Best Secured Credit Cards
A secured credit card is a really effectual way to improve or even rebuild poor credit history. The basis of a secured card is that it requires a collateral deposit in the form of cash which then becomes the credit line for that particular account. It's necessary to note that the amount you charge each month on the card does not get directly deducted from the account like it would if you were using a debit card.
The security deposit is essentially the "fee" you pay for the right to use a credit card. It may not seem fair; however, if you need to rebuild your credit, this is a great way to do it and the cost will be worth it in the long run. You are responsible for making payments each month and the issuer will usually report your activity to the major credit bureaus.
Secured Card: What to Consider
Let's use an example to illustrate this point. Say you put $1,000 in an account. That means you can charge a total of $1,000 using your secured credit card. If you need more credit, then you could add additional funds to the account or sometimes if you demonstrate responsible payment management then the bank will increase your credit limit without the need for additional deposits. The ideal secured credit card will have the following components:
- Annual Fees - Shop around for a card that has no annual fee, if possible. Since this can often be hard to come by look for a card with a low annual fee.
- Minimum Security Deposit - The deposit amount is based on your creditworthiness so it is best to check with the individual provider for up-to-date and accurate details.
- Credit Line - Secured credit cards have credit lines anywhere from a few hundred dollars all the way up to thousands. To increase your line, usually you'll need to deposit more money but some banks will increase this with responsible card usage.
- Reporting to Credit Bureaus - To effectively improve your credit, it's important to look for a card which will report your account activity and payments on time to Equifax, Experian, and TransUnion.
- Comprehensive Customer Support - Telephone and live chat support are critical for up-to-date inquiries.
- Fees - Cash advance, returned payment, and late fees are a handful of the considerations to keep in mind when selecting a secured card.
- Extra Features - Review the extra features offered like mobile banking, fraud alerts, and roadside dispatch.
Capital One Secured Credit Card Review
- Low minimum security deposit amounts
- Regular reports to major credit bureaus
- Free credit tracker
- Low annual fee
- No balance transfer fee
- Late fee up to $19
- 3% or $10 cash advance fee
- Up to $35 returned payment
Looking to take control of your finances while simultaneously building your credit? Consider the Capital One Secured MasterCard. In three easy steps you can be on the road to financial freedom. The steps are simple. First make your security deposit, then use your card responsibly and by showing consistent payments you'll gradually rebuild your credit. Then in good time you can make the decision to apply for a card that's not secured.
It has a variable purchase APR based on your own personal creditworthiness. APR's can frequently change, so please check directly with Capital One as to what types of rates you might expect. It has a relatively low annual fee at $29 and the refundable minimum security deposit is either $49, $99, or $200.
Gradually build your credit line with this card. It starts at $200 and can go as high as $3,000 if you demonstrate to Capital One that you're able to make payments on time and are responsible in your spending habits. This card has received great reviews by customers and the mobile/ online capabilities are perfect for managing your funds on the go. If you'd like to talk to a representative in person they have branches in New York, Texas, New Jersey, Louisiana, Maryland, the District of Columbia and Virginia.
In terms of cons this cards has a late fee up to $19, a 3% or $10 cash advance fee (whichever is greater), and up to a $35 fee for returned payments.
Verdict - Superb
All-in-all, Capital One is a great institution to get a secured credit card with. They're a renowned Fortune 500 company; they offer a free credit tracker to monitor credit, and regular reports to the three major credit bureaus. All of these components will aid in rebuilding your credit.
Wells Fargo Secured Creidt Card Review
- Reports payments to major credit bureaus
- Free online education courses
- Management and tracking tools
- Zero liability program
- Overdraft protection
- Late payment fee up to $35
- Returned payment fee up to $35
- 3% foreign currency conversion fee
The Wells Fargo Secured Visa is touted as a great tool for individuals to establish or rebuild poor credit. It's more flexible than paying with checks since it can be used at any location which accepts Visa cards. The security deposit, used as collateral for the account must be between $300 and $10,000 which in turn becomes the credit limit for that account. Wells Fargo will report your activity to the three major credit bureaus-Equifax, Experian and TransUnion.
