Best Secured Credit Cards 2020. If you have bad or limited credit you won’t qualify for the best credit cards on the market. But there are still options available to help you rebuild, including secured cards. Secured credit cards require a refundable security deposit when you’re approved. This deposit will fund your credit limit for the card. Card issuers require a security deposit because it makes the deal less risky for them. Secured Credit Card. How does a secured credit card no credit work?
How does a secured credit card no credit work?
Secured credit cards require a deposit that serves as collateral for purchases you make using the card. If you default on your payments, the card issuer keeps your deposit. Otherwise, as long as you keep your account in good standing your credit card issuer will return your deposit to you after a certain number of months or when you close your account.
Even though you make a security deposit for a credit limit, you can use the secured credit card just like you’d use any other credit card. Swipe it for purchases up to your credit limit and make timely payments toward your balance each month.
Secured credit cards are a great resource for anyone with poor credit looking to a) receive a line of credit and b) improve their credit score. Secured cards work the same way unsecured cards do in terms of purchasing abilities – if your secured card is Visa or MasterCard branded, it can be used anywhere Visa or MasterCard is accepted.
The only difference between a secured and unsecured card is that secured cards require a deposit upon approval. This is because secured credit cards are for people with low credit scores (600 or less) who do not qualify for a line of unsecured credit, that is, a card that doesn’t require a deposit. Below we’ll discuss how secured credit cards work, beginning with the application process.
Discover it® Secured – How does a secured credit card no credit work?
- Rewards 2% cash back at gas stations and restaurants (up to $1,000 in combined purchases each quarter, then 1%); unlimited 1% cash back on all other purchases
- Welcome bonus At the end of your first year, Discover automatically matches all the cash back you earned
- Annual fee $0
- Intro APR 10.99% for the first 6 months on balance transfers; N/A for purchases
- Regular APR 24.49% variable on purchases and balance transfers
- Balance transfer fee 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*
- Foreign transaction fee None
- Credit needed No credit history
Pros
- No annual fee
- Discover automatically reviews your credit card account monthly, starting at eight months, to see if your security deposit can be returned while you continue to enjoy your card benefits
- Strong cash-back rewards program
- Simple welcome bonus with no minimum spending requirements
- No fee charged on purchases made outside the U.S.
Cons
- Low credit limit prevents cardholders from charging high-cost items or many expenses
- You have to have a Social Security number and U.S. bank account to apply for this card
- Relatively high 24.49% variable APR
- Discover isn’t as widely accepted as Visa and Mastercard
The Discover it® Secured is a well-rounded secured card that offers many benefits that are typically found with unsecured cards. Cardholders can earn cash back, receive a generous welcome bonus, use the card overseas without incurring added fees and more — all for no annual fee.
Cardholders earn a competitive 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter (then 1%). Plus, you can earn unlimited 1% cash back on all other purchases. The welcome bonus is also unique: Discover will match any cash back you’ve earned during the first 12 billing cycles. So, if you earn $50 cash back at the end of the first year, Discover will give you an additional $50.
This card requires a $200 security deposit, which is fairly standard for secured credit cards. It stands out from the crowd because it gives users a clear path to upgrading to an unsecured card (and getting their deposit back). Starting at eight months from account opening, Discover will review your account to see if you can get your security deposit back, which takes the guesswork out of wondering when you’ll qualify for an unsecured card.
Capital One® Secured Mastercard® – Best Secured Credit Cards
- Rewards This card doesn’t offer cash back, points or miles
- Welcome bonus No current offer
- Annual fee $0
- Intro APR N/A for purchases and balance transfers
- Regular APR 26.99% variable on purchases and balance transfers
- Balance transfer fee None
- Foreign transaction fee None
- Credit needed No credit history
Pros
- No annual fee
- $49, $99 or $200 refundable deposit
- Get access to a higher credit line after making your first five monthly payments on time
- No fee charged on purchases made outside the U.S.
- Flexibility to change your payment due date
Cons
- High 26.99% variable APR
- No rewards program
- After you apply and submit your deposit, it takes 2-3 weeks to get your card
- Capital One periodically reviews your account to see if you can be transitioned to an unsecured card, but unlike the Discover it® Secured Card there’s no clear timeline for when this will occur
If you’re looking for a secured card with a low deposit, the Capital One® Secured Mastercard® is your best option. This card has no annual fee and minimum security deposits of $49, $99 or $200, based on your creditworthiness.
If you qualify for the low $49 or $99 deposits, you’ll still receive a $200 credit limit. This is a great feature considering many secured cards require $200 deposits to receive an equivalent line of credit.
Capital One also grants cardholders access to a higher credit limit after you make the first five monthly payments on time — a good incentive to maintain a timely payment history (which is essential when you’re trying to raise your credit score). In addition to paying on time, make sure you pay in full, since this card has a very high 26.99% variable APR.
First Tech® Federal Credit Union Platinum Secured Mastercard®
- Rewards 1 point per $1 spent on all purchases
- Welcome bonus None
- Annual fee $0
- Intro APR None
- Regular APR 17.50% variable
- Balance transfer fee None
- Foreign transaction fee None
- Credit needed N/A
Pros
- No annual fee
- $25,000 maximum credit limit, which is one of the highest for secured cards
- No fee charged on purchases made outside the U.S.
