case that you do have to carry a balance, it pays to have a card with the lowest APR possible to help reduce the cost of interest.
Highlights:
- This card reports to all three of the major credit bureaus, a must if you’re looking to improve your credit.
- Very low 9.99% variable APR
- Approval is easy — there’s no credit check or minimum score requirement.
- Credit limit ranges from $200 to $2,000, depending on how much you put down.
Best credit-building feature: Because no credit check is required, applying for this card doesn’t involve a hard credit inquiry that would temporarily knock several points off your credit score.
See more details and find out how to apply.
Self – Credit Builder Account + Secured Visa Credit Card
Why it’s the best secured card for building credit with savings
Visa offers a unique product that combines a savings account with a secured credit card. Step one is opening a Credit Builder Account that reports to the major credit bureaus. If you successfully manage the account and reach the savings goal of $100 or more, the next step is applying for a Secured Visa Credit Card using the money you’ve saved as your deposit.
Highlights:
- 23.99% variable APR
- No hard credit check or credit history required
- No penalty APR
- Annual fee: one-time $9, secured card $25
Best credit-building features: Auto pay and account reminders can help you stay on top of your payments, and credit utilization monitoring can help you avoid using too much of your available credit.
See more details and find out how to apply.
First Progress Platinum Elite Mastercard® Secured Credit Card
Why it’s the best secured card for easy application and processing
With 100-percent online application and optional Expedited Processing, this Mastercard product could reduce your wait time for getting a secured credit card. The Expedited Processing option is designed to speed up the processing of your card by up to 7 days. The service costs $19.95 and requires that you fund your security deposit with a debit or prepaid card.
Highlights:
- 19.99% variable APR
- No credit inquiry recorded when applying
- No minimum credit score or credit history required
- No penalty APR
- Annual fee: $29
Best credit-building feature: Mastercard will report your activity to the three major credit bureaus on a monthly basis.
See more details and find out how to apply.
Citi® Secured Mastercard® (not currently available)
Why it’s the best secured card for no monthly maintenance fee
If you need a secured card but would like a credit limit that’s higher than a few hundred dollars, this is your best bet. Depending on your creditworthiness, you may be approved for a credit limit of up to $2,500. Featuring no annual or monthly maintenance fees, this card can help keep hard-earned cash in your wallet.
Highlights:
- With a credit limit range of $200 to $2,500, this card gives cardholders the opportunity to have a higher credit limit than some other secured cards offer.
- No annual fee
- Citi® Secured Mastercard® has a variable APR of 22.49%
Best credit-building feature:By offering free access to your FICO Score online, this card provides an easy way to keep an eye on your credit score as you build credit.
See more details and find out how to apply.
The information about the Citi Secured Mastercard has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.
What are secured credit cards?
Most credit cards are unsecured, meaning that they don’t require you to put up any kind of collateral. When you get a secured credit card, you pay a security deposit that typically serves as both collateral and as your credit limit.
Why do you have to pay a deposit on a secured credit card? The deposit is kind of a tradeoff. It costs money, but it makes secured cards accessible for those with limited credit history or bad credit. Keep in mind that using a secured credit card responsibly could lead to:
- Increases in your credit limit
- Getting a refund on your deposit
- A higher credit score that makes it easier to qualify for an unsecured card
If you practice good habits, you might be able to rely on good credit instead of collateral when you apply for your next card.
Reasons to get a secured card and use it responsibly
The main reason to own a secured card is to help repair or build your credit if you don’t qualify for an unsecured card. Think of a secured card as an opportunity to set realistic goals to unlock all the perks that come with good credit.
A secured card could be a good fit for you if:
- You have a limited credit history or a credit score below 579
- Your main goal in owning one is to improve or build your credit
- You’re confident in your ability to pay your bill in full and on time every month
Why is making timely payments such an important part of using any credit card, secured or otherwise? One reason involves short-term costs, and the other deals with your long-term financial outlook.
Short term: Avoiding credit card interest
Secured cards, like unsecured cards, will charge you interest if you don’t pay your balance in full and on time every month. Carrying a balance on your secured card could lead to costly interest charges, since the APR (annual percentage rate) on many secured cards is high because they’re designed for those with little credit or bad credit.
Long term: Improving your credit score
Late payments and unpaid debt can damage your credit score, a measurement of your overall credit standing at a particular moment. Being the most crucial factor of your creditworthiness, payment history accounts for 35 percent of your credit score, while credit utilization (how much of your available credit you’re currently using) makes up 30 percent. These two key components depend on making timely, sufficient payments, which will do wonders for your credit score.
