The Best Secured Credit Cards

The best secured credit cards can help if you have bad credit or a limited credit history. They help solve the chicken-and-egg problem: Lenders won’t give you credit unless you have a good credit score, but you can’t build your credit score without access to credit. A secured credit card requires a security deposit—usually a few hundred dollars—and that amount equals your credit limit. Otherwise, it works much like a normal, unsecured credit card.

Secured credit cards come with drawbacks, but they can be an effective tool in improving your credit score. Here’s everything you need to know.

The best secured credit cards

The most important features of secured credit cards include fees, interest rates, security deposits, and whether a card provides a path to an unsecured card. For most people, the best card will be the one you can get with the lowest fees. Each card on our list has strengths and weaknesses, but all can help build your credit. Read our full reviews to see which is right for you.

CardAnnual feeAPRSecurity depositUpgrade to unsecured
AeroMexico Visa Secured Credit Card$0 the first year, then $2522.29%$300Yes
American Savings Bank Secured Visa Credit Card$021.99%$300Yes
BankAmericard Secured Credit Card$3922.24%$300Yes
Capital One Secured Credit Card$026.99%$49No
Citi Secured Credit Card$024.49%$200Yes
Discover it Secured Credit Card$024.49%$200Yes
Green Dot primor Visa Gold Secured Credit Card$499.99%$200No
The Secured Visa from Merrick Bank$36, billed $3 per month18.70%$200No

What is a secured credit card?

A secured credit card is a special type of credit card that’s easier to qualify for than a traditional credit card. Unlike a normal, unsecured credit card, a secured card requires a security deposit.

With an unsecured credit card, the lender approves your application, and assigns a credit limit. You can spend up to that limit and have to pay your bill every month.

With a secured credit card, you have provide a security deposit after your application is approved. Usually, the deposit is a few hundred dollars. Your credit limit will equal the security deposit you provide. You can spend up to that limit on the card, and will have to pay the bill each month. If you fail to pay the bill, the lender can take your security deposit to recoup the money it lent to you. Otherwise, when you close the account or graduate to an unsecured card, the bank returns your security deposit.

Because you provide a security deposit, the lender takes on little to no risk.

How does a secured credit card work?

Beyond the security deposit, secured credit cards are functionally identical to unsecured cards. You can use them to buy things online or pay for purchases at stores. You receive a monthly bill that you have to pay, and there are negative consequences if you fail to pay.

Your lender report your activities with the secured card to the credit bureaus, just as with an unsecured card. This is essential, as it means that your credit report will improve with each on-time payment. However, if you miss payments, your credit score will drop, so make sure you can handle using the card before you apply.

What to look for in a secured credit card

There’s no one-size-fits-all secured credit card. Some cards charge and annual fee, while others don’t. Some cards offer upgrades to an unsecured account, while others don’t. Others still offer the opportunity to increase your credit limit.

When you look at different secured credit cards, consider the following factors. It’s up to you to decide which factors are most important to you.

Annual fees

Credit cards commonly have an annual fee. Typically, premium rewards cards charge annual fees in exchange for perks and benefits that can more than offset the fee. Average cards without many perks tend to be fee-free.

Secured cards don’t normally come with many perks. Their annual fees provide lenders with safeguards against customers who don’t pay their bills. Often, the customers who apply for secured credit cards can’t get other kinds of credit cards, so an annual fee offsets that risk.

Some secured credit cards don’t charge any annual fees. Look for one without an annual fee. A small number of secured cards that charge an annual fee come with perks and benefits to help offset the cost, but those are rare. Focus on finding a fee-free card.

Security deposit

Most secured credit card issuers require a security deposit of $200, $300, or more. That’s a lot of money for some people. Plus, you can’t withdraw that money whenever you want like with a savings or checking account. Building your credit is important, but you can’t ignore the cost of tying up a few hundred dollars in a security deposit.

The size of your security deposit also impacts your credit limit on a secured card. Most lenders will give you a credit limit equal to the size of your deposit. For example, if you deposit $300, your card will have a limit of $300. You have to measure the value of that money as a security deposit versus what it’d mean in your bank account.

When you look at secured credit cards, consider both the minimum security deposit required as well as how easy it is to provide additional deposits. 

Credit limit increases

With many cards, if you can increase your credit limit by depositing additional money. Most secured card issuers will give you a credit limit equal to your security deposit and will not change the limit unless you add to your deposit. However, some do recognize when you make several timely payments by increasing your credit limit. 

While you never want to carry a balance on any credit card, having an increased credit limit is useful. It makes it easier to make large purchases and helps you avoid the having to pay off your card multiple times each statement to continue using it.

If you’re concerned about the credit limit you’ll receive from a secured card, check to see if the card offers an increase after a period of on-time payments.

Path to an unsecured credit card

Your goal with a secured credit card should be improving your credit score enough to convince a lender that you no longer require a security deposit to use a credit card.

With many secured cards, the only way to move to an unsecured card is to apply for a new account. If you want your secured card’s deposit back, you’ll have to close your secured card.

Some lenders, though, offer the ability to graduate to an unsecured card. Once you’ve had your secured card for a set period of time, the lender will review your account activity and your credit report. If you’re in good standing and have a history of on-time payments, the lender will return your security deposit, but allow you to continue using your card. That makes it an unsecured account.

A secured card with a clear path to an unsecured card is a good thing, so look for offers that include the ability to graduate to an unsecured account.

Other card perks

Credit cards can come with incredible perks. Some rewards cards, for example, offer cash back, miles, or rewards points that you can redeem for airfare, merchandise, gift cards, and more.

Travel credit cards often offer complimentary seat upgrades, free checked bags, discounts on in-flight purchases, or entry to exclusive airport lounges when you fly.

