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

secured credit cards cashIt’s not easy to repair damaged credit after a series of missed payments or bankruptcy, but with the help of a secured credit card, it is possible. And while secured credit cards sometimes have a bad reputation for having heavy fees and high interest rates (which can exacerbate debt), the right card can help you build your credit history.

When choosing a secured credit card, it is important to pay attention to fees, and verify that your payment history will be reported to the credit bureaus. Prepaid cards function similarly to debit cards – therefore, your usage of a prepaid card is not reported to the bureaus, doing nothing to improve your credit.

How Secured Credit Cards Work

When you open a secured credit card, you’re required to put down a security deposit that’s held in a separate account. In the event that you don’t pay the balance on your card, the deposit is used to pay off the amount owed. The amount of the security deposit varies depending on the card, but it’s usually the same as the card’s available credit limit.

For instance, if your credit limit on the card is $500, your security deposit would likely be $500. That said, if you want to increase your credit limit, many secured credit cards allow you to deposit additional funds into the security account. Also, many cards automatically increase your credit limit over time as you develop a positive credit history.

Aside from the required security deposit, secured credit cards function like any other card. You receive a billing statement each month that you’re responsible for paying, and these payments are reported to the credit bureaus. By paying the bill in good faith each month, you rebuild or establish credit – but failure to make timely payments results in negative credit history.

The following credit cards are the best secured credit cards for building and reestablishing credit.

Top Secured Credit Cards

1. Capital One Secured MasterCard

Minimal Fees; Credit Limit Increases Without Additional Deposits

capital one secured mastercardThe Capital One Secured MasterCard is one of the only secured credit cards that does not charge a foreign transaction fee. Furthermore, the Capital One Secured MasterCard is one of the best secured cards because it has few fees and gives you the ability to easily qualify for credit limit increases. These increases don’t require additional deposits as long as payments are on time and you stay within established credit limits.

  • How the Card Works. After approval, you have 80 days to make a refundable deposit of $49, $99, or $200, depending on your creditworthiness. After making the deposit, you’re issued a card with a limit of at least $200. You may increase your line of credit by making deposits to the card online or over the phone in $20 increments, up to $3,000. Each dollar deposited adds a dollar to your existing credit limit, but you may also qualify for credit limit increases based on your payment history and creditworthiness.
  • Fees. The annual fee for the Capital One Secured MasterCard is $29. There is no balance transfer fee. Late payment fees are up to $19, and returned payment fees are up to $35. There is no over-limit fee or foreign transaction fee.
  • APR. The APR is 22.9% for purchases and balance transfers. The APR varies with the prime rate. There is no penalty APR for late payments.
  • Other Benefits. The Capital One Secured MasterCard looks like a regular credit card, but you can customize the card with an image of your choice. You also have free access to CreditInform, which includes unlimited access to Monthly Score (which enables you to track your credit score), as well as other credit tools and resources that help you manage your credit and protect yourself from identity theft.


2. U.S. Bank Secured Visa®

Earn Interest on Your Security Deposit; Graduate to an Unsecured Credit Card

us bank secured visaThe U.S. Bank Secured Visa is a low-fee secured credit card that gives you the chance to qualify for an unsecured card after 12 months of responsible card use. Additionally, the security deposit made to the U.S. Bank Secured Visa is held in an interest-earning savings account.

  • How the Card Works. Your initial deposit is used to open an interest-earning U.S. Bank savings account. The amount of your deposit is equal to the credit limit on your credit card, ranging from $300 to $5,000. You can fund your card through a checking or savings account. After responsibly managing your account for 12 months, you may be offered an unsecured credit card.
  • Fees. The annual fee for the U.S. Bank Secured Visa card is $35. There’s an introductory balance transfer fee of 3% or $5, whichever is greater, when you transfer a balance on your application. After that, the fee increases to 4% or $5, whichever is greater. The foreign transaction fee is 2% of purchases made in U.S. dollars, or 3% of purchases made in a foreign currency. The late payment and returned payment fees are up to $35.
  • APR. The APR is 20.99% for purchases and balance transfers, an amount that varies with the prime rate. There is no penalty APR.
  • Other Benefits. The U.S. Bank Secured Visa credit card does not include any extra benefits; however, it’s the only secured card that enables you to earn interest on your security deposit.


3. Merrick Bank Secured Visa®

Low APR; Credit Limit Increases Without Additional Deposits

merrick bank secured cardThe Merrick Bank Secured Visa offers one of the lowest APRs of all secured credit cards, as well as the opportunity to earn credit limit increases without depositing more money or paying additional fees. As long as you make your payments on time and stay within your credit limit, you may eventually be eligible for an unsecured card. Although it’s not a well-known credit card, the Merrick Bank Secured Visa offers a lower APR and foreign transaction fee than the BankAmericard and Wells Fargo secured credit cards.

