4 Best Secured Credit Cards for Building Credit

4 Best Secured Credit Cards for Building Credit

All-Around Best Secured Credit Card
#1
Capital One Secured Mastercard
  • Payment history appears on 3 major credit bureaus 
  • Automatic credit limit increase after 5 consecutive months of on-time payments 
  • Partially secured and fully secured options available

 

Best Secured Credit Card if You Want Bonus Offers
#2
Discover it® Secured Card
  • Excellent for establishing credit 
  • Refundable security deposit - sometimes before you even close your account
  • Generous cash back program

 

Best Secured Card to Keep Long-Term
#3
Merrick Secured Visa Credit Card

 

  • Free monthly FICO score report 
  • Online payments and statements available 
  • Easy approval process

 

Best Secured Card With No Credit Check
#4
OpenSky Secured Visa Credit Card

 

  • No credit check required for approval 
  • Helps increase your FICO score when used responsibly 
  • Low APR compared to other secured cards

 

After 20 hours of research evaluating 105 products, we picked Capital One Secured Mastercard as our top choice.

All-Around Best Secured Credit Card

Best for Card
Best Secured Card With No Credit Check
OpenSky Secured Visa Credit Card
Best Secured Card to Keep Long-Term
Merrick Secured Visa Credit Card
Best Secured Credit Card if You Want Bonus Offers
Discover it® Secured Card
All-Around Best Secured Credit Card
Capital One Secured Mastercard

"Sorry, but we are unable to approve you at this time."

Sound familiar? It's difficult to get approved for traditional credit cards if your FICO is too low or your debt-to-income ratio is too high. That's why many folks avoid credit card applications and stick with prepaid debit cards instead.

We have compiled a list of the best secured credit cards to help you if you are in this type of situation.

But you have other options:  

Many people have a positive experience establishing or rebuilding their credit with secured credit cards. You can generally get approved with the best secured credit card even if your FICO score needs a major overhaul or you're recovering from a recent bankruptcy.

But why do secured credit card companies send out welcome emails instead of rejection letters to so many people?

Simply put, it's because they're giving you a credit line funded by your own money. There's not much of a risk for them if you bail on payments. Unfortunately, it's still risky for you to miss payments because many secured cards report to all three credit bureaus.  

Here's the good news:

These creditors also report on-time payments, which may help your credit history. Eventually, you might even raise your FICO enough to qualify for unsecured cards like one of the best travel credit cards or a card from your favorite retailer.  

Exciting, right? It's a wonderful feeling to know that you're headed toward financial stability.

Your path toward better credit begins here at Faveable, and we're psyched to share our top credit card picks with you. Review the best secured credit cards below to find one worthy of a spot in your wallet.  

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Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.


Editorial staff

4 Best Secured Credit Cards for Building Credit

4 Best Secured Credit Cards for Building Credit

Read Video Infographic Tips

After 20 hours of research evaluating 105 products, we picked Capital One Secured Mastercard as our top choice.

All-Around Best Secured Credit Card

Best for Card
Best Secured Card With No Credit Check
OpenSky Secured Visa Credit Card
Best Secured Card to Keep Long-Term
Merrick Secured Visa Credit Card
Best Secured Credit Card if You Want Bonus Offers
Discover it® Secured Card
All-Around Best Secured Credit Card
Capital One Secured Mastercard

"Sorry, but we are unable to approve you at this time."

Sound familiar? It's difficult to get approved for traditional credit cards if your FICO is too low or your debt-to-income ratio is too high. That's why many folks avoid credit card applications and stick with prepaid debit cards instead.

We have compiled a list of the best secured credit cards to help you if you are in this type of situation.

But you have other options:  

Many people have a positive experience establishing or rebuilding their credit with secured credit cards. You can generally get approved with the best secured credit card even if your FICO score needs a major overhaul or you're recovering from a recent bankruptcy.

But why do secured credit card companies send out welcome emails instead of rejection letters to so many people?

Simply put, it's because they're giving you a credit line funded by your own money. There's not much of a risk for them if you bail on payments. Unfortunately, it's still risky for you to miss payments because many secured cards report to all three credit bureaus.  

Here's the good news:

These creditors also report on-time payments, which may help your credit history. Eventually, you might even raise your FICO enough to qualify for unsecured cards like one of the best travel credit cards or a card from your favorite retailer.  

Exciting, right? It's a wonderful feeling to know that you're headed toward financial stability.

