Best Secured Credit Cards

Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

The old adage “You can’t build something from nothing” rings true in many areas of life. When it comes to credit, the statement can strike a big chord: if you have no credit, or your credit’s been damaged, how do you go about building it up? You can’t get credit with no credit, right?

Actually, you can — by way of a secured credit card.

What is a Secured Credit Card?

If you are looking to establish credit, build, or rebuild your credit then you may want to consider a secured card. A secured card is a credit card in which you are required to put down a security deposit which is held by the card issuer as collateral in the event you do not meet your financial obligations on the card.

Use the card regularly and responsibly, and (all else equal) over time you may find you qualify for an unsecured card, as long as you are also being responsible with any other credit cards and loans you have. Your security deposit will be returned to you, as long as your balance is paid in full and you don’t have any outstanding issues or obligations remaining on your card.

Two primary ways to handle your credit accounts responsibly is to make your payments on-time and by keeping  your balances low in relation to your credit limits.

How Do Secured Credit Cards Work?

With an unsecured credit card, your card issuer grants you a limit to borrow from at will. The limit, and all of the other terms associated with the card depend on your creditworthiness and other factors.

With a secured card, on the other hand, you must make a cash deposit which is held by the card issuer. That deposit is usually (but not always) equal to the credit limit on the card. The deposit is held as collateral in case you default on your debt. It is not applied to your balance due. You must still pay your bill each month.

Your credit limit, then, is “secured” by the funds you deposit.

Apart from this difference, a secured credit card works like any other credit card. You make purchases, cash advances or balance transfers (if allowed), with the card, and then you are required to pay the balance due. If you make on-time payments and keep your balance low (no more than 30%, and preferably less than 10%) relative to your credit limit, use of a secured card can be a tool to help you improve your credit score and overall credit standing over time. Remember it is up to you to handle your credit obligations responsibly.

If you want to increase your credit limit, you can usually just deposit more money into the collateral account. In some cases, the issuer may agree to a limit increase without additional security funds if you have demonstrated consistent responsible card use for a period of time (usually six to twelve months).

securedcreditcard

Cardmembers may find that after about a year of responsible secured card use, they may qualify for an unsecured card. In fact, some secured card issuers automatically review your credit accounts after a period of time to see whether you are eligible for conversion to an unsecured account.

When your account is converted to unsecured, or you decide to close it for any other reason, you can get your security deposit back, as long as your balance is paid in full and you don’t have any outstanding issues or obligations remaining on your card.

Secured credit cards can be more than just no-frills credit builders. Take a look at our top picks that offer more then the average secured card does.

Best for Low Deposit: Capital One® Secured Mastercard®

CapitalOneSecuredCardAnnual fee: $0

A simple, straightforward card for building or rebuilding credit, Capital One® Secured Mastercard® may interest people with bad credit, limited or no credit history, perhaps even eligible students looking to establish credit, or anyone who needs a card designed for credit building.

With the Capital One® Secured Mastercard® you will get an initial $200 credit line after making a security deposit of $49, $99, or $200, determined based on your creditworthiness. The minimum credit line is $200, if you make your first five monthly payments on time, you can access a higher credit line with no additional deposit needed. The annual fee on this card is $0.

Capital One® Secured Mastercard® features we want to mention:

  • Make a security deposit ($49, $99 or $200) for an initial credit line of $200, determined based on your creditworthiness
  • Get access to a higher credit line after making your first 5 monthly payments on time with no additional deposit needed
  • $0 annual fee
  • No foreign transaction fee

Terms apply.

If you’re interested in this offer click on the below “Learn More” link which will take you to a card details page with additional information.

Learn more about Capital One® Secured Mastercard®.

Best for Rewards: Discover it® Secured

Annual fee: $0

It’s rare to see a rewards-based secured credit card, since points, cash back and travel miles are usually reserved for individuals with good to excellent credit who qualify for unsecured credit card products.

The Discover it® Secured card is a rare exception that offers cardmembers cash back rewards. You earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus, earn unlimited 1% cash back on all other purchases, automatically. As an introductory offer, Discover will match all the cash back you’ve earned at the end of your first year, automatically, for new cardmembers only. There’s no signing up and no limit to how much is matched.

Deposit requirements and fees are also kind to the credit-building consumer on the Discover it® Secured card. Your card requires a refundable security deposit up to the amount Discover can approve of at least $200 which will establish your credit line. Be prepared, when submitting your security deposit you will need to provide your bank information at the same time. This card has no annual fee and there are no foreign transaction fees.

Discover has automatic reviews of your account, starting at 8 months, to determine if you can be transitioned to an unsecured line of credit, in other words, to an account with no security deposit required. These reviews are across all your credit cards and loans, including your Discover account as well as other accounts. So, keep in mind that it’s up to you to manage your accounts responsibly. Demonstrate consistent, responsible credit management by making all your payments on-time as well as keeping your balance low in relation to your credit limit.

Discover it® Secured features we want to mention:

  • Rewards driven credit card – earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus, earn unlimited 1% cash back on all other purchases – automatically.
  • An intro offer – Discover will automatically match all the cash back you’ve earned at the end of your first year, for new cardmembers only. There’s no signing up and no limit to how much is matched.
  • $0 annual fee
  • No foreign transaction fees

Terms apply.

