Best Secured Credit Cards
Check out our picks to help you rebuild credit or start building credit history. These leading secured cards are the best we've come across, plus they include no annual fee.
Best for: Cash back Discover it® Secured
- No Annual Fee, cash back on every purchase, and helps you build your credit with responsible use.
- Your Secured Credit Card requires a refundable security deposit up to the amount we can approve of at least $200 which will establish your credit line. You will need to provide your bank information when submitting your security deposit.
- We will automatically begin reviewing your account starting at 8 months to see if we can transition you to an unsecured line of credit.
- Earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus, earn unlimited 1% cash back on all other purchases - automatically.
- INTRO OFFER: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
- Receive FREE Social Security number alerts-Discover will monitor thousands of risky websites when you sign up.
Best for: Low security deposit Capital One® Secured Mastercard®
- 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
- You will get an initial $200 credit line after making a security deposit of $49, $99, or $200, determined based on your creditworthiness
- 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
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Whether you have bad credit or no credit at all, secured credit cards are a way to start building banking relationships while boosting your credit score so that you can qualify for other types of loans and better credit cards later.
There are numerous secured credit cards out there, but many come with high fees and other charges that make them a poor way to build or rebuild credit. Below, we’ll explore the best secured credit cards on the market, and show you how to manage your secured credit card to get the most benefit to your credit score.
How we picked the winners
The whole purpose of a secured credit card is to help you build or rebuild credit. Therefore, we prioritized a few key features when selecting the best secured cards.
No annual fees -- Some secured cards carry fees that add up to more than $200 per year. None of our best picks carry an annual fee. It’s silly to pay these fees when there are available cards that do not have them.
Low initial deposit -- We like cards that allow you to open an account with a low deposit amount, so that you don’t have to tie up all of your cash. All of our picks allow you to get started with $200 or less.
Credit reporting -- A secured card should help you build credit while you establish a history of good credit hygiene by paying bills on time and keeping debt to a minimum. Therefore, we only picked cards that report to all three of the major credit bureaus. Cards that only report to one or two bureaus are rare and may not be worth considering.
What is a secured credit card?
A secured credit card is just like any other credit card with one big exception: You have to put down a deposit as collateral to open a secured credit card account. The collateral protects the issuer from losses, which allows them to approve secured cards even when the applicant has bad credit or no credit at all.
Typically, secured credit cards carry a low credit limit of $200 to $250, and are generally considered to be “starter” credit cards. They are also useful for people who have bad credit, since they can help you add a good account to your credit report if managed appropriately.
Why choose a secured credit card?
There are five reasons why people choose to apply for a secured credit card rather than an unsecured credit card, and use their secured card in lieu of a debit card or cash.
Easy approval -- Because applicants have to put up cash as collateral for a secured credit card, most issuers will approve just about anyone, no matter how bad their credit may be. Whereas it is significantly harder to qualify for a top-tier unsecured card than a lower-tier unsecured card, the odds of getting approved for the best secured credit card are not much different than the odds of getting approved for the worst secured card.
Build or rebuild your credit -- Some secured credit cards report to all three major credit bureaus, so that when you make payments on time and manage your account wisely, all of this good behavior will be reported on your credit report. Over time, a secured credit card can help you establish credit history (if you currently have no credit at all), or rebuild from past problems. Cards that report to Experian, TransUnion, and Equifax are best.
Pick your own credit limit -- While you can get started with as little as $49, some cards offer you the opportunity to put up a larger amount of collateral for a larger credit line, giving you more flexibility to match your credit limit with your spending needs.
Rewards -- Cash back rewards used to be limited to credit cards for people who had good to excellent credit, but some secured cards now offer cash back rewards, making them a more rewarding alternative to ordinary unsecured cards or prepaid debit cards.
Fraud protection -- Credit cards offer more protection against fraud than other forms of plastic payment, particularly debit cards, making them safer to use for purchases.
