As much as some people would like to think they can get along without them, the reality is it’s very difficult to get through life without a credit card. However, for people who are trying to establish or rebuild their credit, the frustration is that they can’t always choose between the best credit cards until they demonstrate their creditworthiness.
That’s where a secured credit card can provide the best solution—it has the same attributes and acceptance as a credit card, but good credit history is not required to obtain one. Because it can also help build your credit history, it becomes a stepping stone to obtaining an unsecured credit card.
LendEDU’s 12 Best Secured Credit Cards of 2018
When comparing some of the best secured credit cards, we found these to be the most consumer-friendly:
Note: We are not affiliated with any of the following credit card issuers.
- Discover it Secured Card
- Capital One Secured Mastercard
- OpenSky Secured Visa Credit Card
- BankAmericard Secured Visa Credit Card
- U.S. Bank Secured Visa Credit Card
- Citi Secured Mastercard
- USAA Secured Card Visa Platinum
- State Department EMV Savings Secured Visa Platinum Card
- nRewards Secured Credit Card
- DCU Visa Platinum Secured Credit Card
- First Progress Platinum Prestige Mastercard
- Primor Secured Visa Gold Card
Best All-Around Secured Credit Cards
$0 Annual Fee • $200 - $2,500 Minimum Security Deposit
- Earn 2% cash back on up to $1,000 on restaurant and gas spending each quarter
- Earn 1% cash back on all other purchases made with your card
- There is no annual fee
- The first late fee is waived and there is no penalty APR for paying late
on Discover's secure website
10.99% Intro APR on Balance Transfers for 6 Months
24.99% Variable APR
Discover cards are known for their robust rewards programs, paying cash back on most everyday purchases. And the Discover it Secured Card is no exception, offering 2% cash back on up to $1,000 of restaurant and gas spending per quarter and 1% back on all other purchases. Like its rewards program for unsecured credit cards, the rewards never expire. While a cash-back rewards program shouldn’t be the only reason to consider a secured credit card, Discover offers several more reasons for you to think about.
APR & Fees
There is no annual fee, which is unusual since it also offers a rewards program. It also waives the late fee the first time you miss a payment date, and there is no penalty APR for paying late.
The card’s 24.49% APR is a little on the high side, but it shouldn’t matter if you pay your balance in full every month. Balance transfers are charged 10.99% for the first six months. The card’s minimum deposit of $200 is not the lowest around, nor is its maximum of $2,500 the highest, but it should be fine for most people who are trying to reestablish their credit. The credit line is equal to the amount on deposit. Because the initial deposit must be drawn from a bank account, people without a checking or savings account will not qualify.
$0 Annual Fee • $49 - $200 Minimum Security Deposit
- There are no fees associated with this card
- If you continue to make on-time payments, Capital One will consider you for an upgrade
- Gain access to Capital One's online account management platform, and their CreditWise tool
- Capital One will report your payments to all three credit bureaus
on Capital One's secure website
24.99% Variable APR
Although the Capital One Secured Mastercard has slightly stricter qualifications than other secured credit cards, it can be one of the best to consider if you are concerned about fees. It has none. It does require that you have a checking or savings account, and you are not likely to be approved if you are coming out of bankruptcy. Capital One also looks at your expenses and may not approve you if there isn’t enough cushion between your income and your housing payment.
APR & Fees
Once approved, however, you can deposit as little as $49 and obtain $200 in credit if you have fairly good credit. If you have good credit, a $200 deposit could qualify you for a credit line of up to $3,000. Otherwise, the minimum deposits required for a $200 limit are $99 for fair credit or $200 for less than fair credit. Capital One will monitor your credit, and if your credit score improves, it may increase your credit line. Capital One will monitor your payments as well, and if you make five on time, it will consider you for an upgrade to an unsecured credit card.
The Capital One card has a 24.99% APR on purchases, cash advances, and balance transfers. While that is higher than some other secured cards, it is offset by the absence of an annual fee. Plus, at 25 days, its grace period is long enough to gather the money necessary to pay the balance in full each month to avoid interest charges.
