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7 Best Secured Credit Cards to Rebuild Credit – Reviews & Comparison

7 Best Secured Credit Cards to Rebuild Credit – Reviews & Comparison

How’s your credit these days?

If you’d prefer not to answer that question, you’re not alone. Millions of Americans have imperfect credit due to bankruptcy, foreclosure, crushing medical or student loan debts, and other financial black marks. A bad credit score can affect your ability to secure an affordable home loan, rent an apartment, get a cell phone, and even find a job. While credit counseling and debt management plans can help you repair your credit over time, and a debt consolidation loan (a common type of unsecured personal loan) can streamline your ongoing debt service, there’s no magic cure.

For other folks, the problem isn’t bad credit so much as no credit. Consumers who haven’t previously used credit are ciphers to lenders and credit card companies, which are understandably wary about lending to people without a track record of timely repayments.

Whether you’re dealing with the negative effects of bad credit, or simply don’t have much of a credit history to speak of, applying for a secured credit card could end up being a critical first step on your path out of the credit wilderness.

Most credit cards are unsecured. Unsecured cardholders aren’t required to put up any collateral before using their cards.

Secured credit cards are different. They require cardholders to make cash deposits, usually equal to (and sometimes greater than) their initial credit limits, before making charges. These deposits, and the corresponding credit limits, are often low compared to unsecured credit cards’ spending limits – rarely more than $500 at the outset. Over time, issuers reward cardholders for timely payments by increasing their spending limits, in many cases without asking for an additional deposit.

Secured card issuers scrupulously report cardholders’ spending and payment patterns to consumer credit bureaus. For cardholders who use their cards judiciously and make timely payments, this builds and improves credit over time. For cardholders who pay their balances late or not at all, or max out their cards’ spending limits, this ongoing reporting can have negative consequences.

Many cardholders use secured cards temporarily, for credit-building or -improvement purposes. Once their credit is on better footing, they close their accounts and receive their deposits back. Many secured credit card issuers allow cardholders in good standing to graduate to unsecured credit cards after a year or two, eliminating the hassle of closing accounts and applying for new cards.

With these basics in mind, let’s take a look at the best secured credit cards on the market today.

Up to 2% Cash Back on Select Spending; Minimal Fees

The Discover it® Secured Credit Card is one of the few secured cards with a bona fide cash back rewards program. Like the Discover it® Chrome Credit Card, Discover it Secured earns 2% cash back on the first $1,000 in gas and dining purchases each quarter, and unlimited 1% cash back on all other purchases. Plus, Discover matches all cash back earned during the first 12 billing cycles, with no limit.

Like most secured credit cards, Discover reports payment patterns and credit utilization to all 3 major credit reporting bureaus: TransUnion, Equifax, and Experian.

Deposit Requirements, Benefits, and Restrictions
The Discover it Secured Credit Card requires a minimum refundable security deposit of $200, subject to credit approval. If your credit and income qualify you for a higher limit, Discover may allow it, up to $2,500. To start, your security deposit is equal to your approved credit limit.

Beginning at 8 months, Discover periodically reviews your account activity and other credit information to determine whether you qualify for an upgrade to a non-secured card. If you’re approved for a non-secured card, Discover refunds your security deposit within 2 billing cycles plus 10 business days. You’ll also receive a full refund of your security deposit when you close your fully paid-off account.

You can also apply for a credit limit increase at any time, subject to credit approval. Discover reserves the right to require a corresponding security deposit.

See our Discover it® Secured Credit Card Review for more information. Find out how you can apply for this card here.





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Minimal Fees; Possibility of Credit Limit Greater Than Initial Deposit; Credit Limit Increases Without Additional Deposits

capital one secured mastercard

This card reports payments and credit utilization to all three major consumer credit bureaus: Experian, Equifax, and TransUnion.

Deposit Requirements, Benefits, and Restrictions
Capital One Secured Mastercard requires a minimum refundable security deposit of $49, $99, or $200, depending on your credit profile. You need to make the deposit within 80 days of applying for the card. Regardless of your deposit size, your initial credit limit is at least $200. It can range up to $1,000, depending on your creditworthiness.

To raise your credit limit, you can make additional deposits in $20 increments, up to the $1,000 maximum. If you demonstrate a pattern of reliable payments over several consecutive billing cycles, you can access a higher credit line without an additional deposit. Capital One has sole discretion over amount and frequency of these “free” credit limit increases.

See our Capital One Secured Mastercard Review for more information. Find out how you can apply for this card here.





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Low APR and Reasonable Fees; No Credit Check Necessary With Application

opensky secured visa cardopensky secured visa cardAlthough it comes with a moderate annual fee, the OpenSky Secured Visa credit card boasts one of the lower secured credit card APRs around. It also doesn’t require a credit check with your application, meaning it’s a great choice for folks with poor or spotty credit. Negatives include a maximum credit limit lower than some competing cards and no balance transfers.

