The best secured credit cards offer low fees and favorable terms to the consumer. We’ve listed offers that meet these standards and help you build credit.
If you’re looking to build or re-build your credit, a secured credit card is an option you’ll want to consider.
Secured credit cards offer those with limited, poor, or no credit a chance to get a credit card. The best secured credit cards offer low fees and a chance to build credit. The help consumers build credit by reporting the monthly credit card payments to the credit bureaus.
A secured credit card is different than an unsecured credit card. Your approved credit limit depends on the amount of your initial deposit. Unsecured credit cards provide cardholders credit without having to put anything up for collateral. A secured credit card, on the other hand, works only when the cardholders deposits money to the card issuer.
That amount is the amount of credit the cardholder will receive. If the cardholder defaults, the issuer can simply draw from the deposited funds to cover the default. Secured cards generally come with unfavorable terms and high fees but we’ve compiled a list of our favorite secured cards that offer good terms with very low fees. One important benefit of a secured credit card is the ability to build credit. Secured cards report your payments to the credit bureaus, enabling you to build credit. It’s critical to make your monthly payment on time.
Here’s a look at some of the best secured credit cards available to consumers today. Some offer higher credit while others keep the fees very low. Most importantly, all report to the major credit bureaus to help you get your credit back on track.
Best Secured Credit Cards
Capital One® Secured Mastercard®
The Capital One® Secured Mastercard® is a great option for those with very poor credit scores. There is no annual fee (and no fee to acquire the card) and the minimum deposit to gain a line of credit is either $49, $99 or $200. The amount of your deposit will depend on your credit history and your initial line of credit will be $200. You can always deposit more money to gain a higher line of secured credit.
After making five on-time payments, Capital One will give you access to a higher credit line. Capital One can also review your account to see if you qualify for one of its unsecured credit cards. My very first credit card was one step up from their secured card, the Capital One Classic Platinum. Eventually, I turned it into a Capital One Quicksilver Cash Rewards card. The variable APR on the Capital One Secured Mastercard is 24.99%.
Self Lender is a unique company that offers to help you build your credit score. Instead of applying for a credit card which has high fees or a high interest rate, Self Lender has created a way for you to increase your credit score through a self funded loan. After you’ve applied for your loan and selected a payment option, you’ll be on the path to building your credit. Once you’ve completed your payments, the entire principal is returned to you minus the interest rate.
For example, if you take out a $525 loan on repayment terms of 2 years; the interest rate is 13.16%. This means that over the two year period you pay your loan back, you’ll pay back a total of $609; $525 in principal and $84 in interest.
- Initial loan activation fee of $9, $12 or $15
- No repayment penalty. Pay your loan off at any time.
- Four different loan options ($525, $545, $1,000, $1,700)
- All funds are FDIC insured.
Discover it® Secured Card
Discover makes our list for a variety of reasons. First, the Discover it Secured Card charges no annual fee. Second, it offers a 2% cash back rewards program on restaurant and gas purchases (up to $1,000 spent combined per quarter) and 1% cash back on all other purchases. Third, you get a dollar for dollar match on your cash back at the end of the year. That means 4% cash back on gas and groceries year #1 and 2% cash back elsewhere. Simply amazing for a secured credit card.
Diving into the pricing details, the minimum deposit to open the secured line of credit is $200. No maximum amount is listed. Most secured cards, however, will not allow you to have larger than a $3,000 credit line. After your account is in good standing for a period of 8 months, Discover will review your account regularly to see if you qualify for an unsecured line of credit. The purchase APR is 23.99% variable and there is no fee to acquire the Discover it Secured Card.
DCU Visa® Platinum Secured Credit Card
If you’re someone who rolls over a credit card balance, the DCU Visa Platinum Secured Credit Card is a must own. The selling point is that the variable APR is a cool 12.50%. That’s significantly lower than other secured cards and can save you a boat load of interest every month if you’re carrying a balance. There is no minimum monthly interest charge (which is also unique) and no annual fee.
As an added bonus, every purchase you make with this secured card between Thanksgiving and New Year’s Even will receive 1% cash back. As this is a Visa, added protections like car rental insurance and extended warranty benefits are also included. The credit line you receive will match your deposit, minimum of $500. The money is held in a DCU savings account.
The catch, however, is that in order to own the DCU Visa Platinum Secured Credit Card, you must be a member of Digital Federal Credit Union. The easiest way this can be done if you’re not directly eligible is to join an organization by making a donation.
Open Sky® Secured Visa® Credit Card
As we get a little bit lower on the list, the terms aren’t quite as favorable. The Open Sky® Secured Visa® Credit Card offers a credit line between $200 and $3,000 which is linked to your fully refundable security deposit. There is an annual fee of $35 and the variable APR for purchases is 19.14% (which is actually quite good).
The best selling point is that there is no credit check and no checking account required to own the Open Sky Secured Visa Credit Card. Depending on your credit history, there is a chance you would be declined for other cards on this list. So long as you have the necessary security deposit, Open Sky welcomes you with open arms. If you should decide to close your account and it was in good standing, your initial deposit will be returned to you within six weeks.
First Progress Platinum Select MasterCard® Secured Credit Card
First Progress offers a strong secured credit card in their Platinum Select MasterCard. The variable APR is a great 13.99% and there is a $39 annual fee, which is the highest fee on our list. You are subject to a minimum interest charge of $1.50 per month and if you request a cash advance; the fee is either 3% or $10 (whichever is greater).
First Progress does not require a credit history or minimum credit score to obtain this card. They also offer two other secured credit card with slightly different pricing details; depending on your appetite for a higher/lower annual fee.
- Platinum Prestige Mastercard® Secured Credit Card has a 9.99% variable APR and a $49 annual fee
- Platinum Elite Mastercard® Secured Credit Card has a 19.99% variable APR and a $29 annual fee