Your path toward better credit begins here at Faveable, and we're psyched to share our top credit card picks with you. Review the best secured credit cards below to find one worthy of a spot in your wallet.  

Save

Save

Save

Save

Save

Save

Save

Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.


Editorial staff

Best Secured Card With No Credit Check

Best Secured Card With No Credit Check: OpenSky Secured Visa Credit Card
Apply Now
On the CreditCards.com Secure Website
  • Variable APR
    18.64%
  • Cash Advance APR
    18.64%
  • Rewards Rate
    n/a
  • Annual Fee
    $35
  • Intro APR
    n/a
  • Bonus Offers
    n/a

Pros

 

  • No credit check required for approval 
  • Helps increase your FICO score when used responsibly 
  • Low APR compared to other secured cards

 

Cons

Some customers gripe that payments take approximately 2 weeks to post, and your available spending amount doesn’t increase until each payment clears.

Details

  • No credit check necessary to apply. OpenSky believes in giving an opportunity to everyone.
  • The refundable* deposit you provide becomes your credit line limit on your Visa card.  Choose it yourself, from as low as $200.
  • Build credit quickly. OpenSky reports to all 3 major credit bureaus.
  • 99% of our customers who started without a credit score earned a credit score record with the credit bureaus in as little as 6 months.
  • We have a Facebook community of people just like you; there is a forum for shared experiences, and insights from others on our Facebook Fan page. (Search “OpenSky Card” in Facebook.)
  • OpenSky provides credit tips and a dedicated credit education page on our website to support you along the way.
  • *View our Cardholder Agreement located at the bottom of the application page for details of the card.

Application Process:  Unlike some of the other secured credit cards we’ve researched, you can only apply online for the OpenSky secured Visa. Expect to spend approximately 10 minutes providing basic info like your name, date of birth, and Social Security number, and make sure you have your bank info or a debit card to fund this secured credit card. 

Features: The OpenSky secured Visa offers the standard benefits associated with most cards, such as cash advances and approval at online and brick-and-mortar merchants who accept Visa payments. We love that the card has an interest-free grace period for new users and users who pay in full by each due date. 

There’s currently no rewards program for the OpenSky secured Visa, which is a bit of a bummer if you’re into that kind of thing. However, establishing a consistent payment history with this card can help you qualify for cards with rewards in the future. 

APR: The OpenSky secured Visa boasts an APR of 18.14%, which is one of the lowest rates we’ve seen for a card geared toward people with bad credit. The penalty APR is currently an unfixed rate of 22.25%, so get your payments in on time to avoid paying extra interest. 

Bonus Offers: This card doesn’t offer any bonus offers because it’s designed to help people with bad credit or no credit. In other words, it focuses on the basics. 

However, you can apply for other OpenSky products, including a mortgage or checking account, if and when you’re ready. The company also offers complimentary financial education articles online to help you make smart decisions. 

Annual Fee: There’s a $35 annual fee for this secured credit card, which we feel is reasonable. Some companies charge secured cardholders around $100 per year.

Make sure you use this card at least once a year to avoid getting hit with an inactive account fee, which is $10 per month.

Best Secured Card to Keep Long-Term

Best Secured Card to Keep Long-Term: Merrick Secured Visa Credit Card
Apply Now
On the CreditCards.com Secure Website
  • Variable APR
    18.70%
  • Cash Advance APR
    23.70%
  • Rewards Rate
    n/a
  • Annual Fee
    $36 the first year. Billed $3 per month
  • Intro APR
    n/a
  • Bonus Offers
    n/a

Pros

 

  • Free monthly FICO score report 
  • Online payments and statements available 
  • Easy approval process

 

Cons

Multiple cardholders complain that customer service is awful compared to other credit card companies. However, some folks defend the company, stating that angry callers are just upset because they failed to use their cards in a responsible manner.

Details

  • Unsecured credit line increases - After the first year, your account will be regularly reviewed for credit line increases with no additional security deposit required.
  • Monthly FICO® Score for free - get your updated FICO® Score each month when it is provided to us from the credit bureau.
  • Build your credit - performance is reported to all three major credit bureaus, unlike a prepaid card.
  • Flexible credit line - the amount of your deposit determines your initial credit line - up to $3,000 and increase your credit line anytime with additional deposits.
  • Easy funding options – several convenient options to easily fund your security deposit.
  • Worldwide acceptance - use it anywhere Visa is accepted.
  • Quick, easy application - apply online today!

