Possessing a favorable credit history can unlock a realm of lending possibilities and even potential employment options. Regrettably, constructing credit can pose a challenge, given that you require credit to acquire credit; you’re caught in a paradox where credit is a prerequisite for its attainment. This is where secured credit cards come into play. Secured cards serve as an effective avenue to mend impaired credit or construct credit from scratch. These cards are more accessible for qualification since they mandate a refundable cash deposit, functioning as a credit line.
Distinguished from their counterparts, the premier secured credit cards showcase attributes like nominal or zero annual fees, heightened consideration for credit line increments, a pathway to transitioning to an unsecured card, and the potential for a lower initial deposit. Moreover, numerous leading secured cards report to the three primary credit bureaus, a pivotal factor in the credit-building process. Lastly, several top-tier secured cards offer supplementary advantages, such as cash-back rewards that facilitate economizing on day-to-day expenditures.
Collectively, the finest secured cards extend an opportunity for individuals with restricted or unfavorable credit to manifest fiscal prudence and gradually enhance their credit scores. With competitive interest rates and appealing incentives accompanying certain cards, it’s not a strenuous task to discover one that aligns with your requisites.
We conducted a comprehensive evaluation of a wide array of credit cards within this category, spanning different issuers, to curate a compilation of the utmost best. However, it’s advisable to contrast our selections with alternative cards in this category, as the optimal choice for one individual might not hold true in every scenario. Presented below are our picks.
Capital One Platinum Secured Credit Card
The Capital One Platinum Secured Credit Card stands out due to its unique combination of features. It offers the potential for a higher credit line within just six months, along with a clear path to upgrade to an unsecured card. Notably, the card’s minimum deposit can be as low as $49 or $99 for a $200 credit line. This flexibility sets it apart from other secured cards. It’s worth noting that while a low deposit isn’t guaranteed, Capital One will provide information about the specific minimum deposit amount upon approval. Additionally, cardholders gain access to helpful online tools and resources aimed at improving their credit scores over time.
While the card doesn’t provide rewards or a welcome bonus, responsible card usage can lead to transitioning to an unsecured card and receiving a refund of the security deposit. Furthermore, demonstrating good credit habits could make you eligible for a product change to a rewards card. The Capital One Platinum Secured Credit Card is a strong option for those looking to establish or rebuild their credit without the burden of an annual fee.
Capital One Quicksilver Secured Cash Rewards Credit Card
For individuals interested in earning rewards while building credit, the Capital One Quicksilver Secured Cash Rewards Credit Card is a valuable choice. This card offers a straightforward rewards structure with 1.5% cash back on general purchases and 5% cash back on hotels and rental cars booked through Capital One Travel. The absence of an annual fee adds to its appeal, making it an attractive tool for credit improvement. This card is also well-suited for international travelers, as it doesn’t impose foreign transaction fees.
Moreover, the card provides the opportunity for an automatic credit line review after six months of account opening. Maintaining a positive standing may lead to an upgrade to an unsecured card. These features make the Capital One Quicksilver Secured Cash Rewards Credit Card a practical choice for individuals looking to build credit and earn rewards simultaneously.
Navy FCU nRewards® Secured Credit Card
The Navy Federal nRewards® Secured Credit Card offers an advantageous combination of benefits for those aiming to build their credit history. Not only does it have a competitive 18% variable APR on purchases and balance transfers, but it also stands out by not charging fees on balance transfers, foreign transactions, or cash advances (though it’s recommended to avoid cash advances due to immediate interest accrual). This card’s affordability is bolstered by its lack of an annual fee.
Cardholders can earn points on everyday purchases, redeemable for cash back, merchandise, or travel rewards. The card also provides discounts on shopping, dining, and entertainment, along with exclusive military-related benefits. An unusual feature for a secured card is its secondary auto rental collision coverage, activated after personal insurance and declining coverage from the rental car company.
U.S. Bank Cash+® Visa® Secured Card
The U.S. Bank Cash+® Visa® Secured Card shines with its generous cash-back program and no annual fee. Cardholders can enjoy 5% cash back on combined eligible purchases up to $2,000 each quarter in two categories of their choice. Additionally, prepaid air, hotel, and car reservations made directly in the Rewards Travel Center qualify for 5% cash back, while 2% cash back is available in a chosen everyday category like gas stations, grocery stores, or restaurants. All other purchases earn 1% cash back.
Notably, the card provides access to the VantageScore credit score, aiding cardholders in monitoring their credit journey. While foreign transaction fees apply, the card offers free ID Navigator Powered by NortonLifeLock, enhancing security.
