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The Difference Between Secured Credit Cards vs other Cards
Getting a credit card can be tricky. You need to have acceptable credit to qualify for one, but what if you haven’t established credit yet, or have poor FICO® credit score? Secured credit cards are a great option for those with little or no credit to establish credit or as a tool for those with damaged credit to work toward rebuilding it.
A secured credit card works like a traditional credit card, with one major difference. When you open a secured credit card, you will provide a deposit to the credit card company, often equal to your limit, which reduces risk for the credit card issuer.
Some secured credit cards will allow you to upgrade to an unsecured credit card once you’ve proven you are a responsible borrower by paying your bill on-time. Unsecured credit cards can provide you with better benefits and often come with rewards that you can earn. To qualify for an unsecured credit card, your credit score must be at least 670 or greater.
Secured credit card deposit minimums will vary by lender, but you should be prepared to provide a deposit of at least $200.
Let’s take a look at some of the best secured credit cards available today.
Best Secured Credit Cards for Students
First Progress Platinum Elite Mastercard® Secured Credit Card
This secured credit card has a lower annual fee of $29, which might still seem steep for some students. Here are some of the benefits:
- There is no hard credit check for this credit card.
- The credit limit ranges from $200 to $2,000.
- The APR is low for a secured credit card at 19.99% variable.
Applied Bank Secured Visa® Gold Preferred® Card
This credit card is an excellent choice for those with bad or no credit. This card offers a low fixed-rate 9.99% APR that will not go up, even if you are late with your payments. You may also increase your limit up to $5,000 by adding additional deposits at any time. Features include:
- No credit check or minimum FICO® credit score required
- Low minimum security deposit of $200
- Automatic reporting to the three major credit bureaus
- Good for those with no credit or bad credit
First Progress Platinum Prestige Mastercard® Secured
This platinum secured credit card comes with an expedited processing option and online application as well as an annual fee of $49. You credit line will be secured by your fully refundable deposit of $200 to $2,000. Monthly reporting to the three major credit bureaus will help you build or rebuild your credit with responsible use. Features include:
- No credit history or minimum credit score required for approval
- Pay off your balance and receive your deposit back at any time
- 24/7 online access to your account
- Apply in minutes with no negative impact to your FICO® credit score
OpenSky® Secured Visa® Credit Card
This card comes with a $35 annual fee, which is the highest on the list. Aside from this, the card does bring some good strengths to the table:
- You can deposit money and pay bills even without access to a bank account.
- OpenSky provides financial literacy tools to help with money management and credit building.
- The issuer does not complete a credit check.
- The credit limit ranges from $200 to $3,000.
Merrick Bank Secured Visa®
The Merrick Bank Secured Visa® allows you to set your own credit limit based on the amount of your deposit, from $200 to $3,000. You may also increase your deposit at any time by adding money to your deposit, up to the $3,000 limit. Other features include:
- Account reviewed after 9 months for a credit line increase without additional deposit
- 100% U.S.-based customer service and get your FICO® Credit Score free each month
- Fraud coverage if your card gets lost
- 24/7 access to your account
(Not available in Wisconsin.)
