Secured Credit Cards Are a Great Option if You Have a Low Credit Score
Of the credit card options out there designed for people with bad, limited, poor, or damaged, credit, secured credit cards are near the top of the list for many. Which card you get will depend on a number of factors, but they all offer similar structures for establishing or reestablishing a consistent on-time payment history — a critical component of a high credit score.
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What is a Secured Credit Card?
Unlike regular, unsecured credit cards, a secured credit card requires a refundable deposit when you open the account. Your credit limit will be the same as this deposit, and you can make an initial deposit as small as $200. If you fail to pay your bill, the lender can take your deposit to pay the debt.
After typically one year of responsible use (read: low credit utilization and on-time payments), some secured credit cards can be converted to unsecured credit cards, while others can’t. But, once you’ve raised your credit score with the secured credit card, you can apply for an unsecured card elsewhere, and close out your secured card. Your deposit will be refunded to you in either case, assuming your account is in good standing.
Which Secured Cards Can You Apply For?
There are a lot of cards out there designed for people with bad credit, but we’ve researched them all and have listed our top picks below. Or, take a look at our complete list of secured credit cards. Keep in mind that many cards require funding via a checking account, while other card deposits can be made via debit or credit card. You’ll also need to provide the standard identity verification and income information that you would with any credit card.
The Green Dot primor® Visa® Gold Secured Credit Card
While we generally don’t recommend carrying a balance on any credit card, this card offers a 9.99% APR as of May 2019. It also has a comparatively low annual fee of $49. This card reports to the 3 major credit bureaus, which is a requirement for building your credit score over time, and a feature you should look for in any secured card. Also, the Green Dot primor® Visa® Gold Secured Credit Card has no minimum credit score requirement, making it accessible to people with limited credit history.
The OpenSky® Secured Visa® Credit Card
This card requires no credit check which is why it’s a top pick here on CreditCardRewards. It also doesn’t require a bank account in order to apply, and we know that can be an issue for some people. As is the case with all of our top picks, the OpenSky® Secured Visa® Credit Card reports to all 3 major bureaus. While it does have an annual fee, it is only $35.
Applied Bank® Secured Visa® Gold Preferred® Credit Card
The Applied Bank® Secured Visa® Gold Preferred® Credit Card has no minimum credit score requirement, and also does not require a credit check for approval. Like the Green Dot, this card has a low, fixed APR of 9.99% as of May 2019, making it a top choice among secured credit cards. The annual fee comes in at $48, which again is low when compared to other cards on the market.
Why Making Your Deposit after Applying is Important
Some secured credit cards you apply for will do a credit check. As we all know by now, any time someone runs a “hard pull” on your credit report, your score will drop a few points. Now, this would be quickly offset by making some on-time payments to a lender or creditor, so it’s important to make your secured credit card deposit and/or pay the program fee so that you can start making your on-time payments and offset the credit check made on your card application. After all, isn’t the goal to start increasing your credit score through responsible use and on-time payments??
