If you want to build credit but you’re having trouble qualifying for a credit card, a secured card could be a solution to your problem. Unlike prepaid or debit cards, secured cards give you access to a credit line, and payments are typically reported to the credit bureaus, which could help improve your credit score.
Secured cards require a deposit upfront, but after proving you can manage credit with responsible on-time payments, you may be able to get your deposit back. Application requirements, interest rates, terms, and conditions for secured cards can vary.
If you’re looking for a card without a credit check, the OpenSky® Secured Visa® Credit Card is an option that doesn’t require one. If you’re looking for a secured card with a rewards program, the Discover it® Secured Credit Card offers 2% cash back on up to $1,000 spent at gas stations and restaurants per quarter and will match all the cash back earned the first year.
That’s not all, though—we have other options for you to consider on this list. Here are the six best secured credit cards we evaluated, ranked in order:
Unlike prepaid and debit cards, secured cards can help you build a credit history. People who apply for secured credit cards generally fall into two categories: Consumers who are new to credit, such as students or people who’ve recently moved to the U.S., and consumers looking to rebuild credit after a financial setback. Before applying for one of these cards, you should understand how they work:
Secured credit cards require a cash security deposit, which is typically refundable when you upgrade to an unsecured card or close the account in good standing.
The deposit protects the issuer in case you fall behind on payments, but it’s also usually equal to your credit limit. If you max out the card and fail to pay it off, the issuer can take your deposit and zero out the unpaid balance.
As you use the card, your issuer reports your account activity to the major credit bureaus. This can help you build a good credit history and develop credit scores, which are largely based on payment history and your credit utilization ratio. That’s the amount of credit you’re using divided by the amount of credit you have available.
To improve your score, try to make monthly payments on time and aim for a utilization ratio around 30% or less. Paying down your balance each month will help, but so will having a higher credit line. For example, if you have a $200 balance on a card with a $500 limit, then your utilization ratio is 40%. But the same balance on a card with a $1,000 limit reduces your utilization ratio to 20%.
How We Evaluated Secured Credit Cards
We searched for secured cards that limit extra costs (fees and interest rates), help you build credit with responsible use, and come with flexible credit limits. And while rewards take a back seat here, they’re still a nice addition—so we gave them some attention.
When selecting a secured card, you should always read through the cardmember agreement and ask questions. Check the APR, which is a cost the issuer charges when you don’t pay off the balance every month. While some credit cards offer 0% APR, this is typically not the case with secured cards—though if you build up your score, one could be in your future. Also consider any fees, which may be extra burdensome if you’ve already parted with cash for your deposit and have a low credit limit.
Discover it Secured
Among the best secured credit cards, this one earns the top position on our list because it offers plenty of consumer-friendly features: a path to a security deposit refund, credit-building tools, a solid rewards program, no annual fee, and no late fee when you miss your first payment.
How the deposit works: You can make a security deposit of $200 to $2,500. Discover automatically reviews your account every month, starting at eight months, and may refund your security deposit if you've shown responsible use. You can also get your deposit back if you pay your balance in full and close the account.
Other important features: With the rewards program, you earn 2% cash back at gas stations and restaurants on up to $1,000 in purchases each quarter, and you earn unlimited 1% cash back on all other purchases. Plus, the issuer will match all the cash back you earn in the first year. Discover also provides free access to your FICO credit scores, which can help you understand your overall credit health.
Fees and APR: There’s no annual fee, and cardholders get a free pass on their first late payment (thereafter, late payments incur a fee). The card also comes with a low variable APR and charges a balance transfer fee and cash advance fee.
The Capital One Platinum Secured is our runner-up because you can grow your credit line without putting down extra money—a major win for people who don’t have the cash on hand for a large deposit—and it has no annual fee.
How the deposit works: Based on your credit, Capital One will assign you a minimum security deposit: $49, $99, or $200 (or put down more, if you choose). You’ll get a credit line of at least $200 once you pay the initial deposit, which means you may qualify to pay a $49 deposit for a credit line of $200. In as little as six months, Capital One may grant you an even higher amount without requiring an additional deposit.
Capital One may decide to refund your deposit as a statement credit, or you can ask for the deposit back if you close the account in good standing.
Other important features: Like many cards for bad credit, this one comes with no rewards program—but if chasing rewards will cause you to spend more, then it’s best to get a card without them. Capital One also has its own credit-tracking program, CreditWise, which is free for everyone (even people without a Capital One card).
Fees and APR: The variable APR is on the higher side, but can be avoided if you don't carry a balance. There’s also a cash advance fee and late payment fee, but no annual fee.
This card has the lowest APR of all the cards on our list and only one fee to speak of, so it stands to save you the most on costs.
How the deposit works: You’ll use your DCU savings account to put down at least $500 to open the card—and there’s no upper limit on the size of your deposit, as long as you qualify for the credit line. While that puts the card out of reach for people who can’t afford a large deposit, it can be a good option if you have a healthy savings account.
To get the deposit back, you’ll need to pay off the balance and close the account. You can also apply for an unsecured credit card if you’ve established healthy credit.
