Secured credit cards are a type of credit card that is great for those who are either looking to establish a credit history or to repair and rebuilding their credit. They require you to put down a deposit (usually between $200 and $5,000) and this deposit will usually be your credit limit. Many secured credit cards do not charge annual fees and almost all report to the three major credit bureaus. If you use these cards responsibly, keep your credit utilization at 30% or below and pay your bills in full and on time, secured cards can help you improve your credit over time (and sometimes very quickly too).
Below is a list of well known secured credit cards. Many are issued by mainstream issuers and some even do not check your credit (which means you are guaranteed approval). Use our filters to narrow down the features you are looking for to find the right card for yourself.
If you have no credit or little credit, you should be able to get most secured cards. However, if your credit has taken a hit and you are rebuilding, many secured cards issued by mainstream banks will decline you. Therefore, the cards mentioned here are recommended for those of you who are rebuilding. They either have no credit checks or have a record (according to consumers) of accepting folks with bad credit. They also have very reasonable fees and rates compared to others in the market. Most folks should be able to get approved for these cards.
| Card | Annual Fee | Security Deposit | Reports As | Graduates to Unsecured | Interest On Deposit | Good For |
|---|---|---|---|---|---|---|
| Discover It Secured | $0 | $200-$2,500 | secured | Yes | No | Rewards and Early Graduation |
| Capital One Secured Mastercard | $0 | $200-$2,500 | unsecured | Yes | No | Credit limit increases and graduation |
| Harley Davidson Secured | $0 | $300-$5,000 | secured | Yes | Yes | Rewards and Early Graduation |
| Citi Secured Mastercard | $0 | $200-$2,500 | secured | Yes | No | No Credit and Graduation |
| Opensky Secured Visa | $35 | $200-$3,000 | unsecured | No | No | Bad credit and guaranteed approval |
| First Latitude | $0 | $200-$2,000 | secured | No | No | Bad credit and no credit checks |
| First Progress | cell2_7 | $200-$2,000 | secured | No | No | Bad credit and no credit checks |
It depends. Some report as secured while others report as unsecured. Cards that report as unsecured include Opensky while others like Discover report as secured. Whether they report as secured or unsecured has no effect on your credit score.
They work just like any other credit card. You have a credit limit (which is determined by your security deposit) and when you use your credit card, pay your credit card bills, these activities are reported to the three major credit bureaus just like a regular credit card.
As long as you do not use your full credit limit (best to limit to 30%) and pay your bills on time and preferably in full, you will establish a positive track record and improve your score.
For the most parts, most issuers have online application forms. There are some banks who require you to visit the branch, open a savings account and apply at the branch.
]When should I cancel a secured credit cardWhen you have gotten a few no annual fee prime credit cards and are happy with the credit limits you have. That is when you should cancel it as it has served it's purpose of rebuilding your credit. Some issuers require that you have the secured card for a minimum period. For example, Citi's secured Mastercard requires that you security deposit be left in a CD account for 18 months.
Yes you can.
It could take up to two weeks. It is not uncommon that you apply online and do not know whether you are approved or not. But your deposit is taken from your bank account. Once it clears, you get an email saying that you are approved.
It depends on the issuer. Some like do not allow you to add to your deposit. Some make you wait for a certain period.
No. Your security deposit is just a collateral for the credit card. You still have to pay the monthly bill. In fact, it is best to pay in full.
For the most parts no. However, there are the rare ones like Opensky that allows you to deposit your account with a prepaid card and even with MoneyGram.
Yes. One example is the Opensky
Some issuers do not accept those who have just emerged from a bankruptcy. Others only want customer who have no credit and not those who have bad credit.
A secured credit card helps you build credit because you are given a credit limit based on your security deposit. You activity on the card (ie your payment history and credit utilization) is reported to the three major credit bureaus. Prepaid cards do not extend you credit. You load up the card with your own funds and use it as and when you want to. It does not help you to build credit.
Most mainstream issuers have secured credit cards that allow you to graduate to one of their unsecured credit cards. Examples include Discover, Citi and Capital One.
It is best to work backwards. How much do you anticipate charging to your credit card a month? Then remember that a good rule of thumb is to only use 30% of the credit available. Then you just work backwards from there to figure out how much you deposit. For example, if you plan to charge $300 a month of the card, then you should try to deposit $1,000.
If you travel or have the occasional big ticket expenses like travel, booking a hotel, renting a car, then make sure you put down a security deposit amount that will give you enough credit limit.
What is a secured credit card and how does it work?
Pros and Cons of Secured credit cards
How does deposits on secured credit cards work?
What should a typical deposit be on a secured credit card?
How to use secured credit cards wisely?
How fast can secured credit cards build credit?
How many secured credit cards do you need to build credit?
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