The Best Secured Credit Cards from Our Partners
Editors Rating: 4.5/5
Secured Credit Cards are credit cards for bad credit that require a deposit for approval. Most cards listed report to credit reporting agencies, which may potentially help you establish credit.
Credit cards have been demonized over the past few years, but a credit card is often necessary for a healthy financial life. If you are just starting out with credit or need to rebuild it after a financial failure, you should begin with a secured credit card for 2015.
What is a Secured Credit Card?
Secured Credit Card Definition: A secured credit card is a credit card for those with limited or bad credit histories. You deposit a certain amount of money with the issuing bank, usually $300 to $500, and that becomes your line of credit. The deposit is your collateral, or security, for the credit card.
Show the bank you can handle credit
In time, you'll be able to add more to the deposit so that you can increase your credit line. If you manage your credit very responsibly, a bank may reward you with a greater credit line without asking you for a larger deposit.
To find the best secured credit card, you need to shop around--and that's not just browsing; you need to study the fine print. All secured cards have an annual fee, but they can range from a reasonable amount to an exorbitant cost. Some cards have application fees and charge fees for increasing the credit line also.
Avoid subprime cards
Subprime cards, which are offered to consumers with limited credit, often promise a credit line of $300, but the fees--a processing fee for the first year, an annual fee from then on, a monthly maintenance fee--can leave cardholders with hundreds of dollars of debt before they've even made one purchase. Avoid those cards and go for the secured card instead.
Secured credit cards and your credit report
When you're applying for a secured card, whether through a bank or online, be sure to ask if the credit card will be reported to the credit reporting bureaus--Equifax, Experian and TransUnion. This is the key to building a credit history and establishing a credit score.
The credit bureaus gather information on millions of consumers from lenders--credit card issuers, retail stores, mortgage lenders and others. The data they report on you makes up your credit report. (Every consumer is eligible to receive their credit report for free from each of the credit reporting bureaus once a year. Go to annualcreditreport.com to get yours.)
The lenders report whether you've paid on time, if the account is open, how long it's been open, the amount of the credit line and other information. This information is used to create your credit score, a three-digit number that rates your credit worthiness. There are two kinds of scores: FICO or VantageScore.
Secured credit cards and the impact on the all-important credit score
The FICO credit score, which most lenders use to determine if you're a good or bad credit risk, is based on these characteristics:
- Payment history (Do you pay on time? Have you ever missed a payment?)
- Amounts owed (How much of your credit line have you used? Are you near the top of your credit limit?)
- Length of credit history (How long have you had credit?)
- New credit (Have you applied for a lot of credit cards or loans recently?)
- The types of credit in use (car loans, credit cards, mortgage)
If you're new to credit, spending some time reading the education section of myfico.com can help you establish good credit habits. The higher your credit score, the lower the interest rate you'll pay, and that will save you thousands of dollars during your financial life.
Why a secured card?
The purpose of a secured card is to help you build your credit history so that you can qualify for an unsecured card. If you manage your credit card well, you may be able to get an unsecured card within a year. With that goal in mind, it's important to pay on time, pay your balance in full each month, don't max out the credit card, and never go over your credit limit. With this type of usage, this credit card offer can be a tool to put you on the road to financial responsibility and saving money.
Learn about unsecured credit cards for bad credit.
- Build Your Credit fast with our monthly reporting to all 3 major credit bureaus.
- Choose your credit line as low as $200 up to $3000, secured by a fully-refundable* security deposit.
- Security deposit needs to be submitted before the credit card can be issued.
- No credit check necessary and no checking account required; apply in less than 5 minutes.
- Extra credit when you need it, increase your credit line up to $5000
- Access to online financial education.
- *View our Cardholder Agreement located at the bottom of the application page for details of the card.
- Unlike your Prepaid Card, UNITY Visa secured card can help you build your credit. Apply online in less than 5 minutes, and you could be approved today!
- No Minimum Credit Score required; low fixed interest rate of 17.99%; Fully refundable FDIC security deposit* required at time of application; if you have a min of $250 to deposit immediately, you can start now!
- No application fee or penalty rate
- Monthly reporting to all 3 major credit bureaus
- 24/7 online access to your account
- *See the Cardholder Agreement for more details.
- USAA Bank credit cards are exclusively available to military members, veterans who have honorably served, and their eligible family members.
- Best for members rebuilding or establishing credit
- It's a real credit card -- not a debit or prepaid card.
- Determine your own credit limit ($250 to $5,000) with an interest-earning CD.
- Retail and Travel Benefits: Collision damage waiver coverage pays for physical damage and theft to most rental vehicles. Identity theft resolutions services provides assistance should you become the victim of identity theft. Extended warranty extends your manufacturers or U.S. store brand warranties for up to one year. Travel accident insurance provides coverage for you and your family members when your card is used to purchase common carrier travel tickets.
- Security: Chip card technology has added security when used at a chip-enabled terminal and greater acceptance worldwide. You are not liable for unauthorized purchases. Get account balances and transaction history by sending a text message. Access your account on usaa.com or from a mobile device.
- Special Benefits for Military: Get 4% APR on all balances for up to 12 months during deployment or PCS. After 12 months, the regular APR of between 10.15% and 20.15% will apply. This rate will vary with the market based on the prime rate. Special 4% SCRA rate: When you have a balance on your account at the time you enter active military duty, get 4% APR on that existing balance until one year after you complete active duty.
Disclaimer:The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.
This content is not provided by any company mentioned in this article. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any such company. IndexCreditCards.com does not review every company or every offer available on the market.
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