Application Process: You can apply online for the Merrick secured Visa credit card. Before you apply, make sure you have details about your monthly income and expenses so you can answer the application’s questions accurately. If you have a bankruptcy that hasn’t been discharged yet, wait to apply.

Features: Worried a scammer might hack into your account and rack up charges on your card? If that actually does happen, you can breathe easy knowing that Merrick doesn’t hold cardholders liable for fraudulent charges. We’ve heard complaints that other secured credit cards are too friendly toward scammers, so it’s awesome that Merrick takes fraud seriously. 

Aside from $0 liability fraud protection, the Merrick secured Visa offers online account management tools free of charge. You can check your balances, review purchases, and make payments from any Internet-compatible device. 

Oh, and we’re psyched that this secured card offers credit limit increases without requiring you to add additional funds. Very few secured credit cards have this feature.

APR: At 18.20%, the APR for this secured Merrick Visa is only slightly higher than the APR for the OpenSky secured Visa. Expect to pay 23.20% APR on cash advances. The good news is that you can bypass the interest on products and services by paying your balance in full before each due date. Unfortunately, you’ll still owe interest on any cash advances you made during the billing period.  

Bonus Offers: Merrick doesn’t have any bonus offers for its secured Visa credit card at the moment, but neither do most of the other secured cards we’ve researched.

Annual Fee: You’ll have to dole out $36 for an annual fee the first year you have the card. After that, there’s no annual fee, but you’ll be charged a monthly fee of $3. Either way, you’ll owe $36 every 12 months.

Best Secured Credit Card if You Want Bonus Offers

Best Secured Credit Card if You Want Bonus Offers: Discover it® Secured Card
Apply Now
On the CreditCards.com Secure Website
  • Variable APR
    24.24%
  • Cash Advance APR
    26.24%
  • Rewards Rate
    1.0%
  • Annual Fee
    $0
  • Intro APR
    10.99% on Balance Transfers for 6 months
  • Bonus Offers
    Get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.

Pros

  • Excellent for establishing credit 
  • Refundable security deposit - sometimes before you even close your account
  • Generous cash back program

 

Cons

  • Not widely accepted overseas
  • Requires a security deposit to open an account

Details

  • No annual fee, cash back on every purchase, and helps you build your credit with responsible use.
  • The card requires a refundable security deposit up to the amount of at least $200, which will establish your credit line. You will need to provide your bank information when submitting your security deposit.
  • Discovery will automatically begin reviewing your account starting at eight months to see if you are eligible to transition to an unsecured line of credit.
  • Earn 2% cash back at restaurants and gas stations on up to $1,000 in combined purchases each quarter. Plus, 1% cash back on all other purchases.
  • Get a dollar-for-dollar match of all the cash back you've earned at the end of your first year, automatically.
  • Receive free Social Security number alerts — Discover will monitor thousands of risky websites when you sign up.

Application Process: It only takes a few minutes to apply for the card online. If you need help, you can call the company or communicate with an agent via live chat.

Make sure you have your bank account info ready when you apply. You’ll need it to fund the $200 minimum security deposit. 

Features: The Discover It secured credit card offers most of the features found on similar cards, plus a few extras. You can get a new card shipped overnight for free, and it’s nice that you can temporarily freeze your account with the push of a button.

Multiple cardholders appreciate that you can receive your security deposit back before you close your account. Discover periodically reviews your account after eight months to determine whether to convert your secured card to an unsecured card. 

APR: There’s a 24.24% standard variable purchase APR and a 26.24% standard cash APR. These fees are on the high end when compared to other secured cards, but at least the card has plenty of features and benefits to make up for its rates.

Bonus Offers: Cardholders earn cash back on every purchase. Plus, Discover matches the cash-back rewards you accumulate during your first year.  

Annual Fee: None.

All-Around Best Secured Credit Card

All-Around Best Secured Credit Card: Capital One Secured Mastercard
Apply Now
On the CreditCards.com Secure Website
  • Variable APR
    24.99%
  • Cash Advance APR
    24.99%
  • Rewards Rate
    n/a
  • Annual Fee
    $0
  • Intro APR
    n/a
  • Bonus Offers
    n/a

Pros

  • Payment history appears on 3 major credit bureaus 
  • Automatic credit limit increase after 5 consecutive months of on-time payments 
  • Partially secured and fully secured options available

 

Cons

Your initial credit line is just $200, which is lower than most secured credit cards. Then again, you may see this as a perk if you don’t have hundreds of dollars to fund a credit card’s deposit. Capital One does let you increase your deposit over time, and it states you have a chance to do so before your account opens. However, some cardholders complain that it’s difficult to score approval for a deposit increase regardless of how much time has passed.

