5 Best Secured Credit Cards of 2020

Credit Cards

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 company will then hold onto your deposit in case you don’t make your monthly payments. Meanwhile, the credit card company 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 the credit card issuer since you paid an upfront deposit. You’ll get your money back once you upgrade to an unsecured card or close the account.

7 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. 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 one of the best secured credit cards available. There is no annual fee, and you have the option to upgrade to an unsecured card if you pay your bills 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.

2. 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 good 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.

3. Capital One Secured Mastercard

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

The Capital One Secured Mastercard is a good 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.

4. 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.

5. 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, but 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.

FAQs

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 major 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.

How do you apply for a secured credit card?

You’ll start by choosing the card that is the best fit 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 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 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 card you’re taking out. You’ll want to research the annual and monthly fees before taking out a new card.

What is the credit limit on secured cards?

For most secured credit 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 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.
Jamie Johnson
Meet the author

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