6 Best Secured Credit Cards of February 2023

For individuals that struggle with poor credit, a secured credit card can be a valuable tool. With a secured credit card, you’ll pay a cash deposit that’s equal to your credit line.

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The credit card issuer will then hold on to your deposit in case you don’t make your monthly payments. Meanwhile, the credit card issuer will report your on-time payments to the major credit bureaus.

That way you can start rebuilding your credit, and there’s little risk to credit card issuers since you paid an upfront deposit. You’ll get your money back once you upgrade to an unsecured card or close the account.

6 Best Secured Credit Cards

If you’ve been looking for ways to improve your credit but have a hard time qualifying for unsecured cards, then a secured credit card might be the way to go. Here are seven secured credit cards you can consider.

1. Secured Chime Credit Builder Visa® Credit Card

Secured Chime Credit Builder Visa® Credit Card is perhaps one of the best secured credit cards that has ever existed. With no credit check, no annual fees, no interest1, and no minimum requirement for a security deposit6, it simply can’t be beaten.

APR: No interest
Intro APR: No interest
Annual Fee: $0
Security Deposit: No minimum requirement

2. OpenSky Secured Credit Visa Card

APR: 18.89% variable APR
Intro APR: None
Annual Fee: $35
Security Deposit: $200

One of the biggest benefits of the OpenSky Secured Credit Visa Card is that there’s no credit check required to open the account. Instead, you’ll apply and make a one-time refundable deposit of $200.

This makes the OpenSky secured card a great option for individuals with poor credit or limited credit history. And you’ll receive resources and information on building credit on the company’s website.

3. Discover it Secured

APR: 24.49% variable purchase APR
Intro APR: Balance transfer APR of 10.99% for six months
Annual Fee: $0
Security Deposit: $200

The Discover it Secured card is another great secured credit card. There is no annual fee. You also have the option to upgrade to an unsecured card if you pay on time and use the card responsibly.

Plus, the Discover it Secured card is one of the few secured credit cards that offer cash back rewards. You can earn 2% back on the first $1,000 you spend at gas stations and restaurants per quarter. And you can earn unlimited 1% back on everything else.

4. Citi Secured Mastercard

APR: 22.49%
Intro APR: None
Annual Fee: $0
Security Deposit: $200

The Citi Secured Mastercard doesn’t offer any cashback rewards, but it’s still a suitable option for most borrowers. There is no annual fee, and you’ll receive free credit monitoring for signing up.

Plus, Citi offers flexible payment options, so you can choose the date you pay your bill during the month. And making payments and managing your account is easy with the Citi mobile app.

5. Capital One Platinum Secured Credit Card

APR: 26.99% variable APR
Intro APR: None
Annual Fee: 0%
Security Deposit: $49, $99, or $200

The Platinum Secured Credit Card from Capital One is a viable option for borrowers that are just starting to build credit. There’s no fee to get started and you’ll pay a refundable security deposit of either $49, $99, or $200.

And the best part is, you have the option to receive a higher credit line after five months of on-time payments. You can manage your account online or through the bank’s mobile app.

6. Credit Builder Secured Visa Credit Card

APR: 23.25%
Intro APR: None
Annual Fee: $35
Security Deposit: $300

The Credit Builder Secured Visa Credit Card is designed for college students who are looking for ways to raise their credit score. The minimum deposit is $300. However, you can access a credit line up to $3,000 if you have the money to deposit.

If you manage the card responsibly and make your payments on time, you’ll have the option to upgrade to an unsecured card. And you can choose whether you want your payments to come out at the beginning or middle of the month.

Pros of a Secured Credit Card

Before you sign up for a secured credit card, it’s a good idea to get clear on the full picture. Understanding both the benefits and drawbacks can help you make the best choice for you.

Here’s a look at the pros of getting a secured credit card:

Easy Approval

Secured credit cards are designed to be relatively easy to qualify for. If you’ve struggled to find approval for an unsecured credit card because of a low credit score, don’t worry. A secured card can help provide the platform you need to rebuild your finances.

Easy Credit Building

A secured card is one of the best tools out there for building credit from scratch. Or they can also be used to rebuild damaged credit. With responsible use, and consistent on-time monthly payments, you’ll see your credit score improve in a matter of months.

Refundable Deposits

Secured credit cards work by opening a credit line against your deposited amount. However, you don’t need to worry about losing this deposit even when you close your account. Most providers will pay back your deposit in full when your account is fully paid and officially closed.

Potential to Upgrade

The best secured credit cards will help you land an unsecured card in the future. Once you’ve established a proven track record of responsible payments, you’re much more likely to find approval with more competitive traditional cards.

If you can’t meet the minimum credit score required for a traditional unsecured card, a secured card might be the fastest way to change that.