$35 Annual Fee • $200 - $3,000 Minimum Security Deposit
- There is no credit check when applying for this credit card
- You are not required to have a checking account to apply for this card
- Your payments will be reported to all three of the credit bureaus to help you build credit
- Your credit limit is the equivalent of your security deposit
on OpenSky's secure website
18.64% Variable APR
For people with poor credit, the OpenSky Secured Visa Credit Card is a choice worth considering because the bank doesn’t run a credit check, nor does it require a checking account. One weakness of this secured credit card is that it doesn’t offer an upgrade to an unsecured account. However, it does report to all three credit bureaus, which means you will have the opportunity to build a good credit history that will improve your chances of obtaining an unsecured card from another issuer. Your deposit is your credit limit and can range from $200 up to $3,000 depending on your creditworthiness.
APR & Fees
As for the rest of the card’s features, they are about average or reasonable on the basis of costs and other terms. There is an annual fee of $35, which is a bit on the high end. This card comes down hard on late payments with a $27 fee and returned payments with a $25 fee. If you are going to travel outside the country, you might consider leaving this card at home because of its 3% foreign transaction fee.
The card’s APR is somewhat lower than similar cards, at 18.64%. As a small bonus, there is no interest charged during the first billing cycle.
Secured Credit Cards From Major Banks
$39 Annual Fee • $300 - $4,900 Minimum Security Deposit
- This card is a good choice for those looking to build credit with a major bank
- Fees and interest rates are fairly standard
- Your security deposit is returned to you at the end of the first year
on Bank of America's secure website
21.74% Variable APR
The BankAmericard Secured Visa card can be a good choice for people who want to build a relationship with a major bank and have a good opportunity to earn an upgrade to an unsecured credit card. The minimum deposit is $300, but you could be approved for up to $4,900 depending on your income and credit standing.
APR & Fees
The fees and interest charges are fairly standard—$39 for the annual fee and 21.74% for the APR. The cash advance APR is 26.49%. The card also charges 3% on foreign transactions.
$29 Annual Fee • $300 - $5,000 Minimum Security Deposit
- You will have the opportunity to upgrade to an unsecured credit card after 12 months of on-time payments
- There is no penalty APR with this card
- Your credit limit will depend on your deposit
- You will receive a full refund of your security deposit if you qualify for an unsecured card after 12 months
on US Bank's secure website
20.74% Variable APR
U.S. Bank offers an opportunity to work with a major bank to improve your credit and trade up to an unsecured credit card after 12 months of on-time payments.
Unlike BankAmericard, which could boost your credit limit over and above your deposit, the U.S. Bank card sets your limit according to your deposit. The minimum deposit is $300 and the maximum is $5,000. However, U.S Bank offers the advantage of keeping your deposit in an interest-bearing, FDIC-insured savings account.
APR & Fees
The terms and fees are more reasonable than the BankAmericard, with a $29 annual fee and a 20.74% APR. There is no penalty APR, and a longer grace period than most secured credit cards is included, with 24 to 30 days to make a payment before incurring interest charges.
$0 Annual Fee • $200 - $2,500 Minimum Security Deposit
- The credit line matches your security deposit
- Citi may return your security deposit after 18 months of on-time payments
- Has standard fees and interest rates
- This card is an option for those looking to work with a major bank, with the goal of obtaining an unsecured card
on Citi's secure website
24.24% Variable APR
Citigroup is another major bank that offers a secured credit card as a gateway to an unsecured account. The minimum deposit is $200 and the maximum is $2,500, with the credit line equaling the amount of deposit. Deposits are held for a minimum of 18 months, and no interest is earned. Although there is no automatic upgrade available, Citi may return your deposit after 18 months of on-time payments, which in essence means your card is unsecured. Cardholders can apply for a higher limit, lower APR credit card at that time.
In addition to the typical benefits that come with a Mastercard, Citi adds a few more with Trip Cancellation & Interruption Protection and Worldwide Car Rental Insurance.
APR & Fees
The card’s fees and charges are within the typical range, with a $25 annual fee and a 24.24% APR. The penalty APR can get as high as 29.99%, and the cash advance APR is 26.99%. Late payment fees are up to $35.