  • How the Card Works. Your credit limit is equal to the amount of your security deposit – an amount between $200 and $3,000. The annual fee of $36 is deducted from the amount of credit initially available. For example, if you make a security deposit of $200, after your annual fee is deducted from your deposit, your credit limit is $164. Your account is reviewed periodically, and you may qualify for credit limit increases without any additional payments or fees.
  • Fees. The annual fee is $36. Balances cannot be transferred to the Merrick Bank Secured Visa. The foreign transaction fee is 2%, and the late payment fee, over-limit fee, and returned payment fee are each up to $35.
  • APR. The APR on purchases is 17.45%, an amount that varies with the prime rate. There’s no penalty APR, and you cannot transfer balances to this credit card.
  • Other Benefits. Merrick Bank provides access to The Money Smart Financial Education Center, which includes helpful resources for saving money, buying a home, and improving your credit score. This includes tips for using your credit card and establishing a positive credit history.


4. Wells Fargo Secured Card

Low Fees; Low APR; Receive a Refund of the Deposit and Transfer to an Unsecured Card

wells fargo secured visa cardThe Wells Fargo Secured card carries a lower annual fee and APR than most other secured cards. Your deposit is held in a collateral account, which doesn’t earn interest, but does enable you to receive a refund of your deposit and a transfer to an unsecured credit card after positive performance with the secured card.

  • How the Card Works. Your credit limit ranges from $300 to $10,000, depending on how much you deposit. Your deposit is transferred into a collateral account, where your funds are held to ensure that your credit card balance is paid. Your account is reviewed periodically, and with positive credit history, you may become eligible for an unsecured credit card and a refund of your deposit.
  • Fees. The Wells Fargo Secured credit card has an annual fee of $25. Balance transfers are 5% or $5, whichever is greater. The foreign transaction fee is 3%, and the late payment fee and the returned payment fee are each up to $35.
  • APR. The APR is 18.99% for purchases and balance transfers, and varies with the prime rate. There is no penalty APR.
  • Other Benefits. The Wells Fargo Secured card also includes free online credit education courses and tips for managing credit. There are also tools available (such as My Spending Report and Budget Watch) that help you track your finances.


5. BankAmericard® Secured Card

Use the Card Without a Deposit After 12 Months

bank americard secured visa cardThe BankAmericard Secured credit card fees and APR are fairly standard among secured credit cards, but this card does feature the added benefit of building and repairing your credit with one of the nation’s top financial institutions. This is particularly beneficial if you’re a Bank of America customer who prefers to work with one bank. This card also offers you the opportunity to receive a security deposit refund after 12 months, allowing you to continue to use the card as a standard unsecured credit card.

  • How the Card Works. New cardholders are given a credit limit ranging from $300 to $4,900, depending on income information and security deposit. In other words, your credit limit could be approved at an amount greater than your deposit. After 12 months, you may qualify to have your security deposit refunded while you continue to use your credit card as an unsecured card.
  • Fees. The annual fee for the BankAmericard Secured card is $39. Balance transfers are 3% or $10, whichever is greater. The foreign transaction fee is 3%. The late payment fee is up to $35, and the returned payment fee is up to $25.
  • APR. The APR is 20.24% for purchases and balance transfers, an amount that varies with the prime rate. There is a penalty APR of up to 29.99% if you make a late payment.
  • Other Benefits. The BankAmericard Secured credit card includes access to credit education on budgeting and wise credit card usage.


Tips for Choosing a Secured Credit Card

Rebuilding your credit history when you have bad credit can be frustrating. You can’t get a credit card without a decent credit score, and conversely, you can’t improve your score without opening new accounts. The credit card industry markets many cards to people with bad credit, and to people trying to rebuild their credit. Some predatory banks try to take advantage of consumers desperate to obtain credit cards. Because of this, consumers must exercise caution when shopping for a card in the sub-prime market.

If you want to get back on your feet after a credit disaster, keep the following things in mind as you search for a credit card:

1. Stick with a Reputable Bank
Don’t fall prey to prestigious-sounding institutions that offer gold or platinum-colored cards. Many disreputable companies in the credit card industry boast impressive sounding names and credit cards. Instead, apply for a credit card from one of the major banks.

2. Look Out for Fee Traps
Predatory banks bury worrisome details about their credit card offerings in the fine print. Review all the terms and conditions for offers before applying for credit cards. Things to avoid include monthly maintenance fees, high interest rates, application fees, and account set-up fees.

3. Rebuild Your Credit
When you have bad credit, apply for a credit card to restore your credit worthiness. Look for a card that reports your payments to all three major credit bureaus. Once you receive your card, pay your balances in full and on time each month. Failing to make payments on time will negatively impact your credit report.