Oakstone Platinum Secured Mastercard®
Open your account with a credit line of $200 to $5,000 depending on your deposit. There is no minimum credit score required to apply making this card great for those with limited or poor credit. Other features include:
- Reporting to three national credit bureaus
- Fast and easy application process with no required credit inquiry
- Open your personal savings deposit account to secure your line
Best Secured Credit Cards to Rebuild Credit
Platinum Secured from Capital One
This secured credit card is a great choice if you’re looking to rebuild your credit. Your usage habits will be reported to the three major credit bureaus (Experian, Transunion and Equifax), which will help to improve your credit score with responsible usage. Features include:
- No annual fee
- Responsibly using your card and making payments on time could help you earn by your deposit and receive an upgraded unsecured Platinum card
- Easily manage your account with 24/7 online access, telephone customer service, or by using their mobile app
- Good for those with limited or bad credit
Discover it® Secured Credit Card
This credit card comes highly recommended by several personal finance website for students. Approval odds are great even for poor FICO® scores ranging from 300 to 629. These are some of its best features:
- 2% cash back on restaurant and gas purchases up to $1,000 per quarter
- 1% back on all other purchases
- $0 annual fee
- Potential for an upgrade to a regular credit card after 7 months
- Credit limit of $200 to $2,500
Citi® Secured Mastercard®
Build credit with this secured credit card and monthly reporting to the three major credit bureaus. Get a credit limit equal to your security deposit, with a minimum deposit of $200. Additional features include:
- Flexible payment due dates
- Manage your account 24/7 online, by phone or with their app
- Get help staying on track with auto-pay and account alerts
Surge Secured Mastercard®
The Surge Secured Mastercard® is opened with an initial deposit of $300, which becomes your credit line. Making your monthly minimum payments on time for the first six months may increase your credit limit. Other features include:
- 1% cash back rewards on every purchase
- Monthly reporting to the three major credit bureaus
- $0 fraud liability
- Easy application process; get your results in seconds
PCB Secured Visa®
The PCB Secured Visa® is a great choice for those with bad or no credit. Upon credit approval, your initial deposit (between $200 and $1,000) will become your credit limit. After the first year you may request to increase your credit limit up to a maximum of $5,000 subject to credit approval and additional collateral deposits. Features include:
- Monthly reporting to the three major credit bureaus
- 24/7 online account center
- Low fixed purchase APR of 18.90%
Factors to consider when choosing a secured credit card
No matter what credit card you choose, your choice should be made based on your personal goals and finances. Make sure the consider the following as you compare secured cards:
- How high of a deposit are you able to make? Secured credit cards will require a cash deposit that ranges from a few hundred dollars to several thousand dollars. Determine what sort of credit limit makes sense for you.
- Decide whether your card will be used for purchases that will use the majority of your available credit. This type of high usage can impact your credit score and in this situation a high limit secured card may be a better option.
- Consider any rates and fees that come with the card. Some cards have annual fees or foreign transaction fees. While some fees are clearly marked, lesser known fees can be mentioned in the fine print.
- Consider whether you plan to carry a balance on your card. If you do, then it's recommended you avoid a card with a high interest rate as the charges can quickly overtake the principal if the rate is steep.
- Make sure to consider if the rewards matter to you. While rewards are a nice perk, your end goal with a secured credit card should be building credit. Make sure to pick a card that will help you build your credit without charging too many fees.
Secure Credit Card Tips
There are 3 important tips secured credit cards users should follow to help you possible qualify for an unsecured credit card in about a years time:
- In order to build a positive credit score, always pay your monthly bill on time. Many secured cards offer the ability to keep you on a regular payment schedule such as automatic payments and reminders.
- If you can, pay your monthly bill in full in order to avoid interest. Like Just like unsecured cards, secured cards will charge interest if you don't pay your balance in full or on time each month. Having a balance on your secured card could lead to interest charges,. since Since the APR on many secured cards is higher than those on an unsecured card, this could be costly to you.
- Remember to use the card each month. By regularly using the card each month for small charges that you can pay off in full each month, you will build your credit.
People Also Ask?
Do Secured Credit Cards build your credit?
Secured credit cards can be an easy way for building or rebuilding your credit if you have no credit history or low credit score. Because payments are shown on your credit report, which is reported to credit bureaus, paying on time and managing your balance will help to improve your credit, which is something prepaid credit and/or debit cards can't do.
Are Secured Credit Cards Risky?
Secure credit cards require a security deposit of at least $200. This shifts the risk away from the card issuer since you are borrowing from your own security deposit.
When to get a Secured Credit Card?
You should get a secured credit card if you have bad credit or no credit. Since you need a credit card to start building your credit, a secured credit card is a good option to consider if you are unable to get an unsecured card.
Can you be denied for a secured credit card?
While secured credit cards are the easiest cards to qualify for, not everyone will be approved. Your application for a secured card may be denied based on your credit history.
