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Everyone makes mistakes, but sometimes those mistakes severely affect your credit. If you’re among the 21 percent of Americans who have a credit score below 600, a secured credit card might be your only option for card ownership.

Think of a secured credit card as a debit card with consequences. Your credit limit will be established based on the cash collateral you deposit. But, unlike with a debit card, your payment history may be reported to the three major credit bureaus — Equifax, Experian and TransUnion. That means using a secured card can help you create or rebuild your credit score when you establish an on-time payment record.

In This Article

Bankrate’s favorite secured credit cards
In-depth reviews of Bankrate’s top secured credit cards
How secured credit cards work
Who should get a secured card?
Pros and cons of secured credit cards
Things to consider before you apply
Ratings and specs for our best secured card offers

Bankrate’s Best Secured Cards

Editor’s Take: Bankrate’s Best Secured Credit Cards

Discover it Secured card

This is one of the only no-fee secured cards that offers rewards, which are competitive with some unsecured credit cards.

Highlights:

  • Earn 2 percent back on restaurants and gas — up to $1,000 every quarter —  and get 1 percent back on everything else.
  • Minimum security deposit is $200 to open the account, but you can deposit up to $2,500 depending on your creditworthiness.
  • The APR is a variable 24.49 percent.

Capital One Secured Mastercard

This is one of the only secured cards with a deposit requirement that could be lower than your limit.

Highlights:

  • Depending on your credit history, get a $200 credit line for either a $49, $99 or $200 deposit. You can deposit more to get a higher limit — up to $1,000.
  • The APR is a variable 24.99 percent, but there are no annual fees, application fees or foreign transaction charges.
  • If you make the first five payments on time, you can increase your credit limit without any additional deposits.

OpenSky Secured Visa

If you have the kind of credit score that would make a banker blush, the OpenSky Secured Visa Credit Card might be your savior. To apply for this card, you don’t need any credit history and there’s no credit check either.

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 is less than that of other secured cards—which typically hover between 24 percent up to 36 percent.

First Progress Platinum Prestige Mastercard Secured Credit Card

If you’re looking for a secured card with an ultra-low APR, the First Progress Platinum Prestige Mastercard Secured Credit Card fits the bill. With an APR 9.99%, this rate bests even that of most unsecured cards.

Highlights:

  • This card reports to all three of the major credit bureaus, a must if you’re looking to improve your credit.
  • 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.

The Secured Visa from Merrick Bank

Someone who wants a higher-than-average credit limit on a secured card should consider The Secured Visa from Merrick Bank. The card allows a limit of up to $3,000, which can help boost your score over time as long as you pay the balance in full in each month. A higher credit limit will also improve your overall debt-to-available-credit ratio. For example, if you charge $100 on this card and you have a limit of $3,000, that won’t take up as much of your available credit as it would on a card with a limit of $300.

Highlights:

  • You don’t have to have a bank account to get this card, you can fund your security deposit with a qualified money order.
  • After the first year, the issuer will regularly review your account to see if you qualify for a credit line increase.
  • Your security deposit will be refunded to you when you close your account.

UNITY Visa Secured Credit Card

One of the best features of the UNITY Visa Secured Credit Card is that the APR is fixed and not variable. This means that even if interest rates rise on other credit cards or financial products, the rate on this card will remain the same.

Highlights:

  • Unlike nearly all other secured cards, this one comes with a balance transfer offer.
  • The credit range is from $250 up to $10,000-the highest limit we’ve seen on a secured card.
  • This card reports payment behavior to all three credit bureaus.

primor Secured Visa Classic Card

There are two notable attributes of the primor Secured Visa Classic Card: the card has a low fixed APR of 13.99 percent and your security deposit om the card will remain in an interest-bearing account. That may make this card a winner for some.

Highlights:

  • There’s no minimum credit score requirement with this card.
  • All payment behavior is reported to the three major credit bureaus, so if you pay your bill on time, it could help improve your score.
  • If you’re willing to cough up the cash, for the deposit, you can get a credit limit ranging from $200 all the way up to $5,000.

