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The Difference Between Secured Credit Cards vs other Cards
Getting a credit card can be challenging if you haven't built up your credit or have a low FICO® score. Secured credit cards offer a solid solution for those starting out with little or no credit, or for anyone looking to rebuild damaged credit.
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
OpenSky® Plus Secured Visa® Credit Card
Secure your credit line with a refundable security deposit - as low as $300. Click Apply Now to see additional terms and conditions.
- No Credit Check to Apply
- Easy application, apply in less than 5 minutes right from your mobile device
- Reports to All 3 Major Credit Bureaus
Merrick Bank Secured Visa®
(Not available in Wisconsin.)
With no deposit required, this card can help build credit for those who use the card responsibly and pay their monthly bill on time. See website for more details.
- Check your FICO Score Each Month for FREE
- Set your Own Credit Limit Based on a Security Deposit Between $200 and $3,000
- Monthly reporting to the 3 Major Credit Bureaus
First Progress Platinum Prestige Mastercard® Secured
Start building your credit with as little as a $200 security deposit. Use is reported monthly to all three major credit bureaus. Start establishing your credit today!
- 1% Cash Back Rewards On Payments
- No Credit History or Minimum Credit Score Required
- Choose Your Own Credit Line with up to a $2,000 Security Deposit.
Applied Bank Secured Visa® Gold Preferred® Card
- Variable APR
- 9.99%
- Annual Fee
- $48
The Applied Bank® Gold Preferred® Secured Visa® Credit Card can be used at all of your favorite locations including grocery stores, gas stations, discount stores, ATMs and online! See website for details.
- Refundable security deposit up to $1,000
- No application fee
- Reports to all 3 credit bureaus
Best Secured Credit Cards to Rebuild Credit
Platinum Secured from Capital One
- Variable APR
- 29.74%
- Annual Fee
- $0
The easy to use Capital One Platinum Credit Card is a great way to help you build your credit when used responsibly. If you have a fair or limited credit score, you are likely to still be eligible for a Capital One Platinum Credit Card. See website for details.
- No hidden fees
- Eligible cardholders considered for credit line increase in as little as 6 months
- Reports to All 3 major credit bureaus
Discover it® Secured Credit Card
- Variable APR
- 28.24%
- Annual Fee
- $0
This credit card will help you build your credit history while earning rewards. Approval odds are great even for poor FICO® scores ranging from 300 to 629. See website for details.
- 1% + Cash back rewards
- Automatic credit line reviews after 7 months
- Refundable security deposit
Citi® Secured Mastercard®
- Cash Back
- 5%
- Annual Fee
- $0
Your plans change, and with the Citi Custom Cash® Card, so does the way you earn. As your spending changes each billing cycle, what you earn adjusts automatically within eligible categories. See website for details.
- Variable APR: 18.74-28.74%
- 1% cash back on all other purchases
- Rewards never expire
Surge Secured Mastercard®
- Variable APR
- 35.90%
- Annual Fee
- $75-$125
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. See website for details.
- Mastercard Zero Liability Protection
- Initial Credit Limit ranges from $300 to $1,000
- 1% cash back rewards on every purchase
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.
Secured 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 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?
Secured 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.