Other perks are tied to the card network, such as Visa, Mastercard, or Discover, rather than the card issuer. Some of these perks include extended warranty protection and free travel insurance.

Typically, secured credit cards don’t offer these perks. People looking for secured cards are usually more concerned with building credit than with cashing in perks. Still, it’s worth considering if a secured credit card’s perks will provide any additional value to you.

How can you rebuild your credit fast?

The best way to improve your credit quickly is to understand how credit scores work.

Your credit score is a number between 300 and 850. The higher your score, the better, but any score over 750 is considered excellent and will qualify you for the best credit cards and loans.

Five factors determine your score:

  • Payment history
  • Amount owed
  • Length of credit history
  • New credit
  • Types of credit used

By far, the most important portions of your credit score are your payment history and the amount you owe.

Build through payment history

To build your payment history, pay your bills before their due dates each month. Every payment you make will improve your score. Even one missed or late payment can have a major, negative impact on your score. Prioritize making payments on your secured credit card if you want to build your credit.

Carry a low balance

The amount you owe is the second most important factor in your credit score. To keep your score as high as possible, carry as low a balance as you can. The less you owe, the better it will be for your score. Just don’t be afraid to use your credit card. The amount you owe on the card is reported to credit bureaus monthly, and you need to build a payment history. One month of heavy usage won’t have a long-term effect on your score.

The other credit factors are less impactful, but shouldn’t be ignored. To improve your credit, avoid closing old credit card accounts, unless they charge an annual fee, and avoid applying for new loans and credit cards that you don’t need.

Can you get turned down for a secured credit card?

Unfortunately, it’s still possible to be turned down for a secured credit card.

There are a few reasons. If you have a recent bankruptcy on your credit report, or are in the middle of bankruptcy proceedings, there’s a good chance your application will be denied. Some lenders refuse to offer credit cards of anyone with a recent bankruptcy.

You might also be denied if you have a bad history with a lender. For example, if you’ve haven’t paid a $500 balance on a credit card in over a year, that bank probably won’t want to give you a secured credit card.

There are a lot of secured card providers out there, so don’t be afraid to try a different card if your first application is denied.

How do you build your credit when you can’t get approved?

You have a few options if you can’t get approved for a secured credit card.

Become an authorized user

A family member or friend can make you an authorized user on their credit card. Many card issuers report account activity to authorized users’ credit reports. The person who adds you as an authorized user doesn’t even have to let you use the card. Just make sure the person who adds you pays bills on time, as any negative marks will show up on your report until you’re removed as an authorized user.

Use a credit-builder loan

Credit-builder loans are designed to do just that: help you build credit. Typically, you’ll apply for a small loan, put that money in a separate bank account, and set up automatic payments. Paying off the loan will improve your score. The downside is that you’ll pay interest charges.

Have utilities report to credit bureaus

Some utility companies and landlords offer to have your utility bill payments reported to the credit bureaus. Check with yours to see if you can use your monthly payments to boost your credit.

For more details on improving your credit, check out the CardCruncher complete guide.

Conclusion

Secured credit cards are a valuable part of the credit-rebuilding process. If you need to rebuild your credit, or start building altogether, don’t discount secured credit cards. When used correctly, your secured card sets you on the path toward more valuable credit cards—and improved credit.

More details on secured credit cards

Discover it Secured Credit Card

Annual fee: $0

APR: 25.24% variable APR

Bonus: 100% match on cash back your first year

Security deposit: $200

Upgrade to unsecured: Yes

Pro: Cash back rewards

Con: No way to increase credit limit without additional deposit

Read full card details here.

AeroMexico Visa Secured Credit Card

Annual fee: $0 the first year, then $25

APR: 22.29%

Bonus: 3,500 miles

Security deposit: $300

Upgrade to unsecured: Yes

Pro: Travel rewards

Con: Hefty annual fee

Read full card details here.

American Savings Bank Secured Visa Credit Card

Annual fee: $0

APR: 21.99%

Bonus: $0

Security deposit: $300

Upgrade to unsecured: Yes

Pro: Non-citizens are eligible

Con: High fees for late payment, foreign transactions, etc.

Read full card details here.

BankAmericard Secured Credit Card

Annual fee: $39

APR: 22.24%

Bonus: None

Security deposit: $300

Upgrade to unsecured: Yes

Pro: Work with a large bank that has branches everywhere

Con: High fees for late payment, foreign transaction, etc.

Read full card details here.

Capital One Secured Credit Card

Annual fee: $0

APR: 26.99%

Bonus: None

Security deposit: $49

Upgrade to unsecured: No

Pro: Automatic credit limit increase after five months of good standing

Con: No path to unsecured card and high fees

Read full card details here.

Citi Secured Credit Card

Annual fee: $0

APR: 24.49%

Bonus: $0

Security deposit: $200

Upgrade to unsecured: Yes

Pro: No authorized user fees

Con: Low maximum credit limit

Read full card details here.

Green Dot primor Visa Gold Secured Credit Card

Annual fee: $49

APR: 9.99%

Bonus: None

Security deposit: $200

Upgrade to unsecured: No

Pro: Low interest rate

Con: Heavy fees

Read full card details here.

The Secured Visa from Merrick Bank

Annual fee: $36, billed $3 per month

APR: 18.70%

Bonus: $0

Security deposit: $200

Upgrade to unsecured: No

Pro: Lower-than-average foreign transaction fee

Con: Heavy fees in general

Read full card details here.

CARDS MENTIONED IN ARTICLE
Capital One® Secured Mastercard®
Capital One® Secured Mastercard®
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CARDS MENTIONED IN ARTICLE
Capital One® Secured Mastercard®
Capital One® Secured Mastercard®
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