Cons
- $500 minimum security deposit, which is higher than average
- Credit union membership is required, but it comes at no added cost
- No clear timeline to upgrade to an unsecured card
If you want (and can afford) a secured card with a high credit limit, consider the First Tech® Federal Credit Union Platinum Secured Mastercard®. This card has no annual fee and offers credit limits as high as $25,000, but you’ll need to make a deposit equivalent to the line of credit you want.
Cardholders also earn 1 point per $1 spent on all purchases made with the Platinum Secured Mastercard®. This is a nice perk since secured cards often lack rewards programs. You can redeem your points for merchandise, travel and charity, according to the First Tech® Federal Credit Union.
This card also comes with an array of added benefits: travel assistance services, travel accident insurance, baggage delay insurance, trip cancellation and trip interruption coverage, roadside assistance, auto rental collision damage waiver, extended warranty protection and purchase protection.
First Tech® is a credit union, so you need to be a member to open this card. Anyone can join through affiliation with select organizations or employers; a relationship with a current member; work for the state of Oregon; live or work in Lane County, Oregon; attend Cogswell Poly Technical College; or join the Community History Museum (CHM) or Financial Fitness Association (FFA). (First Tech pays the membership fee for the CHM and FFA on your behalf.)
Citi® Secured Mastercard® – How does a secured credit card no credit work?
- Rewards This card doesn’t offer cash back, points or miles
- Welcome bonus No current offer
- Annual fee $0
- Intro APR N/A for purchases and balance transfers
- Regular APR 23.99% variable on purchases and balance transfers
- Balance transfer fee $5 or 3% of the amount of each transfer, whichever is greater
- Foreign transaction fee 3%
- Credit needed No credit history
Pros
- No annual fee
- $200 refundable deposit
- Flexibility to change your payment due date
Cons
- No rewards program
- 3% foreign transaction fee
If you’re looking for a basic secured card with one of the lower APRs, the Citi® Secured Mastercard® is your best option from a major bank. There is a 23.99% variable APR, which is quite high, but still lower than the other cards on this list.
There is a typical $200 security deposit and no annual fee. Be aware purchases made outside the U.S. incur a 3% fee, so this isn’t the best option for traveling overseas. This card doesn’t offer rewards, but that can be a good thing if you’re building credit since you won’t be tempted to overspend.
Cardholders can also benefit from Citi Entertainment access, which provides early access to presales and premium seating for a variety of entertainment events, such as concerts and sporting events.
DCU Visa® Platinum Secured Credit Card – Best Secured Credit Cards
- Rewards None
- Welcome bonus None
- Annual fee $0
- Intro APR None
- Regular APR 13.00% variable
- Balance transfer fee None
- Foreign transaction fee 3%
- Credit needed No credit history
Pros
- No annual fee
- 13.00% variable APR
Cons
- $500 minimum security deposit, which is higher than average
- Credit union membership required, which may cost a minimum of $10 if you don’t qualify
- 3% foreign transaction fee
- No rewards program
- No clear timeline to upgrade to an unsecured card
The DCU Visa® Platinum Secured Credit Card offers one of the lowest interest rates for a no-annual-fee secured card at 13.00% variable.
While we don’t recommend carrying a balance month-to-month (especially when you’re trying to build or rebuild credit), it can be a good idea to choose a low interest secured card if you have a history of carrying balances or you’re looking for a safety net.
There is a higher-than-average $500 minimum security deposit to open the card. But it does come with some additional perks, including travel insurance, auto rental collision damage waiver and extended warranty protection.
Membership to the Digital Federal Credit Union is required, but anyone can join in one of several ways: if you’re a friend or family member of a DCU member, live in select communities, work for select employers or make a one-time contribution (as low as $10) to a participating organization.
SDFCU Savings Secured Visa Platinum Card – Best Secured Credit Cards
- Rewards 1 Flexpoint per $1 spent on all purchases
- Welcome bonus None
- Annual fee $0
- Intro APR None
- Regular APR 13.49% variable
- Balance transfer fee None
- Foreign transaction fee None
- Credit needed No credit history
Pros
- No annual fee
- No fee charged on purchases made outside the U.S.
- Select travel benefits: travel and emergency assistance services, lost luggage reimbursement and auto rental collision damage waiver
- $100,000 maximum credit limit
- Reasonable 13.49% variable APR
Cons
- Credit union membership required, though it comes at no added cost
- No clear timeline to upgrade to an unsecured card
If you’re a frequent traveler, you might want to consider a secured card that offers travel-centric perks and no fees on purchases made outside the U.S. The State Department Federal Credit Union (SDFCU) Savings Secured Visa Platinum Card has those perks, all with no annual fee and a reasonable $250 minimum security deposit.
Cardholders can also benefit from earning 1 Flexpoint per dollar spent on all purchases. This is a nice perk considering secured cards rarely have rewards programs. You can redeem rewards in a variety of ways: travel, event tickets, merchandise, gift cards and charity donations.
This card also comes with select travel benefits, such as travel and emergency assistance services, lost luggage reimbursement and auto rental collision damage waiver — which further enhance the Savings Secured Visa Platinum card’s appeal for travelers.
Since this card is issued by a credit union, membership is required. Anyone can qualify in one of four ways: through the Department of State, an affiliation with select organizations, a relationship with a current member or by joining the American Consumer Council (ACC). Unlike some other credit unions on this list, there’s no cost to join the ACC.
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