Bank of America® Customized Cash Rewards Secured credit card
The Bank of America® Customized Cash Rewards Secured credit card offers a competitive approach to earning cash back. Cardholders can earn 3% cash back in a chosen category like gas, online shopping, dining, travel, drug stores, or home improvement/furnishings. This is coupled with 2% cash back at grocery stores and wholesale clubs, and 1% cash back on other purchases, with a cash back cap on the combined choice category, grocery store, and wholesale club spending.
The absence of an annual fee and a relatively low minimum security deposit requirement make it an accessible option for those seeking to rebuild their credit. While foreign transaction fees apply, the card offers the benefit of monthly access to the FICO Score after opting in.
Bank of America® Unlimited Cash Rewards Secured credit card
The Bank of America® Unlimited Cash Rewards Secured credit card offers straightforward cash-back rewards at 1.5% on purchases. However, it comes with certain drawbacks, including a foreign transaction fee and a high variable APR on purchases and balance transfers. The card does provide free access to the FICO Score on a monthly basis, aiding cardholders in tracking their credit progress.
Discover it® Secured Credit Card
The Discover it® Secured Credit Card is a rewarding choice for building credit while earning cash back. It offers 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, along with 1% cash back on all other purchases. Notably, Discover matches all cash back earned in the first year, potentially doubling rewards. Additionally, Discover periodically reviews accounts after seven months, offering the possibility of upgrading to an unsecured card.
BankAmericard® Secured credit card
The BankAmericard® Secured credit card provides a pathway to build credit without an annual fee. Periodic reviews by Bank of America can lead to an upgrade to an unsecured credit card. The card offers free monthly access to the FICO Score, aiding cardholders in tracking their credit progress. However, the card lacks rewards or a welcome bonus, and foreign transaction fees apply.
OpenSky® Secured Visa® Credit Card
The OpenSky® Secured Visa® Credit Card caters to individuals with poor credit by offering the chance to apply without a credit check. While a $35 annual fee is charged, it presents an opportunity to rebuild credit, even though there’s no path to upgrade to an unsecured credit card. The card provides flexibility with the ability to change the payment due date annually.
Secured Chime Credit Builder Visa® Credit Card
The Secured Chime Credit Builder Visa® Credit Card offers a unique approach to credit building. It ensures payments are made on time through its Safer Credit Building feature. While it functions differently from a traditional line of credit, it offers the advantage of no credit check, no foreign transaction fees, and reporting to all three major credit bureaus. However, it does not provide rewards.
Should you consider an established secured credit card?
“Individuals lacking a credit history or those aiming to reconstruct their credit should contemplate secured cards as a favorable approach to exhibit responsibility in credit usage,” stated Allison Tackette, a credit and travel specialist affiliated with Award Travel Vacations.
Opting for a secured credit card could serve as a valuable strategy for enhancing your credit score if you’re unable to qualify for a conventional, also known as an unsecured, credit card. Certain secured cards even provide incentives for everyday expenditures, potentially assisting in partially offsetting routine costs. Take, for instance, the U.S. Bank Cash+ Secured Card, which presents an attractive choice by furnishing 5% cash back on the initial $2,000 in combined eligible purchases per quarter across two selected categories. Additionally, it extends 5% cash back on prepaid airfare, hotel accommodations, and car reservations directly booked through the Rewards Travel Center, along with 2% cash back on eligible purchases within a chosen everyday category (such as gas stations, grocery stores, and restaurants), and 1% cash back on all other transactions.
Bear in mind, if you’re in the process of applying for a credit card, your primary objective should revolve around establishing a credit history or restoring your credit post prior errors. While rewards hold appeal, they should not divert your principal focus — and you should never surpass your usual spending simply to chase rewards. By treating a credit card as equivalent to cash, you can foster a solid credit profile and sidestep the accumulation of debt.
Comprehensive manual for secured credit cards:
A secured credit card falls within the category of credit cards necessitating a cash deposit as a protective measure. This deposit functions as a safeguard and provides assurance to the issuer that your bill will be settled punctually — failure of which could result in the forfeiture of your deposit. Secured cards are primarily utilized by individuals with impaired, limited, or absent credit history.
The chief advantage of secured credit cards lies in their relatively straightforward acquisition compared to conventional unsecured cards, attributed to their minimal to nonexistent credit history requirement. As your credit limit corresponds to the sum of the security deposit you furnish, financial institutions perceive these cards as less hazardous for borrowers categorized within the “subprime” credit score range. Responsible utilization of a secured card can contribute to progressive enhancement of your credit score, subsequently paving the way for more attractive credit card offers in the future, in addition to access to improved rates on financial products such as automobile loans.
The principal drawback of secured credit cards pertains to the essential cash security deposit that establishes your credit limit. While several premium secured cards offer the possibility of refunding your security deposit following periodic evaluations, this process might entail a substantial duration. This could pose challenges for individuals with limited disposable funds.
