Capital One® Secured Mastercard® Review
Jordan Wathen is a personal finance expert with a deep professional and personal expertise on credit cards. His articles have appeared on sites such as MSN, CNBC, and Yahoo.
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When it comes to secured credit cards, Capital One® Secured Mastercard® is without a doubt one of the very best on the market today. This card boasts no annual fees and a deposit requirement as low as $49, making it a top pick if you want to open a secured card account without breaking the bank. In the Capital One® Secured Mastercard® review below, I’ll explain why I believe this card is one of the best secured cards out there.
Capital One® Secured Mastercard®
Great for: Bad and building credit Capital One® Secured Mastercard®
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
A go-to credit card for people dipping their toes in to building their credit histories, mostly due to the card's low initial security deposit and no annual fee.
Credit Rating Requirement:
- No annual fee
- Security deposit starts at $49
- Annual Fee: $0
- Regular APR: 26.99% Variable
- Intro APR: Purchases: N/A Balance Transfers: N/A
- No annual fee, and all the credit building benefits with responsible card use
- Unlike a prepaid card, it builds credit when used responsibly, with regular reporting to the 3 major credit bureaus
- Access to an authorized bank account is required to make your $49, $99 or $200 refundable security deposit
- Make the minimum required security deposit and you'll get an initial credit line of $200. Plus, deposit more money before your account opens to get a higher credit line
- Get access to a higher credit line after making your first 5 monthly payments on time with no additional deposit needed
- Easily manage your account 24/7 with online access, by phone or using our mobile app
- It's a credit card accepted at millions of locations worldwide
What I like about Capital One® Secured Mastercard®
Though secured cards aren’t known for having all the features of high-end rewards cards, there are some features that make Capital One® Secured Mastercard® a standout star in the secured card category.
No annual fee -- This card already has a big leg-up on many of its peers because it doesn’t have an annual fee. Considering that some secured credit cards have annual fees and monthly maintenance fees that can add up to more than $200 per year, Capital One® Secured Mastercard® is a compelling bargain due to the fact it doesn’t have either of these things.
Low deposit requirement -- I like that Capital One® Secured Mastercard® has three different deposit requirements, depending on your creditworthiness. To get a $200 credit limit, you will have to deposit $49, $99, or $200, depending on your income and credit score. Many other secured cards require you to deposit an amount equal to your credit line ($200 for a $200 credit line, for example) regardless of your creditworthiness. The potential to get started with a smaller deposit than other cards makes this a top choice.
You can graduate to an unsecured card -- With as little as five on-time payments, your credit limit on your Capital One® Secured Mastercard® can be increased above $200. In addition, you may be eligible for graduation, which happens when the card issuer returns your security deposit, thus turning your secured card into an unsecured credit card. This card could easily be one that you have for the rest of your life, enabling you to eventually have years of positive credit history buoying your credit report.
What could be improved
I view Capital One® Secured Mastercard® as one of the best secured cards on the market based on its existing list of perks and features. That said, if you gave me the power to change things about this card, there are a few things I would add to improve its value proposition.
- A 0% intro APR period -- Given that you have to make a security deposit to get a secured credit card, it would be nice if that secured card offered a 0% intro APR period on purchases. Admittedly, this feature is rare with secured cards, so it’s hard to ding Capital One® Secured Mastercard® for not offering it.
- Rewards -- I don’t consider rewards to be a make-or-break feature for secured cards, considering so few actually have rewards programs, but a cash-back rewards program would be a welcome addition to Capital One® Secured Mastercard®.
- FICO® Score for fee -- The Capital One® Secured Mastercard® doesn’t offer free access to a true FICO® Score. Capital One offers an app known as CreditWise®, which allows you to see a simulated credit score that may differ from your true FICO® Score, albeit still useful. A free FICO® Score would add a lot of value to this card.
To be clear, none of these extra features are necessary to propel Capital One® Secured Mastercard® to the top of the pack. The simple fact that it is a no-annual-fee card that offers you to open an account with as little as $49 already makes it a top-tier secured card in my view.
What to look for in a secured card
It’s important not to lose the forest for the trees. After all, secured cards primarily exist as a way for people who have bad credit, no credit, or limited incomes to build or rebuild their credit reports. With this in mind, there are a few features that you should expect from any secured card.
- No annual fees -- Since there are secured cards that don’t charge an annual fee, it doesn’t make sense to apply for a secured card that carries an annual fee. Capital One® Secured Mastercard® is already far ahead of its peers for being a no-annual-fee credit card.
