Our Editor’s Picks for Best Secured Credit Cards
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The following cards were picked based on our recent post: Best Secured Credit Cards for Bad Credit.
For People with
- Annual Fee: $0
- Interest Rate: 24.24% Variable
For People with
- Annual Fee: $0
- Interest Rate: 24.99% Variable
What are Secured Credit Cards?
Secured cards are designed for people with poor or no credit history and provide a way to build credit.
They do not usually offer the same level of rewards and extra perks, but in some cases a secured credit card may be the best option for repairing a poor credit history and managing finances.
Don’t assume secured cards are completely safe for avoiding debt and fees: like all credit cards, it’s important to understand the terms and be aware of every potential fee associated with any card you’re considering.
If you’re looking for unsecured cards (cards that do not require a deposit) for bad credit, check out this post: Best Unsecured Credit Cards for Bad Credit
Q&A Video: Will I Build Credit Faster with a Secured Credit Card?
How Do Secured Cards Work, and How Do They Rebuild Credit?
- When searching for a secured card, find one that will report your account activity to the major credit reporting agencies. This will show that you can use credit responsibly.
- Instead of simply being issued a card with a credit limit, secured credit cards first require a security deposit with the issuer, such as $500.
- This deposit will become the minimum credit limit of the card. In this case, the credit limit would be at least $500.
- Use the card like a credit card, paying off your balance and never missing a payment. This proves that you can be trusted with credit, improving your credit rating.
- If you ever decide to close the card or upgrade to an unsecured card, you will receive your initial deposit back.
Q&A Video: Does Closing or Converting a Secured Credit Card Hurt My Credit Score?
Important Factors to Consider
Several factors are used in determining which secured credit cards are the best. These are the most important considerations:
- Reporting to credit agencies – You want to start the process of building credit by reporting your account activity to the major bureaus. This will demonstrate that you can pay your bills on time.
- Fees and interest rates – Most secured cards have an annual fee, and an APR that you pay when you carry a balance over into the next month.
- Security deposit – You will need to put money down to establish a credit limit. Sometimes this can earn interest. Also, with some secured credit cards, you can get a credit limit higher than the security deposit you put toward the card. For example, you might get a $200 credit limit when you deposit $100.
- Credit limit – The maximum amount you can spend on the card before you need to pay it off. It is best to not use your total available credit limit. Insider Tip: To help build your credit, don’t use more than 50% of the credit you have available at one time and pay off your debt completely every month.
- Approval requirements – Cards vary in their requirement for approval, but most secured cards are available to anyone with bad credit.
- Additional benefits – Some issuers will offer other incentives or benefits like roadside assistance, extended warranties, and purchase protection. Explore all of your options before you make a decision.
Q&A Video: Why Do Banks Turn Down Applications for Secured Cards?
Secured Business Credit Cards
When starting a new business entity, your business needs to build credit, too. While you can often open business credit cards based on your personal credit, it’s also possible to start with a secured business credit card. Learn more about secured business cards and see if one could be right for you.