Details

  • No annual fee, and all the credit building benefits with responsible card use
  • Unlike a prepaid card, it builds credit when used responsibly, with regular reporting to the 3 major credit bureaus
  • You will get an initial $200 credit line after making a security deposit of $49, $99, or $200, determined based on your creditworthiness
  • Get access to a higher credit line after making your first 5 monthly payments on time with no additional deposit needed
  • Easily manage your account 24/7 with online access, by phone or using our mobile app
  • It's a credit card accepted at millions of locations worldwide
 

Application Process: The application process is straightforward and simple. When you apply online, you must provide your name, address, and income information, as well as your Social Security number and date of birth. If Capital One offers you a card, they give you 80 days to fund your security deposit - which is pretty generous.

You can pay your security deposit online or over the phone. You cannot get approved without a bank account, so make sure you have one before you apply.

Features: The features associated with this secured Capital One card rival those offered by the USAA Visa Platinum. Cardholders receive numerous perks, including 24/7 roadside assistance and travel assistance services, auto rental insurance, and extended warranties for purchases. There’s also a nifty price protection feature that hooks you up with cash if you find a cheaper price on qualifying items up to 60 days after you buy them.

APR: At 24.99%, the variable APR is on the high end for this Capital One MasterCard. However, it’s still one of the most highly ranked secured cards we’ve found.

Bonus Offers: There aren’t any bonus offers for this popular secured card, but it has plenty of features and benefits.

Annual Fee: WalletHub likes that there’s no annual fee for this secured credit card, and we share their enthusiasm. Nearly every secured card we’ve come across requires an annual fee, and some of them also charge monthly fees and application fees. It’s nice to see a card that doesn’t do any of that.

There’s a lot of inaccurate information floating around about secured credit cards, but we’re happy to set the record straight by tackling more than 20 common questions below. Scroll down to learn more about everything from refundable credit line deposits to the right (and wrong!) way to use a secured credit card.

Basic Information About Secured Credit Cards

What is a secured credit card?

A secured credit card offers a line of credit backed by your own funds. The credit card company that approves you provides specific instructions about the minimum and maximum amount of money you can add to your account, and that money becomes your credit line.

For example, a secured credit card company might say you can deposit between $300 and $2,000 toward your credit line. You decide to deposit $500, so you have $500 available to spend. If you rack up $450 in charges, you only have $50 left until you make a payment on the card. This frees up some - or all - of your approved credit line, and then you can repeat the process as desired.

Is a secured credit card the same as a prepaid debit card?

Technically the answer to this question is no, but we get why some people think secured credit cards and prepaid debit cards are the same. Both cards typically share a few common traits, including:

  • A distinguishable logo, such as Visa or MasterCard, on the front
  • Self-funded spending limits
  • Acceptance online and at brick-and-mortar stores

However, there’s one major difference: Secured credit cards usually show up on your credit report, and prepaid debit cards don’t. Another difference is that you can spend as much money as you want (as long as you don’t exceed your card’s deposit value or limits) with a prepaid debit card, but you’re stuck with a predetermined credit line when you use a secured credit card.

Can I get a secured credit card with no deposit?

No, you can only get an unsecured credit card without a deposit. A secured credit card gets its name from the process used to fund the card. Cardholders fund their card with cash collateral which then gets converted to a line of available credit.

Sometimes card companies offer partially secured cards that don’t require a deposit that matches the credit line. An example of this is the Capital One Secured MasterCard (our top pick on the list above!), which sometimes requires a deposit of just $49 or $99 instead of $200. The deposit is based on your credit score, and it’s for a card with a $200 credit limit.

How is a secured credit card different from an unsecured credit card?

An unsecured credit card has a credit limit funded by a bank or credit card company, while a secured credit card has a credit limit funded by you. Sometimes you have more flexibility choosing a credit limit for a secured card than an unsecured card because it’s protected by your cash collateral. The credit limit for an unsecured credit card is determined by your income and credit history, while the credit limit for a secured credit card matches (or in some cases, slightly exceeds) your deposit.

