Best Secured Credit Card: If you have bad or no credit, getting approved for a regular credit card can be tough. That’s where secured credit cards come in! They are designed to help you build or rebuild your credit with a small security deposit while offering many of the same benefits as unsecured cards.
A secured credit card can be a stepping stone to better credit and financial freedom. But with so many options available, how do you choose the right one?
In this guide, we’ll explore the best secured credit cards, what to look for, and how to use them wisely.
How Secured Credit Cards Work
Secured credit cards require a refundable security deposit, which acts as collateral for the credit line. This deposit usually determines your credit limit. For example, if you deposit $200, your credit limit will likely be $200.
Unlike prepaid cards, secured credit cards report your payment history to the major credit bureaus (Experian, Equifax, and TransUnion), helping you build your credit score over time. As you demonstrate responsible use, some issuers may allow you to transition to an unsecured credit card and refund your deposit.
Key Features to Look for in a Secured Credit Card
Not all secured credit cards are created equal. When choosing the best one, keep an eye out for these essential features:
- Low deposit requirements – Some cards allow you to start with as little as $49.
- No or low annual fees – Avoid cards that charge high fees for maintaining the account.
- Reports to all three credit bureaus – This ensures your credit-building efforts are recognized.
- Upgrade options – Some secured cards allow you to upgrade to an unsecured card once you establish good credit habits.
Best Secured Credit Cards
Discover it® Secured Credit Card
- Annual Fee: $0
- Security Deposit: $200 minimum
- Rewards: 2% cashback on gas and dining; 1% on all other purchases
- Credit Reporting: Yes (to all three bureaus)
- Upgrade Option: Yes
Why it’s great: Discover it® Secured is one of the few secured cards offering cashback rewards, plus they match your cashback for the first year.
Capital One Platinum Secured Credit Card
- Annual Fee: $0
- Security Deposit: $49, $99, or $200 (based on creditworthiness)
- Rewards: None
- Credit Reporting: Yes
- Upgrade Option: Yes
Why it’s great: You may qualify for a lower deposit than the credit limit you receive, and Capital One offers automatic credit limit increases with responsible use.
Citi® Secured Mastercard®
- Annual Fee: $0
- Security Deposit: $200 minimum
- Rewards: None
- Credit Reporting: Yes
- Upgrade Option: No
Why it’s great: Citi Secured is ideal for those focused on rebuilding credit without worrying about rewards.
OpenSky® Secured Visa® Credit Card
- Annual Fee: $35
- Security Deposit: $200–$3,000
- Rewards: None
- Credit Reporting: Yes
- Upgrade Option: No
Why it’s great: No credit check required, making it ideal for those with no credit or poor credit history.
Bank of America® Customized Cash Rewards Secured Credit Card
- Annual Fee: $0
- Security Deposit: $200 minimum
- Rewards: 3% cashback on chosen category, 2% at grocery stores and wholesale clubs, 1% on all other purchases
- Credit Reporting: Yes
- Upgrade Option: Yes
Why it’s great: One of the best secured cards with a strong rewards program and a path to an unsecured upgrade.
How to Choose the Right Secured Credit Card
Consider these factors when picking the right secured card for your needs:
- Fees and Interest Rates: Avoid high annual fees and APRs.
- Security Deposit: Choose one with a low deposit requirement.
- Credit Bureau Reporting: Ensure the card reports to all three bureaus.
- Upgrade Potential: If possible, get a card that allows transitioning to an unsecured version.
How to Use a Secured Credit Card Responsibly
- Always pay on time – Even one late payment can hurt your credit score.
- Keep utilization low – Try to use less than 30% of your available credit.
- Monitor your credit progress – Use free tools like Credit Karma or your bank’s credit monitoring services.
Pros and Cons of Secured Credit Cards
Pros
✅ Helps build credit
✅ Easier approval than unsecured cards
✅ Some offer rewards
Cons
❌ Requires a deposit
❌ Lower credit limits
❌ Some cards have fees
FAQs about Best Secured Credit Cards
What is a secured credit card?
A secured credit card is a type of credit card that requires a cash deposit as collateral, which typically serves as your credit limit. This card is designed for individuals looking to build or rebuild their credit history.
How does a secured credit card work?
When you open a secured credit card, you deposit a sum of money, which usually becomes your credit limit. You can use the card like any other credit card: making purchases, paying bills, and accruing interest if balances are carried over. Payments are reported to credit bureaus, impacting your credit score.
What are the benefits of using a secured credit card?
Secured credit cards are a powerful tool for building credit. They report to credit bureaus, helping to establish a credit history. They also provide the discipline of a credit limit set by the deposited amount, reducing the risk of overspending.
Are there any disadvantages to secured credit cards?
The primary disadvantage is the required deposit, which might not be feasible for everyone. Also, secured cards often have higher interest rates and fees compared to traditional credit cards. Additionally, the credit limit is generally low, tied directly to the deposit amount.
How can I choose the best secured credit card?
When choosing the best secured credit card, look for cards with low annual fees, competitive interest rates, and favorable terms. Consider whether the issuer reports to all three major credit bureaus. Additionally, check if there are opportunities to graduate to an unsecured card after a period of responsible usage.
Can anyone get a secured credit card?
Most people can qualify for a secured credit card as long as they can provide the security deposit. This makes them an excellent option for those with poor credit or no credit history.
How long should I use a secured credit card to build credit?
It typically takes about six to twelve months of regular, on-time payments to see a noticeable improvement in your credit score. Consistent responsible use over time is key to building a stronger credit profile.
