What Are Secured Cards
A secured credit card is a financial product designed for a consumer with bad credit or a limited credit history. It requires a refundable deposit in exchange for a credit limit. Most credit cards are unsecured credit cards, which means a security deposit isnt required, but those arent always an option for everyone.
Putting it simply, a secured card is a credit card that requires a cash deposit to start the account. The cash deposit gives card issuers a reason to accept lesser credit scores, and because having a credit card is the easiest and fastest way to build credit, a secured card can be worthwhile. Some even come with rewards and perks on top of the long-term credit opportunity.
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.
How We Chose The Best Secured Credit Cards
To find the best secured credit cards, our Editorial Team analyzed cards offered through our partner by its annual fee, security deposit range, unique benefits, rewards, number of credit bureaus the issuer reports to, and whether the issuer is nationally recognized.
Learn more about our ratings and methodology here.
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Self Credit Builder Account + Secured Visa Credit Card
Why its the best secured card for building credit with savings
- This card best for: Someone with the goal of building up savings while establishing their credit history.
- This card is not a great choice for: Those who want a traditional credit card account. With this option, you open a Credit Builder Account and wont actually receive a credit card until youve saved $100 and made three on-time monthly payments in a row.
- What makes this card unique? The savings account and credit card combination is a rarity in the first place, and even more so because you can begin building your credit score before ever obtaining a card. Plus, you can take advantage of monitoring and your habits will be reported to the three major credit bureaus.
- Is the Self Credit Builder Account + Secured Visa Credit Card worth it? For those with the time and patience to wait for a credit card, this is a unique and valuable opportunity. Opening two lines of credit without a hard inquiry is a nice addition to your credit file, and you can further boost your score with on-time payments.
Jump back to offer details.
Sbi Advantage Plus Card
This SBI Advantage Plus Credit Card is among the best secured credit cards in the market. This card offers much more benefits than a regular credit card and can be used both nationally and internationally. The card offers a credit limit up to 85% of the amount deposited in the FD account.
Features of SBI Advantage Plus Card
- Extended credit allows the cardholders to pay the minimum amount and carry forward the remaining amount at the low interest of 2.25% per month.
- The cash withdrawal limit is up to 100% of the credit limit.
- Comes with âEasy Moneyâ facility. This enables cardholders to get a demand draft or cheque delivered to their registered address.
- Cardholders can transfer credit from other credit cards at a nominal processing fee.
- Individuals with this card become automatically eligible for an Encash facility of either Rs. 25,000 or Rs, 50,000. A Fixed Deposit is opened in their name with they are billed Rs. 2,500 or Rs. 5,000 as EMI for 11 months.
Benefits of SBI Advantage Plus Card:
- Can be used at more than 1 million Visa or MasterCard ATMs globally.
- Transactions can be converted into EMIs using the Flexipay option.
- Interest is provided on the fixed deposit after 555 days.
- Benefits of supplementary credit cards.
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What Does A Co
Getting someone with a strong credit score to co-sign a line of credit is one way a family member can help you build credit from scratch. Theoretically anyone can be a co-signer but it’s usually a family member, given the level of trust you need to share. A co-signer will be responsible for repaying the loan in full if you can’t meet its terms. And failing to meet payments on time will hurt your credit score as well as theirs.
Self Credit Builder Account: Best Secured Product For Getting A Small Loan
Overview: With this financial product, you basically get a small loan that funds an FDIC-insured certificate of deposit for 12 or for 24 months. Then, once the accounts term ends, youve built your credit and your CD unlocks.
Pros: This is a good way to build credit for someone with an iffy score. Theres no hard pull on your credit, and it doesnt matter where your credit stands when you begin.
Cons: Theres an administrative fee that is on a sliding scale, depending on how much you pay into your account. So, if you pay $89 a month for 12 months, you pay a $12 administrative fee and you get $1,000 at the end of the year, $68 shy of what youve put in, bringing the total finance charge to $80.
Read more about the Self Credit Builder Account.
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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.
How To Open A Secured Credit Card
If youre as serious about rebuilding credit as we are, we recommend applying for a UNITY Visa Secured Card.