Is a secured credit card right for you?
If all of the following statements apply to you, it may be smart to consider a secured credit card.
You have low or no credit because of past late payments, bankruptcy, judgments, or other serious negative marks on your credit report.
You have enough income to reasonably pay for your charges in full every single month. Income requirements vary, but Capital One specifically requires applicants to have monthly income that exceeds their mortgage or rent payments by at least $425.
You want to rebuild your credit, and have a small amount of money (no more than $200) that you can set aside as collateral to open a secured card account.
You are worried about getting denied for other credit cards, such as low credit limit unsecured cards or store cards.
In short, a secured credit card is good for people who may not qualify for other types of credit accounts because of limited income, or because they have no credit or low credit scores.
Features of top secured credit cards
Secured credit cards are some of the simplest of credit cards, but there are a few things that make some cards standout stars in the category. Here are some features that differentiate the best secured credit cards from the very worst, in relative order of importance.
No annual fee -- Secured cards typically have low credit limits, and those who use them do so sparingly. Thus, many banks make money on annual fees they charge to have an account. The best secured cards allow you to open an account with no annual fee.
Low or partial security deposit -- Applicants should naturally prefer putting up less collateral rather than more. The best secured cards allow you to get started with $200 or less, making them available to people who are on a tight budget.
Reporting to all three credit bureaus -- One of the major advantages of having a secured credit card is that it can help you build or rebuild your credit history. Secured credit cards should report your behavior to all three major credit bureaus so that when you manage your account wisely, you’re rewarded with an uptick in your credit score.
Credit graduation -- You won’t be stuck with a secured credit card forever. The best secured cards convert into unsecured cards after several months of on-time payment history. When your credit card “graduates,” the card company will return your deposit, thus turning your secured card into an ordinary unsecured card.
FICO® Score for free -- One reason why so many people turn to secured cards is to help their credit scores. Many secured cards now offer a FICO® Score for free, which enables you to watch your credit score improve with each on-time payment. Getting access to all of your monthly-updated FICO® scores from MyFICO can cost as much as $479 per year, so this is a very valuable perk.
Rewards -- Secured cards increasingly offer rewards on every swipe, enabling you to earn cash back on every purchase you make with the card. Rewards aren’t a make-or-break feature, though, since rewards aren’t a primary reason for opening a secured credit card account.
5-step guide to improving your credit score with a secured credit card
If you follow a few best practices, you can use a secured credit card in a way that will maximize the positive benefit to your credit report and credit score. Here’s the five step guide to making sure your secured credit card helps your personal finances.
Use the card sparingly. For best results, cardholders should try to keep their balances under 30% of their credit limit at all times. That means your balance should always be lower than $60 if you have a secured card with a $200 credit limit. If you have to make multiple payments per month to avoid using more than 30% of your balance, then do it! Your credit utilization ratio, or your balance as a percentage of your credit limit, makes up 30% of your FICO® Score. Lower utilization is better.
Pay on time, and in full. It is a myth that paying interest on a balance is necessary to get good credit. Always pay your secured credit card on time, and in full, by paying the “statement balance” when the bill arrives. If you pay this amount on time and in full, you won’t pay a dime in fees or interest charges, and get all the benefit of having a card that reports your on-time payments to the credit bureaus, which can increase your credit score.
Don’t apply for more cards. One secured credit card managed correctly can do a lot to help you build or rebuild credit. And while it may be tempting to open another credit card account, having two cards won’t double your progress. If anything, having more accounts just increases the risk that you miss a payment, get into credit card debt, or make other mistakes that might set you back. Stick to one card for a year or so before thinking about other offers.
Watch your progress. If your secured card offers free access to your FICO® Score, watch as your score changes over time. You should begin to see improvement as the card ages and your on-time payments pile up. Seeing your progress can be very motivating, which is why we prefer cards that offer free access to your FICO® Score.