Credit can be something of a chicken-and-egg problem. If you have no credit or have poor credit, you cant qualify for credit cards and loans. However, without access to a loan or credit card, you have no way to build a good credit history.
Secured credit cards are one solution to this problem. You give the lender some collateral, usually a cash deposit, and the lender gives you a credit card. The lender takes on almost no risk and you get the opportunity to show you can handle credit and build your credit history.
First Progress and Open Sky are two secured credit card providers, each with pros and cons.
In a Nutshell
- First Progress is for people who want some control over the annual fee they pay and the interest rate of their card.
- Open Sky is for people wanting access to a community of people who are working to build their credit together.
|Brand||Best For||Special Features|
|First Progress||People who want to customize their annual fee and interest rate||Select from three cards with different fees and interest rates|
|Open Sky||Those who want access to a community of people working to build credit||Credit building community and knowledge base|
First Progress offers three secured credit cards, all on the Mastercard network. You can use these cards anywhere Mastercard is accepted and there is no minimum credit score required.
First Progress Features
First Progress offers three different secured credit cards. The primary difference between them is the annual fee for the account and the interest rate it charges.
- First Progress Platinum Prestige Mastercard® Secured Credit Card carries a $49 annual fee and a 10.74% Variable interest rate.
- The First Progress Platinum Elite Mastercard® Secured Credit Card has a $29 annual fee with a 20.74% Variable interest rate.
- First Progress Platinum Select Mastercard® Secured Credit Card falls in between with a $39 annual fee and a 14.74% Variable interest rate.
Because you should be paying your card’s balance in full with every statement, you should select the card with the lowest fee, as the interest rate won’t be relevant if you always pay your balance in full.
Each of the cards has no minimum credit score requirement and you can qualify with no credit history at all. The minimum security deposit to open the account is $200.
First Progress Special Features
The First Progress cards are relatively basic. There aren’t any bonus features like rewards or other tools you can use to build your credit. The most unique offering from First Progress is getting to choose from three cards with different fees and interest rates.
First Progress Fees
Secured credit cards often charge fees and it’s important to be aware of the fees you’re paying to access a secured card.
Each of First Progress’s secured credit cards charges an annual fee. The fee ranges from $29 to $49. When you first open an account, First Progress will immediately charge the fee. It will also charge the fee on your account anniversary each year until you close the card.
You can use the card while outside the United States but will pay a 3% foreign transaction fee.
If you use the card to get a cash advance, you’ll pay the greater of $10 or 3% of the amount you withdraw. There is also a late payment fee of $40 and a returned payment fee of $29.
Pros and Cons
Before opening an account with First Progress, consider these pros and cons.
- Choose from multiple card options to customize annual fee and interest rate
- No credit history required
- No minimum credit score
- No fee-free option
- No special features
Why Choose First Progress?
First Progress is a strong choice if you have no credit or have especially damaged credit, as there are no credit history or credit score requirements.
It’s also likely the better choice for people who think they might have to carry a balance on their card from time to time. In a perfect world, you’ll pay your credit card bill in full each month, which means you’ll never pay interest. However, things sometimes come up, and being able to choose a card with a low-interest rate means occasionally carrying a balance will be less painful.
OpenSky Secured Visa Credit Card is a credit card company offering a secured credit card on the Visa network.
Open Sky Features
The Open Sky secured credit card has no minimum credit score and no credit history requirements. Open Sky doesn’t even consider your credit history when you apply. All you have to do is offer a cash deposit to secure the card. Your credit limit will be equal to the deposit you provide, with a minimum deposit of $200 and a maximum deposit of $3,000.
Open Sky reports your credit activity to all three of the major credit bureaus. That means if you use the card properly and pay your bills on time, you can build your credit score and eventually qualify for an unsecured card or loan.
Open Sky Special Features
One thing that makes Open Sky unique is it offers a lot of resources for people who want to learn more about credit, credit scores, and how credit works in general.
The Open Sky website has a knowledge base with answers to common credit-related questions. There’s also a Facebook community for Open Sky customers where you can ask questions and share stories. This sort of community can help you feel more engaged with your credit and push you to try to improve your credit score.
Open Sky Fees
The Open Sky secured credit card does charge an annual fee of $35. Open Sky charges this fee as soon as you open the account and then each year on your account anniversary. There are also fees of $38 for late-payments and $25 for returned payments.
The cash advance fee is the greater of $6 or 5% of the amount you withdraw and the foreign transaction fee is 3%.
Pros and Cons
Before opening an account with Open Sky, consider these pros and cons.
- You don’t have to choose from multiple cards, which makes things simpler
- Facebook community and credit knowledge base for account holders
- No credit check
- No fee-free card
- No rewards
Why Choose Open Sky?
Open Sky is a good card to choose if you value having a community of people in a similar situation to yourself. For some people being able to talk with others who are trying to rebuild their credit can be a motivator and help them reach their goals.
Open Sky’s credit knowledge base is also helpful for people who feel like they need to learn more about how credit works.
These are some of the most frequently asked questions about secured credit cards.
Do you ever get your deposit back from a secured card?
When you give a security deposit to a secured credit card issuer, they should place it in a bank account on your behalf. If you pay your credit card bill on time, they’ll keep the money in that account until you close your credit card. When you close your account, you’ll get the money back. Some card issuers will return your security deposit automatically once you’ve built your credit score.
How long does it take to build credit with a secured card?
How long it takes to build credit depends on a few factors. If you’re starting with a blank slate, you should be able to build a solid credit score relatively quickly. If you can show a few months or a year of timely payments, that should be enough to convince a lender to give you an unsecured card. If you have damaged credit, it can take longer to rebuild your credit by using a secured card. You need to wait for the positive impact of your responsible card use to outweigh the damage done by the payments you missed in the past. As time passes, your score will improve, but it may take longer than if you were starting with no credit history at all.
How much should you deposit to a secured card?
Most secured credit cards have a minimum security deposit in the range of a few hundred dollars. Your credit limit is usually equal to the security deposit you provide. There are a few strategies that you can use here. One is to make the minimum required deposit. You’ll have a low credit limit, but that will make it easier for you to avoid using the card for large purchases you can’t afford. If you want to be able to use the card on a regular basis, you’ll have to make a large enough deposit that you don’t hit the credit limit regularly. Having a higher credit limit can also reduce your credit utilization ratio, which can boost your score a bit. However, the higher your credit limit, the more you can borrow, which increases the risk you’ll borrow more than you can afford to pay.
First Progress and Open Sky are two solid secured credit card providers. If you need to build or rebuild your credit score, either card would be a good choice. However, you shouldn’t ignore other secured card options. You may be able to find a card that doesn’t charge an annual fee, offers rewards, or otherwise fits your needs more effectively.