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If you have bad or limited credit you won't qualify for the best credit cards on the market. But there are still options available to help you rebuild, including secured cards. Secured credit cards require a refundable security deposit when you're approved. This deposit will fund your credit limit for the card. Card issuers require a security deposit because it makes the deal less risky for them.
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No annual fee, or a reasonable fee: The best secured cards either have no annual fee or the fee is quite manageable, around $30 to $50.
No extra fees: Some secured cards have additional costs like application fees, card issuance fees, monthly maintenance fees, and others. Avoid cards with fees like these!
Reports to all three of the major consumer credit agencies: The major credit card issuers will report to all three major credit bureaus, but this isn’t always the case for smaller credit unions so it’s worth checking. When building a credit history it’s better to have your monthly payment activity recorded with all three credit bureaus.
An appropriate security deposit and credit limit: Secured cards have different maximum credit limits. Depending on your spending habits and financial needs, you may want a card with a very large maximum limit. Or you might be satisfied with a smaller limit.
A program to refund the security deposit: Some card issuers will refund the security deposit and allow you to continue using the card, if you prove yourself to be a responsible credit user.
A program to upgrade to a different card account: In some cases, depending on your creditworthiness, card issuers will offer an upgrade to a completely different, unsecured credit card.
Rewards, in some cases: It’s rare to find a secured card with a rewards program, allowing you to earn points or cash back. But there are some out there.
Additional benefits: Most secured cards come with a very basic set of extra benefits, like Purchase Protection and some others. Occasionally you’ll find a secured card with more valuable benefits, like the ability to get a higher credit line with Capital One.
Is a Secured Card Right for You?
Secured credit cards are designed to give people with poor, limited, or no credit history a way into the world of credit.
Unlike other types of cards, a secured card requires a refundable security deposit when you’re approved. This will fund the line of credit for the card.
You can use secured cards to build up your credit because your card activity will be reported to the credit bureaus, unlike with prepaid cards or debit cards.
Other than the deposit, secured cards are pretty much just like any other credit card. You need to pay your bills on time. And if you carry a balance from month to month you’ll be charged interest, usually at a very high interest rate.
Unlike most reward cards, you won’t be locked into a specific set of bonus categories. Instead, you can choose your own 3% category from a list of several options, including popular picks like gas, dining, and online shopping.
This card requires a security deposit of $300 to $4,900 to get started, and the amount you deposit will determine your credit line. And here’s a nice feature: Bank of America will check in on your account and credit history now and again, and may return your deposit and allow you to continue using the card.
The Discover it® Secured (Review) is one of the best secured credit cards thanks to its rewards program, which is pretty good even compared to many unsecured cards.
It requires a minimum security deposit of $200. The maximum allowable deposit will be determined by your creditworthiness, with an upper limit of $2,500. Your credit limit will be equal to the amount you deposit.
Discover will review your account and your credit every eight months. With responsible card use, they may return your security deposit and allow you to continue using the card. There is no program to upgrade to a different Discover card.
Instead you’ll be told a minimum required security deposit, based on your creditworthiness. This will be one of the following:
Whichever amount you’re required to pay, this will fund an initial credit limit of $200. So even if you’re only required to deposit $49, you’ll still get a $200 credit limit.
Capital One will allow you to deposit more than your minimum required amount, up to a maximum of $1,000. If you deposit more, the total amount deposited will become your credit limit (so a deposit of $1,000 will get you a $1,000 credit line).
Deposits must be made within 80 days of being approved for the card, and before activating the card. Once you activate the card your initial credit limit will be set.
If you don’t have a bank account to make your security deposit, you won’t be able to apply for most secured cards.
But the Citi® Secured Mastercard® (Review) allows you to pay the deposit by other methods, although you’ll need to visit a Citibank location in person to do this. If you do have a bank account, you can simply use the online application as you normally would.
A security deposit of $200 to $2,500 is required. Your credit limit will be equal to the deposit.
After using the card for some time, Citi may review your card account and credit to see if you qualify for an upgrade. We heard from a reader who was offered an upgrade to the Citi® Diamond Preferred® Card (Review) in less than a year.