USAA Secured Card® American Express®

One of the things we like best at Bankrate about USAA credit cards is that they all offer ultra-low APRs and other benefits to those serving active duty. The standard APR for those who qualify for this credit union secured card is a variable 11.40% to 21.40%. The low end of this range is pretty good even for an unsecured card. But, deployed military personnel qualify for an APR of just 4% for debt incurred prior to deployment.

Highlights:

  • Active-duty members are eligible for special rates and benefits on this card for current balances, new purchases and cash advances when they deploy or have a permanent change of station.
  • This card could be a helpful option for new cadets who may have thin credit files.
  • Your security deposit has to be put in a two-year CD, and it will earn interest until it matures.

How secured credit cards work

A secured card functions similarly to a prepaid debit card. In most cases, the amount you put down as a security deposit on a secured card is equal to the amount of credit you’re granted. With a prepaid debit card, the amount of value on the card is equivalent to the amount you deposit. There are a few key differences though between the two types.

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. With a secured card, if you have a $500 credit limit because you made a $500 security deposit, you can spend $250 on an item, but you don’t have to pay it immediately at the time of purchase. Just like with an unsecured credit card, you can pay back a portion of that $250 charge each month until it’s paid off but you will also accrue interest for each month you carry a balance.

It’s important to know that if you have poor credit due to prior financial missteps, carrying a balance on your secured card is only likely to further hurt your score, as the APRs on many secured cards are high. The best reason to own a secured card is because you want to show good payment habits and behaviors to the credit reporting agencies so you can improve your financial standing.

Who should get a secured credit card?

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—which is a typical credit card that allows you to charge up to a predetermined limit without depositing any money first as security. Secured cards, like unsecured cards, will charge you interest if you don’t pay your balance in full and on time every month. Because these cards are designed for those with little to no credit, the APRs on a secured card generally are higher than those of unsecured cards.

A secured card could be a good fit if:

  1. You are confident in your ability to pay your bill in full and on time every month.
  2. You plan to only charge what you can afford to pay back right away.
  3. Your goal in owning one is to improve your credit.

Pros and cons of secured credit cards

Pros

  • A secured card lets you have a credit card for the times when a merchant doesn’t accept cash—like a hotel room or car rentals.
  • With regular on-time payments, you can improve your credit score.
  • Because you can typically only spend up to the amount of your security deposit, a secured card can help keep your spending in check as you theoretically can’t spend more than you have.

Cons

  • Some secured cards may charge fees for opening the account, which can impact the amount of available credit you have left to use.
  • If you only qualify for a low limit on your secured card and you use the card too much, it can have a negative effect on your debt-to-available credit ratio which can impact your score.
  • If you have a secured card that won’t let you eventually graduate to an unsecured card, when your credit improves, you could be stuck with a card you no longer need.
  • Many secured cards charge higher than average APRs, which can further hurt those who have trouble paying their bills each month.

Things to consider before you apply

Even if a secured card may initially seem like a good fit for you, it’s important to know if the card reports to at least one of the credit reporting agencies. Without reports of good payment behavior to the credit bureaus, your credit standing won’t improve.

Maintain good payment habits, and eventually you’ll be able to switch to an unsecured card. It’s a good idea to choose a secured card that will allow you to “graduate” to an unsecured card after a period of time. This means the issuer will let you switch your card to another one within their portfolio that doesn’t require a security deposit. This can be a big deal as it allows you to avoid two things that can ding your credit—applying for a new line of credit and closing a card you’ll no longer use.

Recap: Bankrate scores and specs for our best secured card offers

Card Name Bankrate Score Annual Fee Best For
Discover it® Secured Card 95/100 $0 Overall Best
Capital One Secured Mastercard 84/100 $0 No Annual Fee
OpenSky Secured Visa 68/100 $35 No Minimum Credit Requirement
First Progress Platinum Prestige Mastercard Secured Credit Card 65/100 $49 No Credit Check Required
The Secured Visa from Merrick Bank 72/100 $36 Establishing Credit
UNITY Visa Secured Credit Card 71/100 $39 High Credit Limit
primor Secured Visa Classic Card 71/100 $39 fixed APR
USAA Secured Card® American Express® 85/100 $35 Military Families

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