If you’re new to using credit, or working to improve a bad credit score, a secured credit card is a great tool to help you build strong credit.
Secured credit cards work similarly to normal credit cards. You’ll charge purchases to the card, then pay them off when your balance is due each month. The biggest difference is the refundable cash deposit you’ll be required to pay when you open your card, which acts as a form of collateral for the issuer.
Secured cards are meant to be used as credit-building tools. While you won’t have access to the rewards and perks of regular cards, secured cards can help you improve your credit. Here are our picks for the best secured credit cards.
Before You Start
Opening a credit card is a big responsibility. Use your card to build good credit habits by paying your bill on time and in full every month, and spending only what you can afford. Also know your issuer’s additional fee charges, such as late payment and cash advance fees, which can add up fast if you’re not careful. Establishing these habits is especially important if you’re using a secured credit card to build your credit score.
The Best Secured Credit Cards
- Intro offer:Cashback Match™
- Annual fee:$0
- Regular APR:27.24% Variable APR
- Recommended credit score:(No Credit History)
Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Earn unlimited 1% cash back on all other purchases – automatically.
NextAdvisor’s Take
- Build credit, even with limited credit history
- Automatic monthly account reviews after 7 months to determine if you qualify for a refunded deposit
- Earn rewards on your spending
- Requires security deposit (minimum $200)
- High APR
Additional Card Details
- Cashback Match first-year bonus: Discover will automatically match all the rewards you earn at the end of your first year
- Refundable security deposit between $200 and $2,500 required, which will act as your credit limit
- Automatic review your account after seven months to determine if you’re eligible to get your deposit back and upgraded to an unsecured card
- Intro offer:N/A
- Annual fee:$0
- Regular APR:27.74% Variable
- Recommended credit score:(No Credit History)
Earn 1% cash back rewards on eligible purchases of gas, grocery, and internet, cable, satellite TV and mobile phone services.
NextAdvisor’s Take
- 1% cash back on eligible spending
- Prequalify online
- Earn interest on your security deposit
- No annual fee
- Credit limit can be as low as $200 (with deposit)
- Cash back rewards categories are limited
- Very high APR
Additional Card Details
- No annual fee secured card
- Minimum $200 deposit, which acts as your credit line
- 1% cash back applies to gas, groceries, mobile phone services, and internet, cable and satellite TV services
- Up to $39 fee for late or returned payments
- Credit score access through your account to track credit progress
- Intro offer:N/A
- Annual fee:$0
- Regular APR:28.49% (Variable)
- Recommended credit score:(No Credit History)
NextAdvisor’s Take
- Build credit with no annual fee
- Available for people with bad credit or no credit
- Low security deposit requirement
- Automatic credit line reviews in as little as six months
- No rewards on your spending
- High variable APR
- Credit limit can be as low as $200
- Maximum credit limit of $1,000 with equal security deposit
Additional Card Details
- Qualify for a line of credit with a security deposit as low as $49, $99 or $200
- Get pre-qualified online without any impact to your credit score
- Automatic review for a higher credit line after six months
- Choose your own due date
- Free credit score with Capital One CreditWise
- Emergency card replacement
- No foreign transaction fees
- Intro offer:N/A
- Annual fee:None
- Regular APR:26.24% Variable
- Recommended credit score:(No Credit History)
NextAdvisor’s Take
- No annual fee
- Establish and build credit
- Can deposit up to $4,900 for a higher credit limit
- No intro offer or rewards
- Must deposit at least $300 upon account opening
- High variable APR
Additional Card Details
- Minimum security deposit of $300 (maximum up to $4,900)
- Periodic account review to determine if you’re eligible to have your deposit returned
- Secured card available to people with no credit
- Account alerts and FICO credit score access
- 3% foreign transaction fee
- Intro offer:N/A
- Annual fee:$35
- Regular APR:21.14% (variable)
- Recommended credit score:(No Credit History)
NextAdvisor’s Take
- Build credit with on-time payments
- Get approved with no credit check
- Security deposit is fully refundable
- $35 annual fee
- At least $200 minimum security deposit required
- No intro offer or rewards
Additional Card Details
- $35 annual fee
- No credit check required
- Refundable security deposit (minimum $200, up to $3,000) required
- Reports to all three credit bureaus
- Track payments via mobile app
Best Secured Credit Cards summary
Discover it Secured Credit Card
Good For: Cash Back
Earn rewards on your secured credit card — 2% cash back bonus on your first $1,000 in combined purchases at gas stations and restaurants each calendar quarter, then 1%.
Credit One Bank Secured Card
Good For: Earning Rewards with a Secured Card
Earn 1% back on eligible purchases and pay no annual fee. You can prequalify online and earn interest on your security deposit of at least $200.
Capital One Platinum Secured Credit Card
Good For: Low Minimum Deposit
Upon approval, you’ll be assigned a deposit of $49, $99, or $200. Any of these will secure you a $200 credit line with the Capital One Platinum Secured Credit Card.
BankAmericard Secured
Good For: Getting a Higher Credit Limit
This card allows a deposit and credit line up to $4,900, which can be helpful if you need a larger line. Plus, a larger credit line can help you improve your credit more quickly if you keep your utilization low.
OpenSky Secured Visa Credit Card
Good For: No Credit Check
The OpenSky Secured Visa Credit Card doesn’t require a credit check for approval, which makes it a good option if you have a negative payment history or nonexistent credit. However, you will pay a $35 annual fee for this card.