4. Make Sure You Have a Grace Period
Do not apply for any card that does not offer a grace period. The grace period is the amount of time between your statement closing date and your payment due date. You can avoid paying interest on the card when you pay your entire balance before the due date. Without a grace period, you owe interest on every purchase made, making it difficult to improve your credit score.

5. Avoid Annual Fees
Most secured cards have annual fees, but some companies do not charge annual fees for the first year. Avoid credit cards with hefty annual fees, a sure sign the secured cards are just a predatory bank’s products.

6. Don’t Chase Credit Card Rewards
People with good credit can apply for rewards credit cards. If you do not have good credit, however, and cannot apply for the best cash back rewards cards, consider this a blessing in disguise. Until you can improve your credit history, you don’t need any incentives to spend more money.

7. Consider Credit Card Benefits
Credit cards offer fantastic benefits only available to credit cardholders. By law, you receive protection from fraudulent charges when using a credit card. You can also issue a credit card chargeback if you do not receive the goods or services that you paid for with your card. In addition, a secured card may offer valuable services like rental car insurance.

8. Earn Interest on Your Deposit
Secured card companies typically require that customers deposit funds with the company, in order to activate the cards. Some secured credit cards allow users to accrue interest on their deposits. If you use a secured card, take advantage of this valuable feature.

9. Card Application Acceptance
Making a security deposit does not guarantee acceptance of your secured card application. Bank of America and Wells Fargo require that applicants have not declared bankruptcy for one year, and Wells Fargo also requires that applicants do not have any unsettled liens. Capital One takes into account an applicant’s ability to pay, while Orchard/HSBC approves every application, once they confirm the identity of the applicant.

Final Word

Choosing a secured credit card may seem like a complicated process, but it’s much easier than you think. The most important factors to consider are the cost of the card and its fees, the APR, and whether payments are reported to all three credit bureaus.

If you already have an account with a bank that offers secured credit cards, you may want to check with them to see what they have to offer. Once you’ve opened an account, you just need to make your payments on time and stay within your credit limit. Before you know it, you’ll be well on your way to establishing a positive credit history.

Do you have experience using a secured credit card?

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.

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Categories: Credit and Debt, Credit Cards, Get Out of Debt

  • Achmad

    How is everyone in this world can be easy to have and make a credit card even if they do not have a number of social as in AMERICAN? Can the USA state solve this problem.
    We are people INDEPENDENT.

  • Thomas Vargo

    If you have bad credit, your most likely going to have get a secured card. If you do get a unsecured credit card the credit limit will be low and the interest rate will be high.

    Your best option is to use a free consumer organization such as “Bad Credit MD” to locate the best card for your situation.

  • http://www.doctorofcredit.com/ doctorofcredit

    Just so you know, you can add BoA’s cash rewards to their secured card, this’ll give people with a low credit score (or no credit history) a chance to earn some cash back.

  • http://paycreditcardsonline.com Danny

    The security of credit cards is a huge deal. This is something that I want to do, you need to find better ways to deal with this.

  • TimBrunellivo

    like Clifford said I didn’t even know that a stay at home mom can profit $4409 in 4 weeks on the internet . you can try here

  • Nikki

    How old is this article? It mentions Orchard Bank and they are owned by Capital One now.

  • bouncingback21

    update ….I’m 30 days post discharge chapter7 and was approved for a Comerica Secured CC through Elan Financial Services

  • Guest

    jfty… I started working from home, doing various simple jobs which only required desktop or laptop computer and internet access and I couldn’t be happier… It’s been six months since i started this and i made so far total of 36,000 dollars… Basicly i profit about 80 dollars every hour and work for 3 to 4 hours a day.And the best part about this job is that you can decide when to work yourself and for how long and you get a paycheck weekly.—> ????? < W­­­W­­­W­­­.­­­J­­­o­­­b­­­s400­­.­­­C­­­O­­­M??????????

  • jw sears

    Thank you, followed all advise, have 5 cards approved. Small fee for a piece of mind.

  • Jé Be (Here but Gone)

    To Whom It May Concern:

    The Bank of the Divided States of
    America is a joke! What a waste of time. On 11/24/15 I learned
    the location in 30092 is a mess.

    Let me first say I realized I
    do not “need” a secured credit card as much as I thought I did. My ignorance of what a secured credit card
    was and how it functioned must only reside in the theoretical realm and not reality.

    I was recently given different
    credit card accounts; I have a FICO of
    682 so no real issues there. I have never been late on any of my credit
    card payments with any bank. In July my car did fall behind (unexpected family
    expenses, funeral, lost wages, etc.) But having had the loan for 4 years in my
    final year, this was the first blemish. Anyways I was denied for the unsecured credit card with Bank of the Divided States of America two
    weeks ago.