Best for Bad Credit or No Credit: OpenSky® Secured Visa® Credit Card

OpenSkySecuredCardAnnual fee: $35

The OpenSky® Secured Visa® Credit Card is for the individual with bad or no credit, there’s no credit check necessary to apply. The security deposit you provide becomes your credit line limit on your Visa® card. Choose it yourself, from as low as $200. The security deposit is refundable and your Pledged Deposit Account will be closed once you satisfy in full all your account obligations under the agreement.

Your account activity is reported to all three major credit bureaus which will help document your credit card activity. With responsible credit card management by you, this can help build your credit and creditworthiness.

The OpenSky® card comes with a $35 annual fee and a foreign transaction fee of 3% of each transaction in U.S. dollars.

OpenSky® Secured Visa® Credit Card features we want to mention:

  • No credit check necessary to apply
  • Credit lines ranging from as low as $200 up to $3,000 secured by a refundable security deposit provided by you
  • Reports to all three major credit bureaus
  • $35 annual fee
  • Foreign transaction fee of 3% of each transaction in U.S. dollars

Terms apply.

If you’re interested in this offer click on the below “Learn More” link which will take you to a card details page with additional information.

Learn more about OpenSky® Secured Visa® Credit Card.

Best for Rebuilding Credit: USAA Secured American Express® Credit Card

Annual fee: $35

The USAA Secured American Express® Credit Card (American Express is a CreditSesame.com advertiser) is a great pick for people who have an existing credit history but want to build or rebuild it, and get their credit score back on track.

This card is a remarkable blend of credit builder and investment account. The minimum initial deposit you make on the card is $250 and is held in a USAA Bank 2 year interest-bearing Certificate of Deposit (CD) account, so the more money you devote to your credit limit, the more dividends you can earn. However keep in mind there is a penalty for early withdrawal on the Certificate of Deposit (CD) account. The maximum credit card limit and security deposit is $5,000.

The card comes with no foreign transaction fees on your purchases when you travel outside of the United States. You need to be a member of USAA to apply for this card – however being a USAA member does not guarantee approval for any products offered.

USAA Secured American Express® Credit Card features we want to mention:

  • The money you put in upfront for deposit, starting from $250 to $5,000, is the card’s credit limit
  • Credit card deposit is held in an interest-bearing CD
  • $35 annual fee
  • Military benefits (APR reductions) for active service, deployment

Terms, limitations and exclusions apply.

Honorable Mention of Secured Credit Cards

Check out some of these credit-minded choices:

BankAmericard® Secured Credit Card

Annual fee: $39

For the BankAmericard® Secured credit card, the required minimum refundable security deposit provided by you is $300 with a maximum of $4,900, and your maximum credit limit will be determined by your income, ability to pay the credit line established and the amount of the security deposit you provide. If you provide a deposit exceeding the calculated maximum amount based on your ability to pay, the difference will be returned to you in the form of a check.

Your BankAmericard® Secured credit card account will be reviewed periodically. Based on your overall credit history, including your account with Bank of America as well as other credit cards and loans, and if you have demonstrated positive, responsible Account activity, you could qualify to have your security deposit returned to you.

Terms apply.

U.S. Bank Secured Visa® Card

USBankAnnual fee: $29

Billed as the card to establish credit, the U.S. Bank Secured Visa® Card is for individuals who want to better their credit score with responsible use. U.S. Bank offers FlexControl™, an online tool that can help you avoid interest and late fees with automatic payments that put you in control. It can also help you pay down a balance faster.

Terms apply.

What is the Difference between a Secured and Unsecured Credit Card?

A secured card, as we’ve mentioned, requires a security deposit made by you and held by the credit card issuer. Without it, the card issuer will not extend credit to you. An unsecured card is acquired by virtue of your creditworthiness, your credit score and other factors; the card issuer extends credit with no collateral on your part.

Even if your credit limit is greater than the amount of your deposit, a secured card is not considered to be unsecured. If your credit is good enough to qualify for a limit greater than your deposit, however, you will have greater purchasing power in your wallet.

In conclusion, choosing a credit card is an important decision so compare offers, review the terms and conditions and find one that best suits your needs.


Disclaimer: All the information about the USAA Secured American Express® Credit Card, BankAmericard® Secured credit card, and the U.S. Bank Secured Visa® Card has been collected independently by CreditSesame.com and has not been reviewed or provided by the issuer of the cards. The USAA Secured American Express® Credit Card, BankAmericard® Secured credit card, and the U.S. Bank Secured Visa® Card are not available through CreditSesame.com.

Disclosure: The credit card offers that appear on this site are from credit card companies from which this site may receive compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This site does not include all credit card companies or all available credit card offers. Credit Sesame is an independent comparison service provider. Reasonable efforts have been made to maintain accurate information throughout our website, mobile apps, and communication methods; however, all information is presented without warranty or guarantee. The editorial content on this page (including, but not limited to, Pros and Cons) is not provided by any credit card issuer. Any opinions, analysis, reviews, or recommendations expressed here are author’s alone, not those of any credit card issuer, and have not been reviewed, approved or otherwise endorsed by any credit card issuer. All images and trademarks are the property of their respective owners.

See the online provider’s application for details about terms and conditions. Offers are subject to change and the terms displayed may not be available to all consumers. Please visit the provider’s site for current information and verify all terms and conditions of any offer prior to applying.

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Published November 3, 2016
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Comments(1)

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jillia mayes•  December 26, 2017
I can't get approval for an unsecured credit card to start building my credit because my credit score is 508
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