- The Ascent
- Best Credit Cards
- Best secured credit cards of September 2020
Best Secured Credit Cards of September 2020
We are committed to full transparency in our mission to make the world smarter, happier, & richer. Offers on The Ascent may be from our partners - it's how we make money - and we have not reviewed all available products and offers. That transparency to you is core to our editorial integrity, which isn’t influenced by compensation.
Secured credit cards are credit cards that are guaranteed with a refundable deposit that acts as collateral. Sometimes, it also acts as the card's credit limit. You don't have to have good credit, or any credit at all, to qualify for a secured credit card. Using a secured credit card is an excellent way to build credit, because your monthly payments are reported to the credit bureaus. However, you have to be wary of secured credit cards with hidden fees and exorbitant interest rates.
The best secured credit cards have low deposit requirements and free credit scores. It's also important to opt for a secured card with no annual fee. Some of the top secured cards are also good starter credit cards, as they come with rewards or the ability to eventually upgrade to an unsecured version. Here are our picks for the best secured credit cards in 2020.
The Ascent's picks for top secured credit cards of September 2020:
- Cash back: Discover it® Secured
- High secured credit limit: U.S. Bank Secured Visa® Card
- Low security deposit: Capital One® Secured Mastercard®
Cash back
Great for: Cash back Discover it® Secured
Rating image, 4.0 out of 5 stars.
4.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.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.
Bottom Line
Need to build your credit history? This card is a great place to start. It offers perks rarely found in secured cards including cash back, no annual fee, and double cash back in the first year. Read Full Review
Rewards
2% cash back at Gas Stations and Restaurants on up to $1,000 in purchases each quarter, 1% cash back on all else
Annual Fee
$0
Intro APR
Purchases: N/A
Balance Transfers: 10.99%, 6 months
Ongoing APR
22.99%, variable
Bonus
Double cash back within 1 year
Highlights
- No Annual Fee, earn cash back, and build your credit with responsible use.
- It's a real credit card. You can build a credit history with the three major credit bureaus. Generally, debit and prepaid cards can't help you build a credit history.
- Establish your credit line by providing a refundable security deposit of at least $200 after being approved. Bank information must be provided when submitting your deposit.
- Automatic reviews starting at 8 months to see if we can transition you to an unsecured line of credit and return your deposit.
- Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.
- Get 100% U.S. based customer service & get your free Credit Scorecard with your FICO® Credit Score
- INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
- Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
Great for: High secured credit limit U.S. Bank Secured Visa® Card
Rating image, 3.5 out of 5 stars.
3.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.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.
Rewards
N/A
Annual Fee
$29
Intro APR
Purchases: N/A
Balance Transfers: N/A
Ongoing APR
18.99%
Bonus
N/A
Highlights
- Credit limit ranges from $300-$5,000 based on deposit.
- The deposit is put in an FDIC-insured savings account that earns interest and won't be touched as long as your account remains open and in good standing.
- Car rental insurance available at no additional cost if you charge the car rental on your card and decline rental company's collision damage waiver option.
- Free TransUnion® Credit Score.
- You are not responsible for unauthorized transactions if your U.S. Bank Secured Visa Card is ever lost or stolen.
Great for: Low security deposit Capital One® Secured Mastercard®
Rating image, 3.5 out of 5 stars.
3.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.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.
What We Like About The Card
Build your credit responsibly with this top-of-the-line secured credit card. It comes with a low initial security deposit and no annual fee, making it a top pick if you want to open a secured card account without breaking the bank. Read Full Review
Rewards
N/A
Annual Fee
$0
Intro APR
Purchases: N/A
Balance Transfers: N/A
Ongoing APR
26.99%, variable
Bonus
N/A
Highlights
- 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
Capital One® Secured Mastercard® is temporarily unavailable on The Ascent. All information was collected independently from the issuer. Some items may be out of date.
Get our latest tips and uncover more of our top picks to help you conquer your money goals
By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.
How does the coronavirus affect secured credit cards?
Interest rates are changing because of the novel coronavirus situation, and we want to ensure that you have access to additional helpful resources. If you'd like to learn more about coronavirus and your money, please visit our coronavirus hub.
What is a secured credit card?
A secured credit card is a credit card that requires a security deposit. It's designed to help cardholders build or rebuild credit. These cards typically come with very low credit limits. As a result, it's easy to gain approval for them -- even with bad or no credit.
When should I consider a secured credit card?