It’s also worth noting that secured card providers typically run soft inquiries when they even bother to check your credit at all, while popular unsecured credit card companies are notorious for dinging your FICO with hard inquiries. You can generally get a secured credit card after bankruptcy or a history of collections and garnishments, but folks with poor credit often struggle to get approved for unsecured cards.

Why would someone want a secured credit card?

Honestly, sometimes a secured credit card isn’t an applicant’s first choice. Many prequalification tools and rejection notices recommend secured cards when an applicant doesn’t qualify for the unsecured card they want.

However, that doesn’t mean that nobody wants secured cards. Secured credit cards are popular with people who are establishing, building, or repairing their credit. After a bankruptcy fully discharges, many people turn to secured cards to help them rebuild their credit. In fact, NerdWallet says getting a secured credit card is “probably the best way to start” rebuilding your credit after you get your discharge notice.

Are secured credit cards for people with bad credit?

No, but they’re a hit with the low-FICO crowd because they’re easy to get, plus they help improve credit when used responsibly. Many secured card companies gear their cards toward people with bad credit, which is why they’ve got high interest rates and a noticeable lack of the cash-back and travel-related rewards associated with many unsecured cards.

What is the best secured credit card?

Our favorite secured credit card is the Capital One Secured MasterCard because you get an automatic credit limit increase after just 5 consecutive monthly payments - assuming you pay on time, that is. You don’t have to fork over an additional deposit for this increase.

We also love these secured credit cards for folks who are building or fixing their credit:

  • Discover It Secured Credit Card
  • Merrick Secured Visa Credit Card
  • OpenSky Secured Visa Credit Card

NerdWallet and WalletHub share many of our views when it comes to secured credit cards, and both sites recommend the Capital One Secured MasterCard.

The Application Process

Where can you get a secured credit card?

Secured credit card applications are available online from card providers like Capital One, Discover, and Merrick Bank. You can also apply for a secured credit card at a local financial institution such as a credit union or bank.

Do secured cards run a credit check?

Some do, some don’t. We’ve noticed that many secured cards just run a soft inquiry, which doesn’t hurt your credit. However, you might get hit with a hard inquiry if you fill out a general credit card app (translation: you’re willing to take whichever card the company offers you).   

Can you get denied for a secured credit card?

Yes, it’s possible to get denied for a secured credit card - but your chances of getting approved are high. You might receive a rejection letter if you’re currently going through bankruptcy or if you’ve recently defaulted on another secured card from the same company.

If you get denied, wait at least 3 to 6 months before you apply again. Make sure you fix the issues that triggered the rejection first (you can request a letter detailing the factors that caused your credit denial if the company doesn’t automatically send one). Remember, it takes time for changes to appear on your credit report - so don’t reapply the same day you handle your financial affairs. If you’re not sure whether your credit report has been updated, you can request one free credit report from each credit bureau once a year.

Can I get my child a secured credit card?

You can get a secured credit card for yourself and add your child as an authorized user, but be careful. Here are some things to consider:

  • If you pay your bill late, you can damage your child’s credit before they even become an adult
  • Your child may lower your credit score by increasing your credit utilization ratio, even if the monthly bill gets paid on time
  • A child may not keep the card in a safe place, putting you at risk for fraudulent charges and/or identity theft
  • You may have to pay multiple fees, including an authorized user fee and an extra card fee

If you decide getting your child a secured credit card is worth the risk, you’ll need their Social Security number. You may also have to prove that you’re the legal guardian if your child is under 18. American Express and Discover both make you wait until your child is at least 15 years old before you add them as an authorized user, but Capital One and Wells Fargo don’t have a minimum age requirement as of 2017.

Deposits and Other Charges

How much is the deposit for a secured credit card?

Deposit amounts for secured credit cards vary, but potential cardholders often have a say in how much they pay. That’s because you’re funding your own line of credit, so there isn’t a high risk for the card company you choose. Secured credit card companies typically provide a range, such as $200 to $3,000, and let you deposit any amount of money between that range.

We’ve never seen a secured credit card with a credit limit lower than $200, so you’ll probably pay at least that much for your deposit. The exception is if you get approved for the secured Capital One MasterCard that we mentioned earlier; sometimes the company only charges $49 or $99 for access to a $200 credit limit.

What if I can’t afford the deposit after I’m approved for a secured credit card?

