Saturday, August 13, 2022

What Is The Best Secured Credit Card To Have

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First Progress Platinum Prestige Mastercard Secured: Best For Offering A Low Apr

BEST Secured Credit Card
  • Annual fee: $49
  • Security deposit: $200 $2,000
  • Editors thoughts: This card reports to all three credit bureaus and does not require a minimum credit score, making it a good option for those looking to build credit

The First Progress Platinum Prestige Mastercard Secured Credit Card offers a low variable APR on purchases and cash advances. The card is accepted nationwide and does not require a credit history or minimum credit score to apply.

Some important details include:

  • There is no credit history or minimum credit score required
  • A refundable security deposit between $200 and $2,000
  • Account usage is reported to all three credit bureaus

If you are concerned with your ability to meet your monthly payment, this card can offer some relief because it has a low purchase APR, limiting the amount of interest charged on any missed payments.

To learn more about this card and its benefits, .

Us Bank Cash+ Visa Secured Card

  • 5% cash back on the first $2,000 of purchases each quarter in two categories of your choosing.
  • 2% cash back on purchases in the category of your choice.
  • 1% back on other purchases.
  • No annual fee.

With the U.S. Bank Cash+ Visa Secured Card, youll earn 5% cash back on up to $2,000 in purchases per quarter in the two categories of your choosing, 2% cash back on purchases in one everyday category of your choice, 1% back on other purchases. If you max out the cap, thats $100 cash back at the 5% rate.

After hitting the spending cap, your earning rate will drop to 1% for purchases in the 5% categories until the next quarter. Your 2% category does not have such a cap, however.

You must enroll in your cashback categories quarterly, and cash back does expire at the end of the calendar month 36 months after the billing cycle in which the rewards were earned.

The minimum security deposit is $300 .

There is a $0 annual fee to carry the card, but take note that there is a 3% foreign transaction fee.

Not too long ago, earning 5% cash back with a secured credit card would have been unheard of. Now, with the U.S. Bank Cash+ Visa Secured Card, cardholders have the opportunity to build credit and earn rewards at a generous rate typically reserved for unsecured cards. Options for the 5% category include:

  • TV, internet and streaming services
  • Fast food
  • Pay with a tap wherever contactless payments are accepted.
  • Choose your payment due date.

About the card

Who’s This Card Best For?

Factors To Consider When Choosing A Secured Credit Card

Your choice in credit card should be based on your personal goals and finances. A secured credit card will require a cash deposit ranging from a few hundred dollars to several thousand. Determine what sort of credit limit makes the most sense for you and how much of an initial deposit that will require. If your card limit is on the lower end of the spectrum and you think youll routinely make purchases that eat up the majority of your available credit, understand that this type of high usage can impact your credit score. In these situations, a high limit secured card may be a better option.

Aside from spending habits, youll also want to take into consideration any applicable rates and fees such as annual fees and foreign transaction fees, as well as any additional benefits. Though its rare, some secured cards do offer rewards, such as the Discover it® Secured Credit Card.

When it comes to selecting a secured credit card, here are a few things you should be particularly wary of:

Also Check: First Premier Platinum Mastercard

How To Use Your Secured Card To Build Credit

Now that you understand how secured credit cards work, how do you handle one correctly? It only takes three easy steps:

  • Pay on time. While it takes months to build your credit with good payment habits, one or two late payments can cause a big drop in your score. And not only is paying on time good for your credit, it keeps you from having to pay late fees and even losing your card.
  • Pay in full. In fact, pay multiple times a month to keep your utilization ratio low because you dont know when your issuer will send your account information to the three major credit bureaus. This will also help you avoid interest charges.
  • Place a small charge on the card. Dont forget to use the card each month. If you lose your card to inactivity, you cant build credit month by month. Put a recurring reminder on your calendar to ensure that you dont forget. Or better yet, place an auto debit for a small charge on your card.

Converting To Unsecured Credit Card

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Some secured credit cards review your account after a certain amount of time, e.g. 12 months, and upgrade you to an unsecured credit card if you qualify. You can improve your chances of qualifying for an unsecured credit card by making your payments on time and keeping your credit card balance low. Even if your secured credit card issuer doesn’t upgrade you to an unsecured credit card, you may qualify for an unsecured credit card with another credit card issuer after six to twelve months. That’s assuming your secured credit card has reported your credit history to one of the major credit bureaus.

A secured card is a good choice if you are just starting out with credit or you need to repair damaged credit history and you can’t get approved for a regular credit card.