Other important features: This card does not offer rewards, and you’ll need to join the credit union to open the account. Although DCU’s membership eligibility requirements are exceptionally flexible, this could be a deal-breaker for some.
Fees and APR: The card comes with a low variable APR, and there’s no annual fee, balance transfer fee, cash advance fee, or foreign transaction fee. However, making a late payment may trigger a penalty APR and a late payment fee.
While this card comes with an unimpressive fee structure and account terms, it offers one truly helpful benefit, especially if you’re rebuilding credit after a setback. OpenSky won’t pull your credit during the application process or ask that you have a bank account, which are routine requirements for other issuers.
How the deposit works: Your deposit can range from $200 to $3,000, subject to approval. The deposit is refundable if you decide to pay off the balance and close the account.
Other important features: There’s no rewards program, and if you’re looking to upgrade at some point, you’re out of luck here. OpenSky won’t change your account to unsecured, but it does say 99% of its cardholders who started with no credit score built a history after six months of responsible use.
Fees and APR: This is the only card on our list with an annual fee: It’s $35 and counts against your credit limit. There’s also a cash advance fee, foreign transaction fee, and late payment fee.
Navy Federal Credit Union® nRewards® Secured Credit Card
This card has everything you want when building credit—primarily, a solid rewards program, free access to your FICO score, a cell phone protection plan, and a dearth of extra costs.
How the deposit works: You’ll use your NFCU savings account for your deposit, which can range from $200 to $5,000. After six months, Navy Federal Credit Union reviews your account to see if you’re eligible for an upgraded cashRewards unsecured card. You can also get the deposit back if you decide to pay off the balance and close the account.
Other important features: You earn one point per dollar spent on all purchases through the rewards program, and the cell phone plan provides supplemental protection when you pay your bill with this card.
Despite all its perks, this card sits lower on our list because you must join the credit union to apply. Unlike DCU, membership is strictly limited to service members of the armed forces, veterans, and family members of these groups.
Fees and APR: The card comes with a low APR, and there are no annual fees, balance transfer fees, foreign transaction fees, or cash advance fees.
Forget the bells and whistles here: The Citi Secured card is a no-frills option that provides just the basics. You can make purchases, build credit, check your free FICO credit scores—and that’s pretty much it.
How the deposit works: Put down a deposit, between $200 and $2,500, as your credit limit. You can get the deposit back if you pay off the balance and close the account.
Other important features: None. But you might find something great in the simplicity; for example, the lack of a rewards program can stifle your temptation to spend.
Fees and APR: This card’s APR is on the lower side, and though it comes with an assortment of fees, they’re clearly stated and can be avoided. There’s a balance transfer fee, cash advance fee, and foreign transaction fee. Making a late payment will also trigger a late payment fee and a penalty APR.
Please note: The offers mentioned above are subject to change at any time and some may no longer be available.
Reviewed has partnered with CardRatings for our coverage of credit card products. Reviewed and CardRatings may receive a commission from card issuers.
Though secured cards are usually a stopgap for people who don’t qualify for an unsecured card, they’re a good tool for building credit. Getting one with a low APR and limited fees will help you save money in the process.
Some issuers will review and upgrade your account automatically if you’ve shown you can use a secured card responsibly. But you can also monitor your own credit and consider applying for an unsecured card. You may need a good to excellent score to qualify, which is a score of around 670 or higher.
Before closing your secured credit card and opening a new unsecured card, consider the potential consequences to your credit. Closing an account lowers the overall age of your credit history, which can cause your scores to temporarily drop. Then, your score can get dinged again when you apply for new credit. However, your credit scores can mend over the next few months if you make on-time payments and keep your balances low.
Common Credit Card Terms
Balance transfer: A process that lets you move debt from one credit card to another. This can help you save money and simplify payments, though you may have to pay a balance transfer fee and a special APR on these transactions.
Cash advance: A short-term cash loan against your credit card. You can usually withdraw the money at a bank or ATM up to a certain limit. Although you access cash in a pinch, you may have to pay a cash advance fee and a special APR on these transactions.
Credit limit: The maximum amount you can charge to your credit card. Once you hit the limit, you need to pay down some or all of the balance before the issuer replenishes your credit line.
Late payment: A payment that's made after the due date or is less than the minimum payment required. The card issuer may charge you a late fee and could report the late payment to the credit bureaus. A large part of your credit scores is based on payment history, so it's important to always make on-time payments.
How Does Credit Card Interest Work?
Despite the term “annual percentage rate,” credit card issuers calculate interest daily. The daily periodic rate is determined by dividing your APR by 365 days, which is then applied to your average daily balance. Crunch this number by adding up the total you carry each and every day of the billing cycle, and then dividing that by the number of days in the billing cycle.
Let’s say your card’s APR is 16%, and this month you carried an average daily balance of $2,000. The issuer first calculates the daily periodic rate (0.16 divided by 365). That rate (0.00043) is applied to your average balance (0.00043 x $2,000), which brings us to 0.87. Over the course of the 30-day billing cycle (0.87 x 30), you’ll pay $26.30 in interest.