Pros and cons of secured credit cards
Almost any product, including a credit card, can have advantages and disadvantages. Here’s a list of potential benefits and potential drawbacks of a secured credit card.
Pros
- A secured card lets you have a credit card for the times when a merchant doesn’t accept cash, like for a hotel reservation or a rental car.
- With regular on-time payments, you can improve your credit score.
- Because you can typically spend only up to the amount of your security deposit, a secured card can help keep your spending in check.
Cons
- Some secured cards may charge fees for opening the account, which can reduce the amount of available credit you have left to use.
- If you have a secured card that won’t let you eventually graduate to an unsecured card, you could be stuck with a card you no longer need when your credit improves.
- Many secured cards charge higher than average APR, which can be expensive if you don’t pay your credit card bill on time and in full.
How quickly can you build credit with a secured card?
If you’re shopping for a secured card, think of your credit as a house. You might need to build one from the ground up, or you might already have one that’s in need of some renovations. Either way, the job requires tools, planning and time.
Spending wisely with your secured card and making timely payments will reflect well on your overall credit, but the turnaround won’t happen overnight. Fortunately, you do have some options for addressing credit problems in a relatively short period of time, including:
Correct any errors on your credit report
Inaccuracies in your credit history can make you a less attractive customer in the eyes of lenders. Make sure that the information on your credit report, a long-term record of how you’ve used credit from the past to the present, is accurate and up-to-date.
Contact AnnualCreditReport.com to request a free copy of your credit report from the major credit bureaus. Equifax, Experian and TransUnion have information on how to dispute errors and have them removed.
Try a more suitable credit-scoring model
If you have a limited credit history, a so-called “traditional” credit score might not tell the whole story. Newer credit score products put added emphasis on good credit habits such as timely payments on your utility and cell phone bills and positive bank account balances.
Ultra FICO, Experian Boost or similar options could benefit someone who’s handled their finances responsibly but doesn’t have experience with credit cards or loans.
Limit your new credit applications
New credit applications that involve hard inquiries (also called hard pulls) temporarily lower your credit score. Be careful about applying for multiple credit accounts in a short period of time. Whenever possible, look for pre-qualified offers or applications that don’t require a credit check.
Upgrading to an unsecured card
After using your secured card responsibly for a while, your credit score should start to rise. The progress happens most quickly if you keep your balances low and make your payments on time. Once you’ve achieved at least a “good” credit score (FICO or VantageScore of 700 or greater), you can begin shopping around for an unsecured card, where you’ll find higher rewards rates and greater sign-up bonuses.
When it comes to going about your upgrade, you have a few options. Some credit cards have both a secured and unsecured version. If that’s the case with your secured card, you may be able to simply call the customer service line and ask to upgrade for free. Some issuers may even allow you to upgrade to a variety of unsecured cards while keeping the same account. Keep in mind that you may not be eligible for the new card’s sign-up bonus if you’re upgrading from a secured card.
The other option is to apply for an additional card instead of upgrading your existing account. You have more options to explore credit cards from other issuers this way. However, your credit may take a temporary dip since the new account will decrease your average age of accounts.
Once approved for a new card, you can either keep your secured card open or cancel it. If your secured card comes with fees, such as a maintenance or inactivity fee, it may be a good idea to cancel it. Otherwise, there’s no harm in keeping it open but dormant to add to the length of your credit history (15 percent of your credit score).
Things to consider before you apply for a secured card
- Your application will require some basic details, including your name and Social Security Number. Have your information ready.
- Make sure you have enough money for the deposit. It could be as low as $200 or as high as several thousand dollars, depending on the card and the issuer.
- Some cards require you to have a bank account to pay for the deposit, while others allow payment by check or money order.
- Look for a secured card that reports to at least one of the major credit bureaus, such as Equifax, Experian or TransUnion. Reports of good payment behavior to the credit bureaus are essential for building or repairing credit.
Alternatives to secured credit cards
Applying for a secured card is a simple and effective way to build up less-than-ideal credit. However, there are other avenues if you decide against it.
Become an authorized user
One way to dip a toe into credit building is to become an authorized user on a parent’s or spouse’s card. For young adults, this can be a good way to establish credit without the pressure of choosing a credit card. Once you’ve built up your credit, you’ll be more likely to be approved for the best credit cards.
Becoming an authorized user may be a good choice for parents who want to monitor their child’s purchases. However, those pursuing this option should trust their authorized user not to overspend; with most issuers, authorized users typically have as much spending power as the primary cardholder. American Express is one exception that allows cardholders to set spending limits for your authorized users.