$35 Annual Fee • $250 - $5,000 Minimum Security Deposit
- This cards includes a PCS and Deployment APR of 4% on balances for up to 12 months while a member is under deployment
- No foreign transaction fees for use overseas
- Members who serve in a qualified military campaign can have the finance charges that accrue during the campaign rebated
- Offers extended warranty protection, travel accident insurance, and collision damage waiver coverage
on USAA's secure website
11.40% - 21.40% Variable APR
The United States Automobile Association (USAA) is a full-service financial company that serves military members and their families. Its mission is to offer military members the highest-quality financial products at the lowest possible cost, and it accomplishes just that with its USAA Secured Card Platinum Visa.
The minimum deposit is $250 and the maximum is $5,000. The security deposit is held in a two-year certificate of deposit earning a variable rate. Members who serve in a qualified military campaign such as the Global War on Terrorism Expeditionary, the Iraq Campaign, or the Afghanistan Campaign can have the finance charges that accrue during the campaign rebated.
In addition to added benefits such as extended warranty protection and travel accident insurance, this card includes collision damage waiver coverage.
APR & Fees
The secured card offers an APR range between 11.40% to 21.40% depending on creditworthiness. Its annual fee of $35 is moderately high, but the card does come with benefits.
This secured credit card includes special benefits available only to military personnel, including a PCS and Deployment APR of 4% on balances for up to 12 months while a member is under deployment. There are no foreign transaction fees for use overseas.
Secured Credit Cards From Credit Unions
Credit unions can oftentimes offer the best secured credit cards when it comes to fees and APRs, but the problem is that you have to be a member to apply for one. If you do belong to a credit union, it should be the first place you look for a secured credit card. If you are not a member of a credit union, some offer the opportunity to join for a one-time, nominal fee.
$0 Annual Fee • $500 Minimum Security Deposit
- With low fees and APRs, this card makes building credit easy
- Earn 1% cash back on all purchases
- Your deposit is your credit limit
- You do not need to be employed by the State Department to apply for this card
on State Department Federal Credit Union's secure website
8.49% - 16.49% Variable APR
You will find the State Department EMV Savings Secured Visa Platinum Card on top of many lists for the best secured credit card. Considering all of the criteria, this card is definitely among the top contenders. Its only drawback is there is no opportunity to graduate to an unsecured credit card. However, its low fee and APR make it very easy to build your credit score quickly, which will enable you to qualify for an unsecured card with another issuer. The great news is you don’t have to be employed by the State Department to apply for the card.
Your deposit is your credit limit, and the minimum is $500. Although there is no opportunity to upgrade to an unsecured account, the absence of an annual fee will enable you to keep this account open after you qualify for another card. The benefit is that keeping an aging credit card account open helps to build your credit score.
Incredibly, the rock bottom cost is not even the best feature of this secured credit card. The State Department secured credit card offers a rewards program that awards points equivalent to 1% cash back on all purchases.
APR & Fees
Starting at 8.49%, this card’s APR is among the lowest on the market for a secured credit card. It’s even lower than most unsecured credit cards. This should not encourage you to carry a balance, but if you have to, it is far more manageable with this APR. There is no annual fee, so as long as you make payments on time and pay your balance in full each month, this card will cost you nothing.
$0 Annual Fee • $500 Minimum Security Deposit
- With a low APR and no annual fee, this card is a friendly option for those trying to build credit
- There are no balance transfer or foreign transaction fees
- Earn one point for every dollar spent
- Points expire after four years
on Navy Federal's secure website
10.49% - 18.00% Variable APR
If you are a member of the military, you can have access to the Navy Federal Secured Card, which is a secured credit card definitely worth considering. Its low APR and zero annual fee make it among the most affordable cards around, and that is sweetened with a rewards program for savings on purchases.
Cardholders can save money with the card rewards program, which awards one point for every dollar spent. Points can be redeemed starting at 1,000 points, and they don’t expire for four years. Five thousand points will get you a $50 gift certificate at Best Buy or Macy’s.