If crunching numbers isn’t really your thing, some issuers include tools that calculate how much interest you’ll owe based on your monthly payment. Petal, for example, shares this information in a mobile app for its two credit cards.
Remember: You won’t be charged interest if you pay off your balance in full and on time each billing cycle. We get that life happens. So if on occasion that’s not possible, consider paying more than the minimum amount to lessen the interest you’ll pay over time, or make more than one payment during the billing cycle to lower your average balance.
Easy Steps to Build Your Credit History
Make at least the minimum payment on time. Timely payments are the biggest factor that contribute to your FICO score, accounting for 35%. Set a calendar alert so that you don’t have another task on your mental to-do list, or set up automatic payments to take the stress away altogether. It’s like a personal assistant—without the price tag.
Be mindful of your credit utilization. This percentage is how much of a balance you carry compared to your available lines of credit. Experts recommend keeping it at less than 30%, meaning if your credit limit is $6,000, have no more than $1,800 as a balance.
Keep tabs on your credit reports and credit score. Your credit card issuer may provide monthly reporting, or there are other ways to check your score for free. One in four credit reports have mistakes that can negatively impact your credit score. Be on the lookout for wrong addresses, outdated information, and high balances that may be a sign of identity theft.
Don’t have a credit card? You may still have a credit score, and there are ways to build your history even if you don’t have one in your wallet.
How to Build Credit Without a Credit Card
Revolving credit isn’t the only factor that impacts your score. Have student or car loans, or another type of installment loan? The lender likely reports your payments to the major credit bureaus, which impacts your score.
Consider taking out a credit-builder loan with a small bank or credit union. This type of installment loan will add to your credit mix—one factor that affects scores—and making on-time payments gives it a boost, too.
Even though your credit score can affect your utilities, your utility payments are not reported to credit bureaus. We don’t make the rules! There are some services, such as LevelCredit and RentTrack, that will report your utility and rent payments to the credit bureau to give you credit for your timeliness.
There are other tools, like Experian Boost, that may make sense for you. It taps your phone and utility payments—and even your Netflix subscription—to nudge your score a bit. According to the credit bureau, users who sign up for the service see an average jump of 13 points in their FICO scores.
What Is a Good APR for a Credit Card?
Credit card annual percentage rates range from 13% to 25%, with the national average in January 2021 around 16%. Credit cards marketed for applicants with bad credit tend to be on the higher side, as do credit cards with rewards programs.
Before you apply for a credit card, you can see this range in the cardmember agreement. You won’t know the rate until you’re approved, as it’s determined by the issuer based on your creditworthiness. The higher your credit score, the lower the rate you can expect. Remember that with a variable rate, an issuer can change the interest it charges at any time—and, per your cardmember agreement, it may not have to notify you.
An issuer may charge a different APR for purchases, balance transfers, and cash advances. It may even offer an introductory rate that includes zero interest for a period of 12 to 18 (or 21) months. Lastly, a penalty APR may kick in if you’re late for a payment, exceed your credit limit, or break other terms and conditions laid out by the issuer.
We’ll say it till we’re blue in the face: Pay off your balance each month, and you won’t have to think about interest.
How Many Credit Cards Should You Have?
We hate to break it to you, but there’s no one-size-fits-all answer here. The right number for you depends on what you can responsibly manage.
Does having a piece of shiny plastic an arm’s length away often encourage you to spend money you don’t have? You may want to think twice before applying for more credit. Carrying a balance you can’t afford contributes to interest charges, and in the long run costs you more money.
If you’re financially responsible and stick to making purchases that you can pay off, there may be some upsides to adding another card to your arsenal. For instance, if you’re a jet-setter without a card that rewards you for hitting the road, a travel card may make sense for you.
Long introductory period APR rates are only a short-term incentive. Potentially high APR rates snap into effect after the card’s intro period ends, which could cost you a lot in interest if you’ve left your balance unpaid. It’s really important—especially when getting a card for a big purchase—to keep an eye on your finances, and keep an eye on the calendar.
APR rates and credit limits vary based on your individual credit. Credit limits and interest rates for each card are determined based on each cardholder's personal situation, so we did not take that information into account when evaluating this card. Remember to pay your bill in full every month, so you will not be charged interest.
Banks have final say on who they accept for a credit card. These recommendations were put together with the assumption that applicants would have average credit or above. That being said, banks decide who they will issue cards to using criteria including, but not always limited to, an individual's credit score when evaluating each applicant.
During the application process, issuers often ask for information such as Social Security numbers. At Reviewed, we're fans of one particular unsecured card that's marketed for applicants with low or fair credit. In addition to perks like cash back and no annual fees, Petal also accepts tax identification numbers when U.S. residents living in the states or U.S. military locations apply.
Kim Porter has written about personal finance topics for U.S. News & World Report, Reviewed, Credit Karma, AARP Magazine, Bankrate, and more. When she's not writing, you can find her training for her next race, reading, or planning her next big trip.
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