If you can’t afford the deposit immediately, no biggie - you probably have plenty of time. Many companies give you several months to pay your deposit, and you can often break it down into multiple payments.

If you can’t afford the deposit at all - like, not even in a few months - it’s probably not the right time for you to apply for a secured credit card. Some secured cards run a hard inquiry, and that hit remains on your report for 2 years even if you never pay your deposit or use the card. You have the option to request an inquiry removal via a dispute letter, but the company has the option to decline your request.

Does my deposit earn interest?

It might, but it depends on which card you choose. Your deposit doesn’t earn interest if you get the Capital One Secured MasterCard or the Discover It Secured Credit Card, but these cards both have a reputation for returning deposits promptly to qualifying cardholders.

We’ve seen some secured cards from banks and credit unions that pay interest on deposits, and some cards that cater toward military members do the same.

Is my deposit refundable for a secured credit card?

Your deposit is fully refundable unless your credit card agreement states otherwise. You generally get your deposit back when you close your account as long as you don’t owe the company any money. A bankruptcy may also affect your deposit.

Some companies mail a check for your deposit after a certain amount of time passes, such as 12 or 18 months, with no card-related issues. Others credit the amount to your secured credit card. You can find the specifics of deposit refunds for your specific card by viewing your cardholder agreement. Companies are required to clearly outline the terms of your credit agreement.

Do I pay interest on my purchases if I have a secured card?

Yes - and plenty of it. We’ve never found a secured credit card with a 0% APR; most secured cards have variable interest rates that are at least 18%.

We’re not trying to scare you out of getting a secured credit card, though. If you need to fix your credit, a secured card is the way to go. After paying your bill on time for a while, you’ll most likely qualify for unsecured credit cards with decent interest rates.

Secured Cards and Your Credit

Do secured credit cards really help your credit?

Yes, secured credit cards really help your credit - if you use them correctly. If you fail to pay your bill on time or max out your secured card, your FICO score might get worse. In fact, it can fall as low as 300 if you fall behind on your credit cards and other accounts. Trust us when we say that is not something you want.

How should I use my secured card?

Carefully. Very carefully.

We’ve heard people make comments like, “My credit can’t get much worse, so who cares what I do with this card?” We disagree with statements like that because your credit can always get worse. It can also get better, which is why it’s vital that you use your secured card the right way.

Here are some practical tips to help you benefit from your secured credit card:

  • Always pay your bill on time - no exceptions. If an emergency arises, contact the card company ASAP and ask if they’re willing to waive the late payment fee and/or remove the late payment from your credit report.
  • Keep your credit utilization ratio lower than 30% whenever possible. If you have a card with a $500 limit, that means you should charge less than $150.
  • Pay off the entire bill each month if you can. This will help you avoid hefty interest fees, and it also helps your credit utilization ratio.
  • Watch out for authorization/preauthorization holds for hotel rooms and car rentals - these can temporarily reduce your credit limit. There are also companies that only place a hold for a dollar or two during preauthorization, which may make you think you have more money than you actually do.

Also, make sure you get the scoop on card-related fees specific to your card. You don’t want to unknowingly get hit with an annual fee or monthly maintenance charge when your card is almost maxed out.

Do I have to use my secured credit card to improve my credit?

Some people can get away with getting a secured credit card and never using it, while other cardholders benefit from making small but regular purchases. It depends on what you’re currently doing with other lines of credit that show up on your credit report. You should also consider your long-term financial goals and think about what you want from your credit card company.

For example, you’re less likely to score a credit limit increase if you never use your card. Credit card companies give you cards because they want to make money off of you, and they do that by tacking on interest when you buy things with your card. Sure, they can charge you annual fees and monthly maintenance fees, but they really want you to use your card for online and in-store purchases.

However, getting a secured credit card just to have one - not to buy anything - can potentially help you if you have other cards that are maxed out. Your overall credit utilization ratio drops whenever you get a new card because you’ve got more credit but haven’t racked up any additional debt yet.

Just keep in mind that the credit card company might close your secured credit card if you never use it. They can’t legally charge you an inactivity fee thanks to the CARD Act of 2009, but they can close your account whenever they feel like it unless your card contract specifies otherwise. If your account gets closed, your FICO score might suffer because you have less available credit.

Can you use a secured credit card to build credit fast?

Despite what late-night infomercials and spammy emails promise, there’s no rapid-fire way to increase your credit score. Sure, some people build credit fast with a secured credit card, and we’ve even heard reports of people boosting their score by more than 100 points in just a few months. That’s not the norm, though.