Some secured cards have annual fees, others don’t. Not only is the BankAmericard® Secured Credit Card lacking an annual fee, it also gives you one of the largest potential credit lines compared to other secured cards.
You can deposit anywhere from $300 to $4,900, and your credit line will equal your deposit. Not bad if you plan on making a lot of purchases each billing period.
Like with all the cool secured cards, Bank of America will check your credit and may give your security deposit back, allowing you to continue using an unsecured version of the card.
Trying to build up your credit, but need a lot of spending power? The U.S. Bank Secured Visa® Card might be right for you, although you’ll need to put down a deposit to match.
Your security deposit can range from $300 to $5,000, so that should cover a month’s purchases for most people. If you need to use your card more than that, you can make payments throughout the month (maxing out your credit card each month is bad for your credit utilization, so try to avoid that).
This is one of very few secured cards where your security deposit will actually earn interest, although it’s just a tiny bit. The only downside here is the small annual fee, but it’s not a very high price to pay for the chance to improve your credit.
Free credit score: Check your VantageScore 3.0 credit score whenever you’d like, based on your TransUnion credit report.
Earn interest: Your security deposit is used to open an FDIC-insured, interest-earning U.S. Bank savings account.
Purchase and Balance Transfer APR: 19.99% Variable
Annual fee: $29
Security deposit: $300 to $5,000
The deposit is used to open a U.S. Bank savings account to ensure your card can be paid. The savings account is FDIC-insured, earns interest and won’t be touched as long as your account remains open and in good standing
Set up automatic payments so you never miss a due date
Free VantageScore Credit Score based on your TransUnion credit report
Most credit cards require a credit check when you apply — they’ll use a hard inquiry to take a look at your credit reports, and they’ll use that information in their approval decision.
But the OpenSky® Secured Visa® Credit Card (Review) is different because OpenSky won’t run that credit check, giving you a better shot at approval if you’re struggling with bad marks on your credit reports.
You’ll just need to provide a deposit to qualify: $200 to $3,000, pretty standard for a secured card.
You can also fund that deposit by means other than a bank account, including debit card, money order, and Western Union.
Self’s credit builder loans give you another way. They’re a type of loan used exclusively to build your credit, rather than give you cash. First you pay off the loan amount, ideally showing a responsible record of payments, and then you get the money.
Self took things a step further and now offers the Self Secured Visa® Credit Card (Review), an extension of its loan program. It’s only available to Self customers; you’ll just need to:
Military members (retired and active-duty) and their families have several credit unions to choose from, but none can match the NFCU nRewards® Secured Credit Card if you’re trying to recover from bad credit and earn some points.
The minimum required security deposit is quite low at $200, giving you an easy way in. And NFCU includes a pair of great features:
After only three months, NFCU will check your credit and may increase your credit limit
As with most secured cards, you’ll have to provide a security deposit (of $500 to $25,000) to fund your credit line, and your credit line will only be as big as your deposit. This is one of the larger potential credit limits you’ll find on a secured business card, though it still could put a damper on things if your business spends a lot more than that every month. But you can pay it off throughout the month if necessary, all the while improving your credit (assuming you use it responsibly) and earning rewards.
And here’s a nice feature: Wells Fargo will check in on your credit and credit card activity periodically, to see if you qualify for an upgrade to an unsecured card. Then you’d get your deposit back.
Your choice of a cash back rewards program or a point rewards program
More Bonus Points: When you shop online or in person at the Earn More Mall.
Card Design Studio: Design your own card.
No annual fee
How Does a Secured Credit Card Work?
Secured credit cards work almost exactly like regular credit cards. The main difference is that, with a secured card, you have to provide a refundable security deposit that typically determines the card’s credit limit.
Most secured cards are designed for cardholders with no credit, bad credit, or limited credit. The risk of nonpayment or default can be higher among these groups, so lenders require security deposits as a safeguard.