Get a cosigner for an unsecured credit card
Some credit card issuers will allow you to apply with a cosigner — ideally someone who has good credit and trusts you to use your card responsibly. Though you are the primary cardholder in this situation, the cosigner is liable for all of your debts.
Like being an authorized user, having a cosigner could give you access to unsecured credit cards that you wouldn’t qualify for with your credit alone. But some issuers do not allow cosigning. If you don’t see the option on the application, you can call the customer service line to ask.
Frequently asked questions about secured credit cards
How are secured cards different from prepaid debit cards?
With a prepaid debit card, the amount of value on the card is equivalent to the amount you deposit. Unlike a prepaid debit card, which just stores the value of the money you’ve put on the card, a secured card functions like a credit card in that you don’t have to pay the entire balance at the time of purchase.
For example: With a prepaid debit card, if you have $500 on the card and you make a $250 purchase, you have $250 left to spend on the card. After that, there’s no money left on the card unless you add more funds.
The main thing that separates secured credit cards from prepaid debit cards is that secured cards can help you establish or repair your credit. When you pay your bill on time and in full and keep your debt under control, it sends a positive signal to the credit reporting bureaus.
Can you be denied for a secured credit card?
Although secured cards are among the easiest credit cards to qualify for, not everyone will make the cut. Your application for a secured credit card might be denied if you have serious problems with your credit history, such as bankruptcy.
Fortunately, some credit cards don’t automatically disqualify you for having a bankruptcy on your credit report. Examples include the Indigo® Platinum Mastercard®.
Which is the best secured credit card to rebuild credit?
With tools to help you build your credit and monitor your progress, the Secured Mastercard® from Capital One is a strong choice for anyone trying to get their credit back on track.
For starters, Secured Mastercard® from Capital One will report to the major credit bureaus, which will reward responsible behavior. The fees are low, another plus for anyone rebuilding their credit after a financial setback.
The card also offers flexibility in how you pay your deposit. You’ll be required to secure the card with a minimum deposit of $49, $99 or $200, but you can pay the deposit in installments ($20 minimum) within the first 35 days of your application.
After as little as 6 months of on-time monthly payments, Capital One could automatically consider you for a higher credit limit — a feature that could help your credit utilization.
What banks have a secured credit card?
Secured credit cards are often the first step into the credit card game, so it’s no surprise that most banks offer them as a way to lock in new customers. Major banks that provide secured cards include:
On top of the most well-known issuers, there are plenty of smaller banks and credit unions that provide options for secured credit cards as well, so be sure to shop around.
Do credit unions also offer secured credit cards?
While some credit unions do offer secured credit cards, typically membership is required to apply. If you’re already a member of a credit union, see what’s available.
What happens to your deposit on a secured credit card?
If you upgrade to a new card with the same issuer or close out a secured card that doesn’t have any outstanding charges, you’ll probably qualify to have your deposit fully refunded. Check the issuer’s terms and conditions to confirm the refund policy.
How much should you deposit on a secured credit card?
A lot depends on your financial situation, including how much money you can comfortably spare. If you have no credit history or a low credit score, making the minimum required deposit would probably be the wise move.
Keep in mind that your deposit will typically serve as your initial credit limit. Those who’ve had trouble making their credit card payments in the past should consider giving themselves a low ceiling.
How we chose our list of top secured credit cards
Every card that Bankrate reviews is evaluated on a five-point scoring system. If you need a secured credit card, you’re probably focused on establishing or re-establishing credit. Making our choices for cards this category involves putting special attention on factors such as:
Annual fee
A lot of secured credit cards will charge cardholders an annual fee. Our analysis takes into account the overall value offered by the card, through rewards and other perks, against the annual fee to help you find the most value.
Additional fees
Secured cards can sometimes have extra fees that you may not see on other credit cards. We pay close attention to the fine print so we can factor these fees into the overall scores and make sure you’re aware of them beforehand.
Rewards
Some secured cards offer rewards programs, such as cash back. Rewards can be complicated, but we make it simple with a breakdown that clearly shows the real value they offer to cardholders.
Extras and perks
Some cards have extra advantages for cardholders. Introductory offers and credit monitoring are examples of benefits that add to a card’s overall value.
More information about secured credit cards and building credit
If you’re interested in secured credit cards, check out these Bankrate resources for more essential information:
Senior Editor Barry Bridges has been writing about credit cards, loans, mortgages and other personal finance products for Bankrate since 2018. His work has also appeared on websites including Nasdaq.com, Zillow.com and The Simple Dollar. He was previously an award-winning newspaper journalist in his native North Carolina. Send your questions about credit cards (and fantasy baseball) to bbridges@bankrate.com.
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