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Secured credit cards can be a powerful tool for building or rebuilding your credit. Unlike traditional credit cards, secured cards require a refundable security deposit, which acts as collateral and determines your credit limit. These cards are typically easier to obtain if you have bad or no credit, making them ideal for those looking to improve their credit score.
In this guide, we’ll cover the best secured credit cards available today. Whether you’re focused on low fees, rewards, or credit-building potential, we’ve rounded up top choices that can help you achieve your financial goals.
What Is a Secured Credit Card?
A secured credit card is a type of credit card designed for individuals with limited or poor credit history. To open a secured credit card, you need to make a cash deposit, which acts as collateral for the credit line. Your deposit typically becomes your credit limit. For example, if you deposit $500, your credit limit will be $500.
These cards function like regular credit cards: you can make purchases, pay off your balance, and incur interest on any unpaid balances. The key difference is the security deposit, which minimizes the risk for the credit card issuer. Secured cards report to the major credit bureaus, which means they can help you build or rebuild your credit over time, as long as you make on-time payments.
Now, let’s take a look at the best secured credit cards for [Year].
1. Discover it® Secured Credit Card
Key Features:
- No Annual Fee: The Discover it® Secured Credit Card charges no annual fee.
- Rewards Program: Earn 2% cash back at gas stations and restaurants (on up to $1,000 in combined purchases each quarter) and 1% on all other purchases.
- Automatic Reviews: Discover automatically reviews your account after seven months to determine if you’re eligible to upgrade to an unsecured card and get your deposit back.
The Discover it® Secured Credit Card stands out as one of the best secured cards on the market because of its rewards program, no annual fee, and the possibility of upgrading to an unsecured card. This card is ideal for those who want to build credit while earning cash back on everyday purchases. Additionally, Discover’s free monthly FICO® score access can help you monitor your credit progress.
2. Capital One Platinum Secured Credit Card
Key Features:
- Flexible Deposit Requirements: Depending on your creditworthiness, your initial deposit could be as low as $49, $99, or $200 for a $200 credit line.
- No Annual Fee: There’s no annual fee for the Capital One Platinum Secured Credit Card.
- Credit Line Increase: You can automatically be considered for a higher credit line in as little as six months with no additional deposit required.
The Capital One Platinum Secured Credit Card is an excellent option for those who may not have a large amount of cash available for a security deposit. With flexible deposit options, this card allows you to open an account with as little as $49, making it accessible for many users. The lack of an annual fee and the potential for credit line increases after responsible use are additional perks.
3. Citi® Secured Mastercard®
Key Features:
- No Annual Fee: The Citi® Secured Mastercard® comes with no annual fee.
- Credit Building Tool: This card is designed specifically for those looking to build or rebuild their credit.
- Worldwide Acceptance: As a Mastercard, this card is widely accepted globally.
The Citi® Secured Mastercard® is a straightforward option for individuals looking to establish credit. It’s easy to use, has no annual fee, and provides access to the Mastercard network. While it doesn’t offer rewards, its primary focus is on helping you build credit responsibly. If your goal is to improve your credit score and eventually transition to an unsecured card, the Citi® Secured Mastercard® is a solid choice.
4. Bank of America® Customized Cash Rewards Secured Credit Card
Key Features:
- Rewards Program: Earn 3% cash back in the category of your choice (gas, online shopping, dining, travel, drug stores, or home improvement/furnishings), 2% at grocery stores and wholesale clubs (on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter), and 1% on all other purchases.
- No Annual Fee: There’s no annual fee for this card.
- Potential to Graduate: Your account will be periodically reviewed to determine if you’re eligible for an upgrade to an unsecured card.
The Bank of America® Customized Cash Rewards Secured Credit Card offers an appealing combination of cash back rewards and no annual fee, making it one of the few secured cards that allow you to earn cash back. You can also customize your rewards by choosing the spending category that best fits your lifestyle. This card is a great option for those who want to build credit while earning rewards on everyday purchases.
5. OpenSky® Secured Visa® Credit Card
Key Features:
- No Credit Check: OpenSky® doesn’t require a credit check to apply, making it ideal for those with no credit or poor credit history.
- Reports to All Three Credit Bureaus: The card reports to Experian, Equifax, and TransUnion, helping you build credit.
- $35 Annual Fee: The OpenSky® Secured Visa® Credit Card charges a $35 annual fee.
The OpenSky® Secured Visa® Credit Card is designed for individuals who need to build credit but may have difficulty getting approved for other secured cards. With no credit check required, it’s a good option for those with bad credit or no credit history at all. While it does charge a modest annual fee, the OpenSky® card offers a clear path to building or improving your credit score with responsible use.
6. First Progress Platinum Prestige Secured Credit Card
Key Features:
- Low APR: This card offers a relatively low APR of 15.24% variable, which is lower than many other secured credit cards.
- $49 Annual Fee: There is a $49 annual fee for this card.
- Reports to All Major Credit Bureaus: Like other secured cards, it reports to the major credit bureaus to help you build your credit.
The First Progress Platinum Prestige Secured Credit Card is a good option for those who may carry a balance from time to time and want a lower interest rate. While it does charge an annual fee, the lower APR can help you save money on interest if you occasionally carry a balance. This card is designed for individuals focused on rebuilding their credit and offers access to the Mastercard network.
How to Choose the Best Secured Credit Card for You
When choosing a secured credit card, it’s essential to consider your financial goals and credit-building needs. Here are some factors to keep in mind:
- Annual Fees: While many secured credit cards don’t charge an annual fee, some do. Consider whether the benefits of the card outweigh the cost of the annual fee.
- Security Deposit: The amount of your security deposit typically becomes your credit limit. Look for cards that offer flexible deposit options if you have limited funds available for the initial deposit.
- Credit Reporting: Make sure the card you choose reports to all three major credit bureaus—Experian, Equifax, and TransUnion. This ensures that your responsible use of the card will help build your credit history.
- Upgrade Potential: Some secured cards allow you to graduate to an unsecured card after demonstrating responsible use. This can help you transition to a traditional credit card without needing to close your account.
- Rewards and Perks: While rewards are less common with secured cards, some options do offer cash back or other perks. If rewards are important to you, look for a card that provides value beyond just credit building.
How to Use a Secured Credit Card to Build Credit
Using a secured credit card responsibly can help you improve your credit score over time. Here are some tips for maximizing your credit-building efforts:
- Pay on Time, Every Time: Your payment history makes up 35% of your FICO® score, so paying your bill on time is crucial.
- Keep Your Balance Low: Try to keep your credit utilization below 30% of your credit limit. For example, if your limit is $500, aim to keep your balance below $150.
- Avoid Carrying a Balance: While it’s important to use your card regularly, paying off your balance in full each month can help you avoid interest charges and keep your credit utilization low.
- Monitor Your Credit: Many secured cards offer free credit monitoring tools, so take advantage of them to track your progress and stay on top of your credit report.
Start Building Your Credit with the Right Secured Credit Card
Secured credit cards are a valuable resource for those looking to build or rebuild their credit. By choosing the right card and using it responsibly, you can take control of your financial future and work toward achieving a higher credit score.
Whether you’re looking for a card with no annual fee, cash back rewards, or the ability to graduate to an unsecured card, there’s a secured credit card out there that fits your needs. Remember, the key to success is consistent, responsible use—pay your bill on time, keep your balance low, and monitor your credit progress to make the most of your secured credit card.