It comes with a fixed rate, access to our How to Rebuild Credit Program and reporting to the major credit bureaus, so you can see your efforts paying off when your credit score starts rising.
You may think avoiding another credit card is the best thing to do when you want to rebuild credit, but thats not always the case. Consider opening a secured credit card. If you place limited funds on it, use it sparingly and pay it in full each month, this credit card can easily help you rebuild your credit.
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Practice Healthy Credit Habits With Your Secured Credit Card
Following good credit habits can help you make the most out of a secured credit card. The following steps are both simple and effective:
- Pay your bill on time every month. Again, this is the most important action item, as your payment history makes up 35% of your FICO® Score. Setting up automatic payments can prevent you from missing a due date. You only have to pay your required minimum payment for it to count as an on-time payment, but paying more will help you keep your card balances down.
- Don’t max out your card. It’s ideal to pay off your card balances in full each month. If you do carry a balance, try to keep it below 30% of your credit limit.
- Know what’s on your credit report. Whether you’re establishing your credit history or taking steps to improve your credit score, it’s wise to periodically check your credit report. Doing so can help you keep up with your progress. It can also alert you to any potential identity theft that may be happening in the background. Accounts you don’t recognize are a major red flag and can indicate fraud.
Things To Consider Before You Apply For A Secured Card
- Your application will require some basic details, including your name and Social Security Number. Have your information ready.
- Check your credit score. You can check your credit score for free online, and knowing where you stand is essential before you get started. Also, errors arent unheard of on credit reports, so its worthwhile to make sure there hasnt been a mistake.
- Look for prequalified offers. Many cards and issuers will let you know ahead of time whether youd be approved, so you dont have to go through the full process or take a hit to your credit. The CardMatch feature is an easy way to find a selection of cards you may be prequalified for.
- Make sure you have enough money for the deposit. It could be as low as $49 or as high as a few thousand dollars, depending on the card and the issuer.
- Some cards require you to have a bank account to pay for the deposit, while others allow payment by check or money order.
- Look for a secured card that reports to at least one of the major , such as Equifax, Experian or TransUnion. Reports of good payment behavior to the credit bureaus are essential for building or repairing credit.
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Are Secured Credit Cards Good
Secured credit cards are an excellent tool to build credit when you cannot get approved for an unsecured credit card or a loan. While putting down a security deposit is less than ideal, secured credit cards give you the chance to build credit when other payment options, such as debit cards, will not.
Best Secured Cards For Bad Credit With Low Aprs
Secured credit cards require you to make a refundable security deposit to open your account. The cards issuer will return your deposit once you close your account, as long as you have a zero balance and no outstanding debts to the bank.
The amount of your deposit typically equals your new credit limit. Youll still need to pay off any charges you make to your card, plus interest if you dont pay within your .
The cards below offer low interest rates that reduce your total cost of credit.
- Receive Your Card More Quickly with New Expedited Processing Option
- No Credit History or Minimum Credit Score Required for Approval
- Quick and Complete Online Application No credit inquiry required!
- Includes Free Real-Time Access to Your Credit Score and Ongoing Credit Monitoring powered by Experian
- Full-Feature Platinum Mastercard® Secured Credit Card Try our new Mobile App for Android users!
- Good for Car Rental, Hotels Anywhere Credit Cards Are Accepted!
- Monthly Reporting to all 3 Major Credit Bureaus to Establish Credit History
- Just Pay Off Your Balance and Receive Your Deposit Back at Any Time
- 24/7 Online Access to Your Account
- Nationwide Program though not yet available in NY, IA, AR, or WI ** See Card Terms.
- Get a fresh start! A discharged bankruptcy still in your credit bureau file will not cause you to be declined.
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Us Bank Secured Visa Card
This is U.S. Banks credit-builder card, and, as such, reports your account activity to the credit bureaus to help build or rebuild your credit score. A minimum deposit of $300 is required to open an account, and your credit line will equal your total deposit.
Youll also receive a free TransUnion credit score and email alerts when there are changes to your credit report.
Try A More Suitable Credit
If you have a limited credit history, a so-called traditional credit score might not tell the whole story. Newer credit score products put added emphasis on good credit habits such as timely payments on your utility and cell phone bills and positive bank account balances.