Cons of a Secured Credit Card

Requires a Deposit

Let’s face it, when money is tight and your debt is adding up, coming up with a deposit for a secured credit card isn’t easy. If the security deposit is a barrier to a secured card, take the time to shop around for secured cards that have a low minimum security deposit.

Fees

Some secured cards will charge you an annual maintenance fee, although these are usually small. But keep your eyes out for potential hidden fees, such as processing or penalty fees. There are secured cards with very few fees out there, however.

Higher Interest Rates

One of the major downsides to secured credit cards are the interest rates. These type of cards are not renowned for their competitive rates. As such, it’s a good idea to always pay your balance in full rather than simply meeting the minimum payment.

Lack of Rewards

There are secured cards out there that allow you to earn rewards, but rewards are definitely not a focus for secured cards. They’re built with one purpose in mind, so even if you find a secured card with rewards, they will likely be modest.

The reality is that you might have to work on building credit first before you have access to unsecured credit cards with better rewards.

When is a Secured Credit Card a Good Idea?

Secured credit cards might sound useful, but when exactly is it a good idea to get one? And are they suitable for anyone? Let’s take a look at some examples that are best suited to secured cards versus regular credit cards.

You Need to Build Credit from Scratch

Secured credit cards are designed primarily to help those with thin credit build a positive credit history. If you’ve never dealt with credit before, taking on a secured card is a smart way to build a history of timely payments.

Monthly payments are reported to the three major credit bureaus, meaning you can quickly build your credit history when your payments are on time.

You Need to Repair Bad Credit

When it comes to rebuilding bad or damaged credit, secured cards are also a great idea. With late payments on your record it can be difficult, if not impossible, to open a new line of credit.

Secured cards may be one of your only remaining options for getting your credit history back on track. The good news is, they are a great tool for repairing credit as well as building it from scratch.

You Want to Avoid Debt While Building Credit

If increasing your credit score is important to you, but you don’t want to take on the risk of debt, a secured credit card can do the job. Secured cards are guaranteed by your deposit, plus credit limits are generally small. This can be a great option whether you’re looking to get out of debt, or simply trying to avoid getting in to debt in the first place.

How to Get a Secured Credit Card

Today it’s easier than ever to find and research secured credit cards online. Your current bank might also have a secured card on offer. Either way, you’ll find plenty of options. Here’s a quick run through of how to go about landing yourself a secured card.

Choose a Card

Your first step is to do some research and determine which secured credit card fits your budget and needs. While secured cards are typically no-fuss, the product details can vary so always take the time to compare different possibilities.

Decide Your Deposit Amount

When you’ve decided on a secured credit card, your next step is to determine how much you want to deposit. For most cards your credit limit will be determined by your deposit.

It’s important to think about credit utilization when making this decision. While a secured card credit is much safer than an unsecured one, it’s still a real line of credit. And learning how to manage your credit utilization is vital to building and maintaining good credit.

Submit and Monitor Your Application

When you submit your application with your chosen issuer, they’ll ask you to provide personal identifying information. In most cases, credit card issuers will inform you of their decision within minutes. However, if for some reason you need to wait longer than that, you can usually monitor your application online or over the phone.

After you’ve been approved you’ll be invited to pay the deposit amount, following which you’ll receive your secured credit card in the mail.

If for some reason your application is denied, the credit card issuer will inform you of this. They will also provide details explaining their decision.

How to Maximize the Benefits of a Secured Credit Card

The benefits you reap from a secured credit card will depend on how well informed you are. On top of that, how well you can actually put good credit habits into practice will shape your success.

Using a secured card is the perfect opportunity to build and stack good credit habits. This is important because once you progress to an unsecured credit card, you’ll need habits in place to keep the credit you’ve built. Here are some tips:

Pay on Time

The reality of credit building is harsh. It can take several months to build up your score, especially if you’ve got damaged credit. On the other hand, one or two late payments can cause a big drop in your credit score.

Making sure your payments are on time is vital, not just for building credit but also for avoiding late fees and penalties. Remember that payment history is the single biggest factor in calculating your FICO credit score.

Payment reminders and even automatic withdrawals can help build this vital credit-building habit.

Pay the Full Balance

To avoid incurring interest charges, it’s best to always pay the full balance on your card when possible. These charges may seem relatively easy to handle but they can quickly build into serious debt. In any case, if you’re using a secured credit card to help build good credit habits, paying in full should always be your aim.

Timely and complete payments is also the best way to prove your creditworthiness. Paying in full and paying on time will see your credit score quickly improve.

Always Budget

Overspending and forgetfulness are the biggest challenges to maximizing your secured credit card. Many people get too comfortable with secured cards, mistaking them as an easy no-fuss credit building tool.

While it’s true that these cards can help you build credit, it also requires some work. Don’t overlook the importance of keeping a monthly budget. Taking the time to plan ahead will help you manage payments comfortably each month.