With some secured cards, you might be able to get your deposit back without closing the account simply by demonstrating responsible credit management practices. Some credit card companies will even upgrade you to a different (and potentially more rewarding) unsecured card if you exhibit good behavior.
Other than that, the differences between secured and traditional credit cards are minimal. You still have to make a minimum monthly payment, and you’ll still be charged interest when carrying a balance.
Secured cards tend to offer fewer rewards and benefits (if any), but that’s normal for cards geared toward those with limited or poor credit.
No Credit Check Credit Cards
There are some secured credit cards that don’t require a credit check when applying, which means you’re almost guaranteed to be approved. There is still a possibility of denial, but it’s relatively low.
If you’ve been denied for other secured cards these may be your last options. Since they won’t check your credit you can probably get one of the following cards as long as your finances can handle it (some cards like these may check your credit, but they don’t necessarily use it to make the approval decision). You may still be denied if your identity can’t be verified, or if your income is too low.
These cards don’t require credit checks for approval but they’re known for having relatively poor customer support, and the payment processing systems may be slower or buggier than with other cards. This makes them riskier to use, and we don’t recommend them unless you truly can’t get anything else (even then, they probably aren’t a good idea). Some cards like these don’t require bank accounts, making them more attractive for people in certain situations.
If you use one of these cards, be sure to completely understand how to make on-time payments so you don’t wind up accidentally hurting your credit instead of helping it.
How To Build Or Rebuild Credit With Secured Credit Cards
Using a secured card is basically like using any other credit card. Most of the same rules apply, but a refundable deposit is also involved.
When approved for the card, make as large a security deposit as you comfortably can to get as large a credit limit as possible. This will make it easier to keep your credit utilization lower, which is better for credit scores. And you won’t have to worry as much about hitting the limit when shopping, because you’ll have more available credit.
Always pay your bills on time. Make at least the minimum monthly payments.
We recommend paying more than just the minimum payment. Aim to pay off your statement balance in full each month to avoid interest and help your credit utilization.
Be patient. The only way to establish a positive credit history is to consistently make on-time payments over a long period.
Track your credit using a free credit monitoring service to be sure that you’re making progress, and to get specific tips based on your credit reports.
When you’re ready to move on to an unsecured card, pay off your card balance in full. Then you can close the card account and get your security deposit back (some issuers also have programs that let you upgrade to an unsecured card account).
Can You Be Denied When You Apply for a Secured Credit Card?
Because secured credit cards require a deposit, the risk on the lender’s part might seem low enough that there’s no point in denying applications. But that’s not exactly how it works.
You can be denied for a secured credit card. And in general, it’s for the same overarching reason(s) you’d be denied for any credit card: Your credit history or other personal/financial information doesn’t measure up to the issuer’s standards, or there was something wrong with your application.
The actual reasons for your denial may vary, but they may include warning signs like bankruptcies, inadequate income (or lack of a stable income), perpetually late payments, and even poor management of any bank accounts you hold/have held with the issuer in question.
The good news? It’s your right to know why you were denied, and you should ask if the issuer doesn’t tell you. That way, you know exactly what to work on in order to get your credit to a place where you’re more likely to be approved.
Why Do Banks Turn Down Applications for Secured Cards?
Learn More: Q&A Videos
Will I Build Credit Faster with a Secured Credit Card?
Does Closing or Converting a Secured Credit Card Hurt My Credit Score?
Credit Builder Loans
If you have poor or limited credit there are a few different routes available to you. As an alternative or complement to a secured card, you may want to look into credit builder loans. A credit builder loan is a special type of installment loan that’s designed to build a positive credit history and good credit scores.
If you’re approved for one of these loans, the amount of the loan goes into a special account you can’t access. You make payments every month to “pay off” the loan, and the bank reports this positive activity to credit bureaus. Once you’ve paid the entire amount of the loan, you’ll get the money that was “loaned” to you from the special account that you couldn’t access until the loan was paid off.
You can typically open business credit cards based on your personal credit, and, like regular consumer cards, it’s possible to start with a secured business card if your credit isn’t so great. This could be a good option if you’ve been denied for unsecured business cards.