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.
This deposit puts the “security” into a secured card. It provides the issuer protection against unpaid charges. This is why secured credit cards are accessible to people who many have difficulty qualifying for conventional credit cards. Some secured cards will make your credit limit whatever the amount of your deposit is, while others may grant you a higher credit limit than your deposit.
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.
Best Secured Credit Cards
Discover it® Secured Credit Card
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.
- Intro bonus: Cashback Match™
- Annual fee: $0
- Regular APR: 22.99% Variable
- Recommended credit score: (No Credit History)
Overview
The Discover it Secured Credit Card can help you build up your credit with responsible use while earning cash back rewards. You can earn a 2% cash back bonus on your first $1,000 in combined purchases at gas stations and restaurants each calendar quarter. Purchases over that $1,000 cap and outside bonus categories earn 1% cash back.
Plus, you’ll double all the cash back you earn throughout your first year with Discover’s Cashback Match bonus at the end of your first year.
Starting eight months after account opening, Discover automatically reviews your account monthly to determine whether you’re eligible to “graduate” to an unsecured card based on your credit use. There’s no annual fee and a variable APR of 22.99%. You must deposit at least $200 to open this secured card, which will be used as your credit limit.
Why we chose this card
It’s rare for secured cards to offer any rewards, so 2% cash back in bonus categories with the Discover it Secured Credit Card is a standout benefit. Make sure you nab those rewards by swiping at gas stations and restaurants (on up to $1,000 in combined purchases per quarter, then 1%).
Just remember, with a 22.99% variable APR, any rewards you earn will be quickly wiped out by any balance you carry on this card. Pay your balances in full (not just the minimum amount due) and on time each month to reap this card’s cash back rewards.
Secured Mastercard® from Capital One
- Intro bonus: No current offer
- Annual fee: $0
- Regular APR: 26.99% (Variable)
- Recommended credit score: (No Credit History)
Overview
The Secured Mastercard from Capital One* offers a uniquely low minimum deposit option to open. After you’re approved, you’ll be given a minimum required deposit of either $49, $99, or $200. When you pay your assigned deposit, you’ll receive a $200 credit line. You can also choose to deposit more than $200 (up to $1,000) to receive a higher credit limit.
After six months, Capital One automatically reviews your account for credit line increases and monitors your responsible credit use to determine whether you qualify to receive your security deposit back as a statement credit.
This card has no annual fee and a variable APR of 26.99%
Why we chose this card
The option to secure your credit line with a deposit under $200 is rare among secured cards. Plus, account reviews after just six months means you can quickly benefit from practicing good credit habits with potential credit line increases or even a security deposit return.
But there’s a tradeoff: the 26.99% variable APR. Make sure you pay off your balance on time and in full each month to avoid paying that high interest rate on any lingering balance.
BankAmericard® Secured Credit Card
- Intro bonus: No current offer
- Annual fee: None
- Regular APR: 22.99% Variable
- Recommended credit score: (No Credit History)
Overview
The BankAmericard Secured Credit Card* charges a minimum refundable security deposit of $300, but Bank of America determines your maximum credit limit based on a number of factors, including your income. You may be eligible for a credit limit as high as $4,900.
While it doesn’t specify how often, Bank of America does periodically review your account and overall credit history to determine whether you qualify to have your deposit returned. There’s no annual fee, and a variable APR of 22.99%.
Why we chose this card
The BankAmericard Secured offers you the chance to secure a larger credit line than many other secured card options — up to $4,900. A higher credit line is useful for building credit because you can keep a lower credit utilization ratio while enjoying more spending power (as long as you don’t spend more than you can afford to pay off).
You’ll need to have that cash on hand, though. Your maximum credit limit will be determined by the amount of security deposit you give, your income, and other personal factors. If you provide a deposit with your application that exceeds the maximum line that Bank of America is willing to provide you, you’ll receive a check for the difference.
OpenSky® Secured Visa® Credit Card
- Intro bonus: No current offer
- Annual fee: $35
- Regular APR: 17.39% (variable)
- Recommended credit score: (No Credit History)
Overview
Unlike many secured cards, OpenSky Secured Visa* charges an annual fee of $35. In exchange, it doesn’t require a credit check for approval.
When you’re approved and open your account, you’ll have to pay at least $200 as a refundable security deposit, but you can deposit up to $3,000. This amount will act as your credit limit.
OpenSky Secured Visa has a variable 17.39% APR.
Why we chose this card
Despite its annual fee, this card earns a spot on our list thanks to its accessibility. Because you can get approved without a credit check, this is one of the most attainable secured card options for people with absolutely no credit history or especially poor credit.
But there are a few drawbacks you should keep in mind before you apply. Unlike the other secured cards on our list, you will pay a $35 annual fee. And while your deposit is refundable, there are no automatic account reviews to help you upgrade to an unsecured card. That means you’ll need to regularly check your credit to determine if and when it makes sense to upgrade.
U.S. Bank Secured Visa® Card
- Intro bonus: No current offer
- Regular APR: 25.99% (Variable)
- Recommended credit score: (No Credit History)
Overview
The U.S. Bank Visa Platinum Secured Visa Credit card* has a minimum $300 deposit and maximum $5,000, which will determine your credit limit. After 12 months of credit use, U.S. Bank will review your account to determine whether you’re eligible to upgrade to an unsecured card.
There’s a variable 25.99% APR, no annual fee, and you can choose your payment due date to best fit your schedule.
Why we chose this card
This card can help you improve your credit and offers some valuable flexibility to determine your own payment due date. That can help you ensure you don’t miss a payment by timing your due date to your paycheck cycle.
Plus, the security deposit that you use to secure your line is used to open a savings account with U.S. Bank, so you can earn some extra money via savings interest while your deposit is tied up.
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%.
Secured Mastercard from Capital One
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 Secured Mastercard from Capital One.
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.
U.S. Bank Secured Visa Card
Good For: Payment Flexibility
Earn some interest on your deposit while it’s securing your credit line, and enjoy the flexibility to determine your own monthly payment due dates.
Best Secured Credit Cards of August 2021 Summary
| Card | Good For | Minimum Deposit | APR |
|---|---|---|---|
| Discover it Secured Credit Card | Cash Back | $200 | 22.99% Variable |
| Secured Mastercard from Capital One | Low Minimum Deposit | $49 | 26.99% Variable |
| BankAmericard Secured | Higher Credit Limit | $300 | 22.99% Variable |
| OpenSky Secured Visa Credit Card | Bad Credit | $200 | 17.39% Variable |
| U.S. Bank Secured Visa card | Earning Interest | $200 | 25.99% 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 Secured Mastercard® from Capital One, BankAmericard® Secured Credit Card, OpenSky® Secured Visa® 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.