- Access to FICO® Scores -- The whole point of signing up for a secured card is to build or rebuild your credit score. A free FICO® Score, though not a dealbreaker, is a nice feature to get from a secured credit card. Capital One only offers a “FAKO” score through its CreditWise® app.
- Credit score reporting -- A secured card should report your account history to one, if not all, of the three leading credit bureaus. (Capital One® Secured Mastercard® reports to Experian, Equifax, and TransUnion, thus checking all the boxes here.)
- An affordable deposit requirement -- You shouldn’t have to empty your bank account to open a secured credit card. A deposit requirement of $200 or less is ideal. Capital One® Secured Mastercard® has three tiers of deposit requirements, ranging from as low as $49 all the way up to $200, depending on your creditworthiness, making it accessible to just about anyone who is serious about building credit.
Suggested credit score
The deposit you put up to open a secured credit card protects the card issuer in the event you fail to repay your balances. So, even if you have no credit history, or bad credit (a score below 500), it’s likely you can qualify for a secured credit card. Your income may be the only limitation to getting approved, as the terms and conditions for Capital One® Secured Mastercard® state that your monthly income must exceed your monthly rent or mortgage payment by at least $425.
How to use a secured credit card to build (or rebuild) your credit
There is no better way to build or rebuild your credit than to open a secured credit card account. But simply opening an account isn’t enough to help your credit score. Here’s what you should do to make sure that your secured credit card helps your credit report and score:
- Keep your balances low -- Having a low balance as a percentage of your credit limit will boost your credit score. You should strive to keep your balance to less than 30% of your credit limit. Thus, on a card with a $200 credit limit, a balance of $60 or less is ideal. One easy way to get all the benefits of a secured card is to use it once per month to pay for a tank of gas or pay for a recurring monthly charge (a Netflix membership or utility bill, for example), before paying it off in full each month.
- Pay on time month after month -- A secured credit card is not a prepaid debit card. You need to pay your balance on time to avoid late fees and penalty interest on your balance. Set up automatic reminders or automatic payments so as to avoid the risk you forget to pay your bill on time.
- Pay your balances in full to avoid interest -- When your statement arrives, pay the “statement balance” by the due date to avoid interest and fees on your balance. If you always pay the statement balance on time and in full by the due date, you’ll never pay any interest or fees for having your Capital One® Secured Mastercard®.
- Watch your credit score rise over time -- Sign up to Capital One® CreditWise® to track your credit score. Watching how your score changes as you keep and properly utilize the card can help you better understand how credit scores work. Seeing your score rise over time is a good way to stay motivated about getting a better credit score.
- Sit back and wait for your card to graduate -- One key feature of Capital One® Secured Mastercard® is that it your credit limit can be increased after making five on-time payments. In addition, if you consistently pay on time, your card may “graduate” to an unsecured card. When your card graduates, your deposit will be returned to you, turning your secured card into an unsecured card.
If you follow this guide and simply do the basics -- keep a low balance, pay on time and in full -- it will only be a matter of time until your credit score improves. It’s not uncommon for people who have bad credit or no credit to get to a prime credit score (generally, a score of 700 or better) within one year’s time. The best time to start building credit is as soon as you can, as having more months of on-time payments will ultimately beget a higher credit score.
This card is right for you if…
Used correctly, a secured card can help you build toward excellent credit. But used irresponsibly, a secured card can harm your credit score and result in costly fees and interest on your balances. If all of the following statements apply to you, then Capital One® Secured Mastercard® should make the short list of cards to apply for.
- You have bad credit or no credit and/or limited income. The disadvantage of having to make a deposit to get a secured card brings about a major advantage: You can get approved for a secured card even if you have bad credit and/or limited income. If you’ve been denied for unsecured credit cards in the past, a secured credit card may be your only option for opening a credit card account.
- You have up to $200 to open an account. Capital One® Secured Mastercard® will require you to deposit $49, $99, or $200 to open an account, depending on your credit score and income. Only apply if you have $200 that you can afford to use for a deposit to open an account. It doesn’t make sense to empty your bank account or miss payments on other bills to open a secured credit card.
- You will always pay on time and in full. Paying so much as one day late will cost you in late payment fees, in addition to interest charges on your balance. Paying more than 30 days late will result in derogatory marks on your credit report, hurting your credit score. If you always pay your bill on time and in full, your Capital One® Secured Mastercard® will help your credit score without costing you a dime in interest or fees. If you can’t commit to making payments on time, you may want to stick to cash or debit cards for now.