Best Secured Credit Cards of December 2022 Summary
| Card | Good For | Minimum Deposit | APR |
|---|---|---|---|
| Discover it Secured Credit Card | Cash Back | $200 | 26.74% Variable *Rates as of December 15, 2022 |
| Credit One Bank Secured Card | Earning Rewards | $200 | 26.99% Variable |
| Capital One Platinum Secured Credit Card | Low Minimum Deposit | $49 | 29.74% Variable |
| BankAmericard Secured | Higher Credit Limit | $300 | 25.24% Variable |
| OpenSky Secured Visa Credit Card | Bad Credit | $200 | 21.14% Variable |
Who Can Be Approved for Secured Credit Cards?
You’ll need to be at least 18 in order to get a secured credit card, but beyond that anyone could apply for a secured credit card. However, they’re most helpful for those with bad credit or little to no credit history. A secured credit card requires a refundable security deposit to secure your line of credit. Because you secure your account with this collateral upfront, secured credit cards are typically much easier to get approved for than general consumer cards.
There are a few red flags that may lower your chances of approval: a history of bankruptcy, insufficient income, or very negative payment history. If you’re under 18, try to become an authorized user on someone else’s credit card to start building and maintaining your credit early.
How Does the Secured Credit Card Application Process Work?
Applying for a secured credit card is a lot like applying for a normal credit card. Here’s what to do:
- Choose the card you’d like to apply for and either go in person to the lender or begin filling out your application online.
- To complete the application, you’ll need a few things readily available, like your Social Security number and proof of identity. Remember to include all of your income sources in your application to increase your odds of getting approved.
- Pay your deposit. A secured credit card requires a security deposit, which you’ll pay either when you apply or upon approval. If you submit your deposit alongside your application and then you’re denied, the deposit will be returned to you. You can transfer funds from a checking or savings account online, but if you’re applying in person you may need cash or a check to open your account — check with your issuer before you go.
How to Use a Secured Credit Card
You can use a secured credit card to pay for regular expenses like you would any other credit card. Just make sure that you can pay off any balance on time and in full each month to increase your credit score and maintain a positive payment history.
Also keep your credit limit in mind as you charge purchases to your secured card. In order to build your credit as efficiently as possible, keep your credit utilization ratio (the amount of credit you use relative to your total credit limit) below 30%.
For example, if your credit limit is $10,000, you would only want to spend up to $3,000 in one billing cycle to keep your ratio below 30%. But secured cards generally have much smaller credit limits, so it’s even more important to keep the 30% rule in mind. If your credit limit is $300, aim to cap your monthly spending on the card to $90.
Alternatives to Secured Credit Cards
Student Credit Cards
Student credit cards can be a great option for college students with little to no credit history, and require no security deposit. You must be a student to apply, and any rewards or other benefits are usually designed with college students in mind, like good grade rewards or Amazon.com savings.
Retail Credit Cards
Retail or store credit cards offer rewards for people who shop at a specific place. These closed-loop credit cards are more limiting than a student or secured credit card, since you can only use it to stop at that one specific store, and they often carry extremely high APRs. But if you’re a frequent customer and responsibly use the card, it can be a good tool for building your credit history.
Co-signing or Authorized User
When you apply for a credit card with a co-signer, the co-signer takes legal responsibility for your debt if you don’t pay your credit card bill. This method can help you get approved for credit cards that might otherwise be difficult.
Similarly, being named an authorized user means you hold a card under someone else’s existing card account. As an authorized user, you’re not responsible for any payment on the account, which instead defers to the primary account holder.
Under either of these options, you should only co-sign or become an authorized user with someone who has good credit, and discuss your agreement fully before applying.
What’s the Difference Between Secured and Regular Credit Cards?
Regular credit cards are unsecured. That means you don’t have to put down any amount as collateral to access your credit line, and also why you must prove your creditworthiness for approval. A secured credit card is more accessible for people without a strong credit history because your initial cash deposit is used to secure your account.
This is a similar process to taking on a secured loan, such as a mortgage. A mortgage uses your house as collateral, so if you don’t pay your mortgage, the lender can seize your home. Similarly, your secured credit card issuer can take the money you’ve deposited if you don’t pay off your credit card bills.
Because of the security of your deposit collateral, an issuer may feel more comfortable offering you a secured credit card even if you’d otherwise be considered a credit risk. Even if you don’t pay, they already have that deposit and won’t be at a loss.
*All information about the BankAmericard® Secured Credit Card and U.S. Bank Secured Visa® Card has been collected independently by NextAdvisor and has not been reviewed by the issuer.
Frequently Asked Questions
What do I do with a secured credit card?
Use your secured credit card to pay for expenses as you normally would, but be certain that you can pay your bill on time and in full every month to add positive payments to your credit history.
Also remember that your credit limit on a secured credit card is likely to be much lower than that of a normal credit card. Keep your spending within your credit limit to avoid penalties, and maintain a healthy credit utilization to more quickly boost your credit score.
Can I get a secured credit card even if I have really bad credit?
You can get a secured credit card with bad credit history. Your chances of approval may vary between different secured card options, but secured credit cards are designed for new credit users or people with bad credit looking to build a positive payment history.
Do secured credit cards come with rewards?
Most secure credit cards do not come with rewards, though one on our list does (Discover it Secured Credit Card). To qualify for credit cards with valuable rewards and benefits, work on building and maintaining healthy credit habits like timely payments and low credit utilization. Then you can graduate to an unsecured credit card with more competitive rewards.
Methodology
EDITORIAL INDEPENDENCE
As with all of our credit card reviews, our analysis is not influenced by any partnerships or advertising relationships.
To determine the best secured credit cards, we evaluate all of the secured credit cards currently available in the market. Secured credit cards often don’t have the same perks and benefits as general consumer credit cards, so our final picks are those that we believe stand apart based on factors such as rewards, credit limit, required deposit, and more, compared to standard offerings among secured cards.