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    Selecting A Rewards Credit Card

    Generally speaking, cards that earn you points are usually best used for travel redemptions. These cards will likely give you other ways to cash out your points, but the majority of the time, you get the most value for your points when redeeming for travel. Similar to cash-back cards, you want to pick a card that gives you the most points on the categories you spend the most money. You also want to figure out what type of travel you prefer you could get an airline-branded credit card or a hotel-branded one. There are also credit cards that allow you to redeem for any type of travel. Regardless of what you go with, you need to know how the reward programs work so you can maximize your points.

    Bankamericard Secured Credit Card: Best For A Higher Potential Credit Line

    Annual fee: None.

    Minimum security deposit: $300 for a $300 credit line.

    How to get a higher credit line: You may be approved for a credit limit of up to $4,900, but a security deposit is required for the amount of your credit limit.

    Variable APR: 22.99%.

    Who should apply: With the BankAmericard Secured credit card, you can access your FICO score, updated monthly, for free. Plus, Bank of America will periodically review your account and, based on your overall credit history, you may qualify to have your security deposit returned while being able to continue using your account. Your card will have chip technology, but theres a 3% foreign transaction fee, so you wont want to use this card abroad.

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    Can You Be Denied When You Apply For A Secured Credit Card

    Because secured credit cards require a deposit, the risk on the lenders part might seem low enough that theres no point in denying applications. But thats not exactly how it works.

    You can be denied for a secured credit card. And in general, its for the same overarching reason youd be denied for any credit card: Your credit history or other personal/financial information doesnt measure up to the issuers standards, or there was something wrong with your application.

    The actual reasons for your denial may vary, but they may include warning signs like bankruptcies, inadequate income , perpetually late payments, and even poor management of any bank accounts you hold/have held with the issuer in question.

    The good news? Its your right to know why you were denied, and you should ask if the issuer doesnt tell you. That way, you know exactly what to work on in order to get your credit to a place where youre more likely to be approved.

    Why Do Banks Turn Down Applications for Secured Cards?

    How To Maintain Your Secured Credit Card Account

    What Is The Best Secured Credit Card

    As with all credit cards, making timely payments is such an important part of using a secured card. There are major downsides to missing payments and its tough to catch up once you fall behind, so its essential to get into the habit of making sufficient payments on time. Here are some guidelines:

    • Many secured cards offer features designed to help you keep a regular payment schedule, such as auto-pay settings and automated reminders. Put these features to work for you so that you dont have to shoulder the entire load.
    • Secured cards, like unsecured cards, charge interest if you dont pay your balance in full and on time every month. Carrying a balance on your secured card could lead to costly interest charges, since the APR on many secured cards is higher than the average rate.
    • Late payments will also damage your credit score. Payment history accounts for 35 percent of your credit score, while makes up 30 percent. These heavily weighted factors make it extremely important to pay your credit card bill on time and in full.

    Also Check: Best Buy Credit Card Payment App

    Do You Need A Bank Account To Get A Secured Card

    In just about every scenario, a secured credit card company will require an active checking or savings account to qualify you for a card.

    You use this account to send your refundable security deposit and make your regular monthly payments. The bank will also use your account to verify income and payment history information.

    The one positive is that you dont necessarily need a checking or savings account with the bank that issues your card.

    For example, you wont need a checking account specifically with Citi to qualify for the Citi® Secured Mastercard®. Instead, you can link your active account through a local or online bank or credit union to send your deposit and make your monthly payment.

    That said, it does not hurt to open an account with the bank that issues your secured credit card especially if you are shopping for the card in hopes of improving your credit score.

    A secured credit card is the beginning of a relationship-building process with a lender. When you open a regular account with that lender one in which you can receive direct deposits of your paycheck or benefits checks you can solidify the relationship even more.

    That can lead to an eventual card upgrade or approval for other loans and financial products. When you build a good history with a specific bank, it is far more likely to consider future applications than if you were a one-time customer who comes and goes.

    No Credit Check Credit Cards

    There are some secured credit cards that dont require a credit check when applying, which means youre almost guaranteed to be approved. There is still a possibility of denial, but its relatively low.

    If youve been denied for other secured cards these may be your last options. Since they wont check your credit you can probably get one of the following cards as long as your finances can handle it . You may still be denied if your identity cant be verified, or if your income is too low.

    These cards dont require credit checks for approval but theyre known for having relatively poor customer support, and the payment processing systems may be slower or buggier than with other cards. This makes them riskier to use, and we dont recommend them unless you truly cant get anything else . Some cards like these dont require bank accounts, making them more attractive for people in certain situations.

    If you use one of these cards, be sure to completely understand how to make on-time payments so you dont wind up accidentally hurting your credit instead of helping it.