Secured credit cards are a good idea when you're looking to build or rebuild credit. They're especially helpful if you can't qualify for an unsecured credit card. Once you understand how credit cards work, the following will help you decide if a secured credit card is right for you.
- You want to build credit from scratch. If you're new to credit, one of the best things you can do for your credit score is to build a solid history of on-time payments. You can do this by using a secured credit card regularly and paying it off in full every month. Just make sure you never miss a payment.
- You have bad credit and want to rebuild. If you need to know how to rebuild your credit, secured cards might be the answer. If you have late payments on your credit history, this could be a good option for you. You can even use it to boost your credit if you've filed for bankruptcy. In situations like these, secured credit cards are often the best -- and sometimes only -- option for establishing a positive payment history.
- You want to improve your credit score without falling into debt. If you're looking to increase your credit score but you're worried about overspending, a secured credit card is a good option. These secured cards come with low limits. If you've already racked up a balance in the past, understanding how to pay off debt will help you get that number back to zero.
What should I look for in a secured credit card?
Here's what you should look for:Â
- Low security deposit. Secured credit cards with a low deposit amount are the easiest and often best option, because they require less money upfront.
- No annual fee. A secured card with no annual fee will help you minimize costs. Building or rebuilding credit shouldn't cost you money.
- Free credit score. You'll want to check your credit score regularly as you work on improving it. While some services charge you to do this, many secured credit cards provide your credit score for free.
- Ability to upgrade. Ideally, you want a secured credit card that you can eventually upgrade to an unsecured version once you've completed enough on-time payments.
- Rewards. While rewards shouldn't be a top priority while building your credit, earning some cash back on your spending doesn't hurt.
Building credit with a secured credit card
Secured credit cards are an excellent tool for building credit, as long as you use them properly. Make sure you understand how to increase your credit score before diving into the world of secured credit cards.
How to get a secured credit card
Getting a secured credit card is a fairly easy process. While approval is never guaranteed, most issuers approve applicants regardless of credit history.Â
- Find the best secured credit card for you. Do your research. Compare the top secured credit cards in 2020 to make sure you find the right one for your needs.
- Gather your personal and financial information. You'll probably need to provide personal information. This could include your Social Security number, address, and phone number. You also might be asked for financial information like your employment status, income, and rent or mortgage payments.
- Apply for a secured credit card. Complete the online application for the secured credit card of your choice. These applications only take a few minutes. Plus, you'll often receive a decision immediately.
If you don't receive an instant decision when you apply for a secured credit card, don't panic. You should receive one by phone or mail within seven to 10 business days. Once you've been approved, it typically takes another seven to 10 business days for your new secured credit card to arrive.
Upgrading to an unsecured credit card
You'll want to upgrade your secured card to an unsecured credit card as soon as possible. This means knowing how to upgrade a credit card is important. Upgrading, rather than applying for a new credit card, can improve your chances of approval. It will also help keep your credit score intact.
What are alternatives to secured credit cards?
Credit cards for bad creditÂ
A credit card for bad credit is also worth considering. Some of the best credit cards for bad credit don't require a security deposit at all. That said, the ones that don't require a security deposit often charge an annual fee instead. Other times, they're harder to get if you have serious negative marks on your credit.
Cosigner for an unsecured credit card
Another option is to apply for an unsecured credit card with a cosigner. Your cosigner functions as a guarantor for you. If you miss your credit card payments, they can be held liable for repaying your debt. This responsibility is not to be taken lightly. If you find someone who trusts you enough to co-sign your credit card application, you might be able to qualify for an unsecured credit card with better terms and lower fees.
Student credit cards
If you're a student working on building credit from scratch, you should also consider the best credit cards for students. Many of these credit cards don't require a lengthy credit history or a security deposit. Some even come with rewards geared toward a student lifestyle.
FAQs
-
A secured credit card is a credit card for people with bad credit or no credit that requires a refundable security deposit to act as collateral.
-
The best secured credit cards have low security deposit requirements, no annual fee, access to a free credit score, and the ability to eventually upgrade to an unsecured version.
-
Secured credit cards are a good idea for anyone who wants to improve their credit score and can't qualify for an unsecured credit card.
About the Author
Elizabeth is a personal finance writer specializing in credit cards, debt repayment, and small business. Her work has appeared on The Motley Fool, MSN Money, Yahoo! Finance, and Business Insider. She’s an avid credit card points collector and perpetual traveler currently living in Costa Rica.