    I have multiple bank
    accounts/credit unions and while I have plenty of credit, I wanted a credit
    card from a major bank other than Chase
    and Capital One. So my credit union
    offers a secured visa, PNC offers, as well as SunTrust. However what I liked about Bank of Divided
    States of America is they have a graduate well stipulated notation that your
    account may be reviewed and may qualify for a unsecured card 6-12 months, not a guarantee but I preferred this option versus the aforementioned
    only providing a secured card where you still have to apply separately for an
    unsecured account at a later date.

    I go into the branch; I do not
    bank there, provided her $300 dollars
    cash. She had the audacity to
    ask me was I a United States Citizen
    (WTF!) I have never been asked that. Anyways, she completes the application,
    converted my cash into a cashier’s check, and stated she couldn’t
    set up the online account yet until I got the card in the mail which I should receive in 7-10 business days
    and to come back in to activate online access. She was being very coy, sarcastic, and patronizing,
    however I figured she is miserable and looked it so I paid her
    no mind (I’m not a bully), even when she rudely
    laid down my I.D and Capital One credit card for “verification” after I had handed it to her jarred nail n teeth having self, where is the customer service? If someone hands you something you hand it

    I get home and something told
    me to log on and check the status of my
    application. It showed denied for
    both the unsecured card from 2 weeks ago, and the one from today.

    1. My
    first thought, why thee p h u c k didn’t she tell me this when I was sitting in
    her face -_- she was trying to be funny and a pure b I tch, when she told me
    all the aforementioned THEN proceeded to take my cash deposit as if I were
    approved!? Why take my money if I wasn’t approved? Why not tell me THERE and
    give ME back my money where I can go bank with someone who wants to bank with
    me. It is no big deal; you say no they say yes. I obviously am not hard up for
    the money or why else would I have put it on a “secured” credit card o_0 it is
    the principle.

    I know from recent credit approvals, I have fraud alert and that deters instant approvals etc. so I
    presumed that may have been the issue. I
    called into the secured credit card department and spoke with two female agents
    who referenced a past due auto loan and utilization as the reason for denial
    for the secured credit card. Dumbfounded
    as I was, I proceeded to say yes, my auto loan did fall behind back in July due
    to unexpected family expenses, death in family, and loss wages, I have had the
    loan for 4 years, in my final year, and this is the first time I got behind. In
    regards to my credit card utilization I do carry a balance on my Amazon card
    for the promotional aspect; however I did remit payment to my credit accounts
    today for $1300 dollars, bringing my utilization
    down from 50% to 30% total. Why
    was my application not manually reconsidered and approved I met the requirements listed on the website.

    2. But
    what does ANY of this have to do with a SECURED
    credit card. Where is the risk o_0. I provide the CASH for my limit to “prove”
    I am credit worthy. If I don’t pay your bank doesn’t lose anything, you have MY
    money. It is contradicting what the h e l l is a secured credit card if it is
    treated like an unsecured credit card for approval o_0. SO you deny me for an unsecured credit card
    less than 2 weeks ago, why would your system run the credit again (hard
    inquiry) when it’s been less than 30 days since I last applied o_0. Credit
    doesn’t change in a two week time period and most reputable banks use the
    credit score 30 days at a time it is 2015 most systems can catch things such as
    this. I applied for a secured credit
    card for a reason, and if the secured and unsecure operate on the credit report
    factor how can one be approved for SECURED credit card and yet DENIED for an
    unsecured and credit has the same effect on both o_0… is secured NOT for
    blemished credit regardless to the severity. Does the security deposit not
    protect the bank from any liability, it’s not like you can spend over the
    approved limit.

    3. I
    called between 3:50pm and 4:00pm per the secured credit card lady so I can get
    my cashier check back before they mail it the next business day. I called and
    someone answered I hear brief typing then the phone and hung up on me !!!!!!! I
    was very infuriated by this! I could have been calling for ANYTHING for their
    safety, an emergency outside the building, etc. and you disconnect the phone on
    me? I called back to back for the 10 minutes and no one picked up the phone. If
    bank hours are 9am to 4pm they should be available for that duration. Is this
    the type of reputation you want for your bank.

    4. I
    will be there bright and early at 8:59am 11/25/15, hopefully to retrieve my d a
    m n money back and handle my business elsewhere where they have a higher level
    of intelligence, respect and competence. From the online reviews the branch
    manager is just a as much a joke so why bother voicing my genuine concerns.
    Perhaps this is a blessing in disguise. Hopefully all goes well and I retrieve
    my cashier check back instead of having to wait for MY money back in the mail.
    This is so stupid, I am so pissed!

    you can tell her I said it…

  • MizzHotBlaze

    I think this article is old because there are plenty of secured cards with no Annual fee and cash back rewards like the Discover card for example