    Read Also: Bestbuy Credit Card Online

    What Are Secured Credit Cards

    Most credit cards are unsecured, meaning that they dont require you to put up any kind of collateral. When you get a secured credit card, you pay a security deposit that typically serves as both collateral and as your .

    Why do you have to pay a deposit on a secured credit card? The deposit is kind of a tradeoff. You have to put money down, but it makes secured cards accessible for those with limited credit history or bad credit. Keep in mind that using a secured credit card responsibly could lead to:

    • Getting a refund on your deposit
    • A higher credit score, which makes it easier to qualify for an unsecured card

    If you practice good habits, you might be able to rely on good credit instead of collateral when you apply for your next card.

    What Credit Score Do You Need To Be Approved For A Secured Credit Card

    Business Secured Credit Card / Top 10 Secured Credit Cards ...

    Because you are not able to spend more than the cash deposit you provide, the issuers risk is much lower than it would be lending to someone with an unsecured credit card. For this reason, applicants with minimal or bad credit history are often approved for secured credit cards. To give you a better sense of what constitutes good, fair and bad credit, FICO goes by the following range:

    • Very poor: 300 to 579
    • Fair: 580 to 669
    • Very good: 740 to 799
    • Exceptional: 800 to 850

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    Best Credit Card To Shop Local

    This is a new category on our list this year. We wanted to share a bit more info on how credit cards are catering to those who want to support businesses near them.Credit cards are accepted pretty much everywhere, even small mom-and-pop shops. The lure of shopping with bigger retailers has been the potential for rewards but those who want to shop local to support their communities can now collect rewards too, including cash back. And now there is a card that gives preferencial rates for shopping local .

    In an effort to boost the profile of small businesses and help them survive the volatility of the pandemic, many credit card companies have launched programs to connect consumers with the best of their communities. For example, with American Expresss Shop Small, consumers can easily locate and purchase from local vendors. Visas Back to Business Locator identifies merchants across type and location, providing easy access for local spenders. Through its partners, Mastercard offers small businesses a variety of tools they can use to succeed, from cybersecurity to customer relationship management, all available in its Business Resource Centre. These are all excellent programs aimed at keeping small businesses vital, but when it comes to consumer perks for shopping local, our top credit card pick is the Neo.

    Who Benefits From A Secured Credit Card

    Regular credit cards have stricter credit qualifications that make it hard for people with bad credit and no credit to be approved for these cards. Consumers who have trouble getting approved for traditional credit cards often get approved for a secured credit card much easier than a regular credit card. Getting a secured credit card is an opportunity to prove you can use credit cards responsibly. After a few months, you have a better chance of getting approved for regular credit cards.

    Even people with good credit – those who don’t have trouble getting approved for regular credit cards – can benefit from a secured credit card. For example, you may want a bigger credit limit than you can be approved for. Making a security deposit of $5,000 or even $10,000 would give you a bigger credit limit and make it easier to get approved for similar credit limits on an unsecured credit card.

    Recommended Reading: Best Buy Consumer Credit Card

    You Want To Be Able To Change Your Minimum

    Petal doesnt offer the option to change your minimum payment due date, so youre locked into the date you’re assigned. If you need more flexibility, consider the Capital One Platinum Secured Credit Card. Youll have to pay a security deposit to qualify, but if youre eligible you might be able to pay one as low as $49 depending on your creditworthiness. It has a $0 annual fee, but it doesnt offer rewards.

    Capital One Quicksilver Secured Cash Rewards Credit Card

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    Our pick for: Rewards and upgrading

    The Capital One Quicksilver Secured Cash Rewards Credit Card offers an impressive combination of features for those with poor credit. A deposit is required, but in exchange you get a $0-annual-fee card that reports to all three credit bureaus an automatic credit limit review after six months and a possible upgrade path to an unsecured Capital One card. Oh, and 1.5% back on all purchases, which equals what you’d find on many unsecured cards. Read our review.

    Also Check: Credit Cards That Use Transunion Score

    What Is The Minimum Credit Score Needed To Get A Secured Card

    There is no minimum credit score requirement for a secured credit card because your security deposit makes up for your lack of credit history or previous credit mistakes.

    Some examples in which you may not be approved for a secured credit card include having an active or recently discharged bankruptcy case, unverifiable income, or a lack of funds for the security deposit. You may also fail to qualify if you have a recent foreclosure or accounts that are currently in collections or default.

    If you are denied, you can contact that cards issuer and speak to a representative to explain your needs and current status. While this does not guarantee approval, it often helps you add some background information to your application, making it easier for the bank to consider your request for credit.

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