Periodically, Wells Fargo reviews secured card accounts to determine if they may be eligible for an unsecured credit card. However, to qualify for this you'll need to demonstrate your creditworthiness through punctual payments each month. At that point your collateral account funds will be refunded and you'll be set to start charging to your unsecured credit card.
This secured Visa card comes with some other fantastic features. You'll automatically be protected from liability for unauthorized charges, assuming you report them immediately. You get overdraft protection which means you can link the card to a Wells Fargo checking account. This will help you avoid overdraft penalties and other fees. This next point is something we haven't seen from other institutions so it's quite appealing. When you pay your monthly cell phone bill using the Wells Fargo card you'll get up to $600 in protection for that device. There are other conditions so read the full details before signing up. Other benefits include rental collision damage, roadside dispatch and emergency assistance services.
Verdict - Great
The Wells Fargo Secured Visa Card is overall one of the top five secured cards we identified. They offer a host of benefits and will even switch you over to an unsecured card when you demonstrate responsible payments on time. Check with Wells Fargo directly to see what annual percentage rate on purchases you would qualify for. The same goes for rates on balance transfers and cash advances.
Citi Secured MasterCard Review
- Poor to fair credit approved
- $200-$5,000 credit line
- Over 900 in-person locations
- Eligible for unsecured card after 18 months
- 23-day grace period
- $35 annual fee
- Must apply for card in person
- Late fee up to $35
Citibank introduced its secured card which will make many individuals with poor credit quite happy. This card has many of the benefits you've come to expect with a standard credit card including rental car insurance as well as protection of retail purchases. You can deposit anywhere from $200 to $5,000 into a certificate of deposit, and your credit limit then becomes equivalent to that amount. What's really great in terms of building your credit standing is that Citi will report your payments and performance to the three major credit bureaus which ideally will give your FICO score a massive boost. Also, if you have proven that you can use your card responsibly, after 18 months, Citi will consider you for an unsecured credit card.
This card has a pretty low annual fee at $29, no monthly fee and a 23 day grace period. Now, onto the less agreeable terms coupled with this card. It has a $35 late fee, 5% cash advance fee or $10 (whichever is greater) and a 3% foreign transaction fee. It's pretty tough to escape these fees so do your best to weigh the pros and cons.
Verdict - Good
The Citi Secured MasterCard is ideal for people with poor credit because of the opportunities it presents to boost your score. It's important to note that you do have to apply for this card in person which is a bit inconvenient but there are over 900 locations scattered throughout the United States. This card carries a high interest rate for individuals with bad credit, but again this is determined on a case-by-case basis. For an exact number, check with Citibank directly.
US Bank Secured Credit Review
- Qualify with poor credit
- Zero fraud liability
- Fraud protection
- Free online banking
- Automatic bill pay
- $35 annual fee
- 3% or $5 balance transfer fee
- 3% or $5 convenience check cash advance
Gradually re-establish or improve your credit history while simultaneously getting the worldwide purchasing power of U.S. Bank. One huge plus with this card as with some of the others is if you deposit a large sum as collateral for your credit line, it'll improve your credit score in a faster period because the bank will inform the credit agencies of your low balance to credit line ratio. Again, this is a tremendous benefit to individuals with bad credit. U.S. Bank offers a zero fraud liability so you're not responsible for unauthorized transactions if your card is stolen. You receive fraud protection which notifies you of any unusual card activity, plus auto rental insurance and free online banking.
A few other points worth mentioning with this card is that it comes with automatic bill pay which allows you to manage your finances online as well as something exclusive to U.S. Bank called FlexControl. This is a tool which helps you avoid late fees and interest by generating automatic payments. As the APR goes, customers have reported that it is on the high end but that is based predominantly on your creditworthiness so just because one individual was charged a high APR doesn't necessarily mean that you will incur the same rate.
This card has a number of fees that are important to address. The annual fee is a bit high at $35 and you will be charged 3% or $5 for balance transfers and check cash advances. Also you'll be charged 4% or $10 for cash advances at ATMs and 4% or $20 cash equivalent for advances.
