If you have a bad credit history or very little (or no) credit history, banks may approve you for a secured credit card that requires a refundable security deposit but otherwise works just like any other credit card (meaning you pay your balance each month, payments are NOT taken from your deposit). Secured credit cards can help you build credit if you use them responsibly, and they are one of our favorite ways to do so.
Below we offer our list of the 5 best secured cards on the market today. We are especially partial to cards that offer the possibility of returning your security deposit after a certain period of on-time payments, allowing you to then use that card as an unsecured credit card.
- First National Bank of Omaha Secured Visa – Put down a deposit of anywhere from $300 to $5000 and get a credit line of the same size. From their site: “You may be able to get your deposit back automatically in as little as 11 months when you maintain a good payment history with us (subject to credit approval).” No annual fee. Interest rate: 19.49%.
- Discover It Secured Card – Deposit anywhere from $200 to $2500 and get a credit line of equal size. Also offers a modest cash back reward program: a 1% rebate on most purchases, and 2% on restaurant and gas purchases (on up $1000 in such purchases per calendar quarter). A good payment history can help in building credit, and “Using credit responsibly across all of your credit cards and loans, including Discover and others, may qualify you to get your security deposit back.” No annual fee. Interest rate of 24.49%.
- Capital One Secured MasterCard – Get a credit line of $200 to start, after you deposit $200 (in some cases you may be able to deposit a little less). If you make your first 5 payments on time, Capital One might increase your credit line without a further deposit. No annual fee. Interest rate: 24.99%.
- BankAmericard Secured Card – Put down a security deposit of anywhere from $300 to $4900 and get a credit line of that same amount. Also, they will “periodically review your account and, based on your overall credit history (including your account with us and other credit cards and loans), you may qualify to have your security deposit returned.” Includes a $39 annual fee (not part of the security deposit). Interest rate: 21.74%.
- Citi Secured Mastercard – You put down a deposit anywhere from $200 to $2500 and your credit limit equals the amount you deposited. No annual fee and a 23.99% interest rate. Citi does not mention the possibility of an upgrade to an unsecured card, which makes this one a bit less desirable in our opinion.
- U.S. Bank Secured Visa – Your security deposit is put into a U.S. Bank savings account with this secured card, so you do earn a very little bit of interest. Has an annual fee of $29 (not part of the security deposit). Interest rate: 20.49%. There is no mention on their website of a possible upgrade to unsecured status in the future, so don’t get your hopes up there.