Ultra FICO, Experian Boost or similar options could benefit someone whos handled their finances responsibly but doesnt have experience with credit cards or loans.
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Best With A Low Deposit Requirement Best For Making A Deposit In Installments: Capital One Platinum Secured
|Allows upgrade to unsecured card||Yes|
- Why We Chose This Card:
- Pros & Cons:
Most secured credit cards require at least a $200 deposit to activate the accountnot this one. Some people will qualify for a $200 credit line with as little as a $49 deposit. Its also great that Capital One starts reviewing your account for a potential credit line increase if you make your first five monthly payments on time, because a higher credit limit makes it easier to develop a good credit utilization rate, which helps your credit score.
No annual fee
Some cardholders only have to deposit $49 or $99 for a $200 credit line
Access to a higher credit limit possiblewithout an additional depositonce you make six on-time payments
Maximum credit limit is just $1,000
One of the highest ongoing APRs among secured cards
- $49, $99 or $200 refundable minimum security deposit. Access to an authorized bank account is required to make your security deposit.
- Make the minimum required security deposit and you’ll get an initial credit line of $200. Plus, deposit more money before your account opens to get a higher credit line.
- Be automatically considered for a higher credit line in as little as 6 months.
- Pick your own monthly due date and payment methodcheck, online or at a local branch.
Bankrates Guide To The Best Secured Credit Cards
A secured credit card is a type of card backed by collateral, usually in the form of a deposit from the cardholder. The typical consumer who gets a secured card has no credit history or a low credit score, but the deposit makes a secured card easier to qualify for. You might have an opportunity to upgrade to an unsecured card with no deposit if you use the secured card responsibly.
As an alternative to paying a security deposit, some products give you access to a secured credit card after you establish your creditworthiness through a credit-building account that involves gradually paying off a small installment loan.
A secured credit card can be more than just a convenient way to make your everyday purchases. It can also give you an opportunity to establish or rebuild credit. Whether you need to build your credit history or get back on track financially, responsible use of a secured credit card could provide a starting point.
Check out the expert advice and recommendations on this page to get the information you need to know.
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How Secured Credit Cards Work
A secured credit card looks, feels, and acts virtually the same as an unsecured credit card. It is usually issued as a Visa or Mastercard, so it is widely accepted with most U.S. merchants or abroad.
As with unsecured credit cards, monthly interest is charged when you carry a balance on secured cards, and theres sometimes an annual fee for being a cardmember. And, just like a regular card, if youre late with a payment, youll be charged a late payment fee.
The only real difference between secured and unsecured cards is that the credit line on a secured card is established based on the value of a savings deposit in a bank account with the issuing financial institution.
The deposit, which is typically in the range of $200 to $3,000, is usually equal to your line of credit. However, with some secured cards, a percentage of your deposit is held in reserve as a cushion in case you go over your credit limit or miss a payment. Conversely, some banks add some real credit on top of your secured line, and if you demonstrate responsible card use and dependable payment history, theyll further increase your credit limit.
When your credit card issuer starts increasing your credit limit, youll be well on your way towards applying for an unsecured card.
Secured Credit Cards Faq
Comparing secured credit cards can be tough. But youve got the knowledgeable WalletHub community on your side. We encourage everyone to share their knowledge while respecting our content guidelines. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not the financial institutions responsibility to ensure all posts and questions are answered….show moreshow less
Best For Low Interest From A Major Bank
Who’s this for? If you’re looking for a basic secured card with one of the lower APRs, the Citi® Secured Mastercard® is your best option from a major bank. There is a 22.49% variable APR, which is quite high, but still lower than the other cards on this list.
There is a typical $200 security deposit and no annual fee. Be aware purchases made outside the U.S. incur a 3% fee, so this isn’t the best option for traveling overseas. This card doesn’t offer rewards, but that can be a good thing if you’re building credit since you won’t be tempted to overspend.
Cardholders can also benefit from Citi Entertainment access, which provides early access to presales and premium seating for a variety of entertainment events, such as concerts and sporting events.