Verdict - Good
This is another good card to consider if you are looking to rebuild or improve your credit. There are a number of fees, but the ability to report a low credit utilization rate is an appealing option to boost your credit score. Keep the cons in mind while you also weigh the pros to make a more informed decision.
First Progress Platinum Secured Credit Card Review
- No minimum credit score required
- No application fees
- Accepted at MasterCard locations
- Fully-refundable security deposit
- Penalty for returned payments up to $25
- Maintain deposit of $300 minimum
- Not available in Arkansas, New York, Iowa, or Wisconsin
The First Progress Platinum Prestige MasterCard Secured Card fought off a few other offerings to make it to the list. With that in mind, it stands out primarily because poor-average credit holders will get approved, there's no application fee and it reports to the top three credit bureaus. Since it's a MasterCard you'll benefit from the convenience and protection of the worldwide MasterCard system. Before we continue, be aware that this is not available in Arkansas, New York, Iowa, or Wisconsin so if you live in any one of the aforementioned states then you can automatically rule this card out. The annual fee is $44 which is higher than any other card on the list and requires the card holder to maintain a $300 minimum deposit but don't be completely dismayed by those points.
Verdict - Fair
On average, individuals with very poor credit claim that the APR is lower than with other banking institutions. But that differs from person to person so just because one individual qualified for a low APR doesn't mean the same with apply to you. This could be a great secured option for you if you have a very low credit score and have found difficulty getting approved for other cards. Since it is not available in a handful of states, please make sure to confirm your state is on the list before applying.
Review the pros and cons of the five secured credit cards mentioned above. Keep in mind things like the minimum security deposit, monthly reporting to the three major credit bureaus as well as the other points mentioned in the considerations summary. One final word of advice whenever you're shopping for a credit card is to check with the issuer directly for specific APRs since they are contingent on your personal creditworthiness.
Secured Credit Cards FAQs
Are secured credit cards accepted like regular cards?
Yes, secured credit cards are viewed as regular cards by retailers and stores nationwide. They are ideal for individuals who are trying to rebuild their credit, have faced difficulties being approved for other types of cards, or want to strengthen their credit history. Wells Fargo's secured card, for example, can be used wherever a Visa credit card is accepted. If you are unsure whether a merchant will accept your secured card, simply ask a store associate or manager. Otherwise you can contact the card's client assistance service to hear a list of participating stores. Certain exclusions may apply depending on the merchant.
Should I get a secured credit card?
Secured credit cards are ideal for individuals who have poor to fair credit and are trying to improve their credit scores and ratings or who have been declined for other card types. When your receive a secured credit card from companies like Capital One and Bank of America, your history will be regularly reported to the three major credit bureaus (Equifax, Experian, TransUnion). That means you can considerably improve your credit scores with responsible use and on-time payments. Be aware that not all banks and institutions offer a secured credit card and there are a select few which charge exorbitant fees. As long as you check the financial rating of the institution and do your research ahead of time, you should be good to go!
Do all banks offer secured credit cards?
No, not all banks of the same types of cards. The types and credit line will vary from issuer to issuer. It's best to inquire with your particular bank as to whether or not they offer this card. Also, just because your bank offers a secured credit card does not necessarily mean that you will be approved for it or that's it's appropriate for you. A secured credit card is best suit for individuals who are trying to rebuild their credit. Banks take a comprehensive look at your credit scores, credit history, and a number of other factors before issuing credit cards.
What is a secured credit card?
A secured credit card is one in which the credit line is based upon on the amount of cash you keep in the account. The cash is used as a collateral deposit in the event that you do not fulfill your debt. For example, if you put $600 in the account, you'll be able to charge up to $600 on the secured card. Payments are not directly deducted from this account though. After you fill out an application either online or in person for a secured credit card, the funds will be transferred into the account. This process can take up to 10 days for some banks like Wells Fargo. If you've been up-to-date on your payments, many banks will see that as a good sign and consider increasing your credit line for a higher deposit.
How much do I have to deposit?
Usually a secured credit card requires a deposit amount anywhere from $49 to $10,000. However, as previously mentioned, many card issuers will allow you to increase your credit line if they see that you are paying off your balance on time.