Your credit score is determined by several factors, and new credit only makes up 10% of your FICO score. However, your credit utilization ratio makes up 30% of your score, so you could theoretically notice a drastic spike in your credit score (in your favor) if your new card is your only card. Assuming you keep your balance significantly lower than your credit limit, that is.

How much will a secured credit card raise my score?

There’s not a set number when it comes to how much your credit score will increase after using a secured credit card. If you have bad credit, expect to wait approximately 12 to 18 months for your score to increase enough for you to get an unsecured card. If you’re using a secured card to build rather than repair credit, you may see your score increase significantly in 3 to 6 months.

Some cardholders report a noticeable FICO increase after 30 to 60 days. That’s often when a credit card company reports your available credit limit and your first couple payments.

How many secured credit cards should I have?

The number of credit cards you should have varies, so the right number of cards for your best friend or mom might be totally different than the number you need. If you’re recovering from bankruptcy or currently have no credit whatsoever, you may want more cards than someone who just needs a small boost to their FICO score.

But that doesn’t mean you should go crazy with credit card applications. Before you go on a card-collecting spree, make sure that you can afford the security deposits and monthly bills. You should also keep in mind that some companies run hard inquiries, and that can hurt your FICO score for several years.

Can I upgrade to an unsecured credit card if I pay my secured card on time?

With responsible use, it’s definitely possible if your cardholder allows it. Some companies provide a specific timeline for card graduation, while others never convert secured cards to unsecured cards. Capital One Secured MasterCard offers a credit limit increase after just 5 months, so then you have a partially secured card rather than a fully secured card. We’ve also noticed that banks (as in, the kind you visit in person) are often happy to upgrade cards for responsible members.

Even if you have no luck getting an upgrade from your current provider, you may qualify for an unsecured card from a different company after an established history of responsible use.

Common Concerns About Secured Credit Cards 

What if I can’t pay my credit card bill?

Contact the credit card company ASAP and let them know what’s going on. Do not wait for them to call you, and don’t just ignore your billing statements. Some companies are willing to work with you (and keep negative marks off your credit report) if you keep them in the loop.

We’ve also noticed that many credit cards for bad credit offer insurance plans that protect cardholders if they become disabled or suffer a serious financial setback. This might be an option for you, but review the terms carefully before you commit to coverage.

What should I do if the credit card company isn’t reporting to the credit bureaus?

Contact the company and ask what’s causing the delay. Sometimes it takes a few months, so don’t panic if you don’t see your card listed on your credit report right away.

You can potentially prevent this issue by choosing a reputable credit card company that’s known for reporting payments. Some companies even advertise the fact that they offer monthly credit bureau updates - look for this info on the application page or in the cardholder agreement.

How do I make sure I get my deposit back?

Follow the guidelines outlined by the company that gave you the secured credit card if you want your deposit back. Many companies require you to keep your account in good standing, which basically just means you need to pay your bill on good time and avoid doing anything illegal with the card.

Your cardholder agreement should specify the procedure you need to follow for a deposit refund. If not, submit a written request via postal mail (go ahead and pay a few extra bucks for delivery confirmation) informing the company that you’d like your deposit back.

Can I rent a car with a secured credit card?

Yes, you can generally rent a car with a secured credit card as long as the purchase price doesn’t exceed your available credit limit. Keep in mind that some companies place an authorization hold for a set amount, such as $300 or $500, on your card. This protects the company if you damage the vehicle, but it can also leave you without access to a large portion of your credit line.

You can also reserve a hotel room with a secured credit card. Like car rental companies, hotels are notorious for placing authorization holds on credit cards - so make sure you’ve got plenty of available funds on your card.


Still confused about secured credit cards? Share your questions below so we can help!

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Missy Nolan is a single mom who is too sleep-deprived to come up with a clever bio at the moment. She has been a professional writer for more than 10 years and loves staying home with her 3 kids. Well, most of the time. Missy rocks at parenting, baking, cooking, saving cute outfits she'll never wear on Pinterest, and sipping her beloved secret-menu Starbucks Pink Drink while strolling through Target.

She's your go-to girl for advice or feedback on any of the things listed above, as well as tips on healthy living, bargain hunting, marketing, and finances. Connect with Missy here or at MakeItWithMissy.com, a food blog that features healthy recipes and grocery deals.

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