Deposit Requirements and Benefits
To get started with the OpenSky Secured Visa, you need to make an upfront refundable deposit of at least $200. Your deposit can be as high as $3,000, depending on your creditworthiness. Your credit limit is always equal to your deposited amount.

OpenSky reports to all three credit reporting bureaus. One significant drawback is that unlike some other issuers, the OpenSky Secured Visa doesn’t allow for a transition from secured to unsecured. You can keep your account open as long as you like, but you don’t receive your security deposit back until you request to cancel the card and pay your balance in full.

Find out how you can apply for this card here.





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Reasonable APR; Relatively High Credit Limit

citi secured mastercard

Deposit Requirements and Benefits
Once you’re approved for the Citi Secured MasterCard, you have 30 days to deposit as little as $200 or as much as $5,000. You can make additional deposits to raise your credit limits, but your funds are tied up for at least 18 months and don’t earn interest during that time.

f you make timely payments for the duration, Citi may elect to return your deposit and allow you to continue using your card. Your payment and credit utilization patterns are automatically reported to all three consumer credit bureaus.

See our Citi Secured Card Review for more information.

Reasonable APR; Laid-Back Credit History Requirements; Earn Interest on Your Deposit

us bank secured visa cardus bank secured visa cardThe U.S. Bank Secured Visa Card’s biggest advantages include easy approval for applicants with poor credit and a reasonable APR (relative to other secured credit cards). The unusually long grace period of up to 30 days, compared with the more typical 20- to 25-day grace period for this card class, is a useful backstop against late payments. Drawbacks include somewhat high fees.

Deposit Requirements and Benefits
To get started with the U.S. Bank Secured Visa Card, you need to make a deposit of at least $300 and as much as $5,000, depending on your creditworthiness. Your credit limit is always equal to your deposit amount. Said deposit is held in an FDIC-insured, interest-bearing (0.05% to 0.10% APY) U.S. Bank savings account, rather than a no-interest escrow account, as is the case with the Citi Secured MasterCard.

If you make timely payments for at least 12 months, you’ll likely qualify for an unsecured credit card and receive your security deposit back in full, with interest.

Find out how you can apply for this card here.





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High Credit Limit; Reasonable APR

wells-fargo-secured-card

Deposit Requirements and Benefits
To get started with the Wells Fargo Secured Visa Credit Card, you need to make a deposit of at least $300 and no more than $10,000. Your deposit is your credit limit, and you can add more funds at any time. After 12 months of timely payments, Wells Fargo reviews your account and may upgrade you to an unsecured arrangement, refunding your security deposit in exchange.

Find out how you can apply for this card here.





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Relatively Low APR; Relaxed Credit Standards

merrick bank secured visa cardmerrick bank secured visa cardMerrick Bank’s Secured Visa credit card makes no bones about being for consumers with poor credit. Its approval standards are very laid back, so it’s definitely worthwhile to apply even if you’ve been denied by other secured credit card issuers. A relatively low APR helps with the ongoing cost of the card, though higher than average annual fees cut into those savings.

Annoyingly, you’re not allowed to make balance transfers with this card. Merrick Bank does report your payment and credit utilization information to all three credit bureaus though.

Deposit Requirements and Benefits
Merrick Bank lets you deposit as little as $200 or as much as $3,000. You’re encouraged to deposit as much as you feel comfortable depositing – your deposit isn’t limited by your credit profile, only by Merrick’s $3,000 limit. Your credit limit is always equal to your deposit amount. Your deposit is FDIC-insured, but doesn’t earn interest.

Merrick Bank doesn’t automatically convert its Secured Visa into an unsecured card. If you want to graduate to an unsecured card, you need to apply for a Merrick Bank (or other issuer’s) unsecured card. To get your deposit back, you need to close your Secured Visa Card account.

Find out how you can apply for this card here.





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Each secured credit card on this list is designed to boost folks with poor credit or spotty credit histories. However, they can’t single-handedly dig their users out of financial holes or accelerate them painlessly down the road to the promised land of easy, low-cost credit.

Building and improving credit takes time and discipline. In addition to applying for a secured credit card and making timely, in-full payments, follow these straightforward tips:

If you play your cards right, you could find your credit situation significantly improved in less time than you ever thought possible.

Do you use secured credit cards? Which is your favorite?

Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Updated: October 16, 2018
Categories: Credit and Debt, Credit Cards, Get Out of Debt

Brian Martucci writes about frugal living, entrepreneurship, and innovative ideas. When he’s not interviewing small business owners or investigating time- and money-saving strategies for Money Crashers readers, he’s probably out exploring a new trail or sampling a novel cuisine. Find him on Twitter @Brian_Martucci.

Comments Disclosure: The below responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

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