Monitor Your Credit

Most secured cards come with credit monitoring tools that serve two purposes. First, you get to track your progress and get quick feedback. This is great for helping you to course-correct if you’re not seeing the progress you were expecting.

Secondly, it helps you get comfortable with checking in on your credit. You can also use this time to request a free copy of your credit report from each of the three major credit bureaus.

Use Your Card Each Month

It’s a good idea to use your card each month, even if it’s just a small token charge. Failing to use it at all. While you won’t harm your credit score due to inactivity, it will also be difficult to make any improvements if you don’t use it at all.

Plus, consistent inactivity might trigger the issuer into canceling your card.

Aim to Progress to an Unsecured Card

After some time of successfully holding and using a secured credit card, you should be eligible to upgrade to better cards. While some card providers will automatically promote you to their own unsecured cards, you should also shop around for other options beforehand.

If you can consistently make full payments on time, after six to twelve months you should see some real improvements to your credit score. Just be sure to get those good habits in place before you move to a regular unsecured credit card.

FAQs

How does a secured credit card work?

A secured credit card provides a line of credit that is guaranteed by your own refundable deposit. This deposit acts as collateral, so in essence you’re not actually borrowing any money. Usually the credit limit you get is equal to the deposit that you make.

Since secured cards are designed for building credit and good credit habits, this makes them a lot less risky compared to regular unsecured cards. Each month your payment records will be reported to the three credit bureaus, which is crucial to helping you raise your credit score quickly.

What is the benefit of using a secured credit card?

Borrowers with a limited credit history or bad credit due often find themselves in a catch 22. They need access to credit to build a good credit score, but they need a good credit score to open a new line of credit.

With a secured credit card, you’ll pay an upfront deposit and receive access to a line of credit. Your payments are reported to the three credit bureaus, so you can begin improving your credit right away. And since you paid an upfront deposit, the lender is at less risk as well.

Do secured credit cards really build credit?

Yes, if used responsibly a secured card can quite effectively build credit over time. While products such as prepaid debit cards are similar, the key difference here is that your payment activity is reported to the major credit bureaus regularly.

This means that you can quickly build up a good credit rapport which will be reflected in your credit history. If you make timely payments, and especially complete payments, a secured card will raise your credit within months.

How do you apply for a secured credit card?

You’ll start by choosing the best secured card for you. You’ll apply for the card on the lender’s website and go through an underwriting process unless there’s no credit check required.

Once you’re approved, you’ll fund the deposit. Most secured cards require a minimum deposit of $200, and you won’t be able to access the card until the deposit has been made.

After the deposit has been paid, you’ll receive your secured card in the mail. You can begin using it just like a regular credit card and you’ll pay your bill every month. If you make your payments on time, you may eventually have the option to upgrade to an unsecured card.

Do secured credit cards charge fees?

This depends on the secured card you chose. You’ll want to research the annual and monthly fees before getting a secured card. You can also avoid late payment fees, foreign transaction fees, and penalty APRs by choosing the right card and using it carefully.

What is the credit limit on secured cards?

For most secured cards, your credit limit is equal to the amount of money you deposited. So if you put down a deposit of $300, you’ll have a $300 credit limit. If you put down a deposit of $3,000, then you’ll have a $3,000 credit limit. So in most cases, the credit limit is really up to you.

Can I get my deposit back?

Yes, if you close the secured credit card account or upgrade to an unsecured credit card you’ll receive your security deposit back. However, this assumes your account is in good standing.

Are there any alternatives I should consider?

Yes, if you’re on the fence about whether a secured credit card is the right choice for you, here are three alternatives you can consider:

  • Prepaid debit cards: With a prepaid debit card, you’ll load money onto a card and use it for purchases. It’s safer than carrying cash, but a prepaid card won’t help you build credit.
  • Retail cards: If there is a store you frequently shop at, you can consider applying for a retail credit card. These cards don’t usually require security deposits, but the APR is usually higher than traditional credit cards.
  • Unsecured credit cards: You can always try applying for an unsecured credit card. However, this may be a challenge if you have a low credit score.

See also: Secured vs. Unsecured Credit Cards: What’s the Difference?

Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank N.A. or Stride Bank, N.A.; Members FDIC. Credit Builder card issued by Stride Bank, N.A.

1. Out-of-network ATM withdrawal fees may apply with Chime except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.

6. Money added to Credit Builder will be held in a secured account as collateral for your Credit Builder Visa card, which means you can spend up to this amount on your card. This is money you can use to pay off your charges at the end of every month.

7. To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.

Jamie Johnson
Meet the author

Jamie Johnson is a freelance writer who has been featured in publications like InvestorPlace and GOBankingRates. She writes about various personal finance topics including student loans, credit cards, investing, building credit, and more.