APR & Fees
The card’s 10.49% starting APR is among the lowest of all secured credit cards, which is a big plus if you ever have to carry a balance. While that is the lowest rate available for this card, the actual rate applied could be higher depending on your creditworthiness.
Regardless, the larger focus for secured credit card holders should be on keeping overall costs down while working toward improving their credit, and that’s where this card excels. It has no annual fee, and there are no fees for balance transfers or foreign transactions. For cash advances the fee is $0 at a Navy Federal Credit Union Branch, domestic or foreign, or $.50 at non-branch ATMs.
$0 Annual Fee • See Terms for Security Deposit Information
- This secured credit card allows you to build credit by borrowing against your savings account at lower rates than other cards
- You will receive extended warranty coverage on most purchases
- For any vacations booked with the card, you will receive an additional $500,000 in free travel insurance coverage
on Digital Federal Credit Union's secure website
As low as 13.00% Variable APR
The DCU Platinum Secured Visa comes with all the perks of the conventional DCU Platinum card, plus any dividends from the savings you borrow against. This secured credit card allows holders to build their credit score by borrowing against their savings account at rates considerably lower than other secured cards on the market. Considering many secured credit cards have prohibitive fee structures and higher interest rates in place due to higher-risk clientele, the DCU Platinum is good value.
Cardholders get all the same benefits of the conventional credit card, including the ability to pay online, and they can also take advantage of Apple Pay, Google Pay, and Samsung Pay services. This is a unique feature to this secured credit card.
As with most unsecured credit cards, this secured version provides extended warranty coverage on most purchases made with the card. What this means in practice is that if you buy a new television on the DCU secured credit card, the one-year manufacturer's warranty will automatically double to two years.
Travelers can also take advantage of the secured card’s additional travel protections, such as extended coverage on collision damage or theft on any rental cars paid for on the card. Need extra travel insurance? For any vacations booked with the card, you received an additional $500,000 in free travel insurance coverage. Arriving late? Late arrival is also covered by this card; DCU guarantees it will hold your room until you arrive.
APR & Fees
This card offers rates as low as 13.00% and is very competitve amongst its rivals if what you are interested in is a low APR.
Low APR Secured Credit Cards
Although the low APRs on these secured credit cards seem attractive, that alone might not be enough reason to choose them when compared to others that might offer better terms. These secured cards do report payments to the three credit bureaus, and they don’t require good or even fair credit for approval, but at a $49 annual fee, they can be very expensive for those making a smaller security deposit. People using a secured credit card should try to avoid carrying a balance regardless of the APR. If that can be accomplished, whether the APR is high or low shouldn’t matter.
$49 Annual Fee • $200 - $2,000 Minimum Security Deposit
- This card has one of the lowest APRs for a secured credit card
- Outside of the low APR, this card does not have much to offer
- There is no opprtunity to upgrade to an unsecured credit card after using this card
on First Progress' secure website
9.99% Variable APR
APR & Fees
At 9.99%, its APR is lower than most secured cards except those issued by some credit unions. Unlike with a credit union, however, anyone can apply for this card. At $49, the annual fee is higher than most secured cards, and its minimum and maximum deposits are fairly standard at $200 and $2,000.
$49 Annual Fee • $200 - $5,000 Minimum Security Deposit
- Low APR of 9.99%, which is lower than most secured credit cards
- There is no penalty APR for late payments
on Primor's secure website
9.99% Fixed APR
If you are looking for a secured credit card with a low APR, then this card may be for you. Outside of that, there is not much that this card has to offer.
APR & Fees
The APR on the Primor Secured Visa Gold Card is fixed and low at 9.99%.However, its $49 annual fee is among the highest of the best secured credit cards on this list. Primor will also charge you for late and returned payments up to $29, but there is no penalty APR for late payments. Primor will consider applicants with poor or no credit.
Best Secured Credit Cards Comparison
|Card||Minimum Security Deposit||Annual Fee|
|Discover it Secured Card||$200 - $2,500||$0|
|Capital One Secured Mastercard||$49 - $200||$0|
|OpenSky Secured Visa Credit Card||$200 - $3,000||$35|
|BankAmericard Secured Visa Credit Card||$300 - $4,900||$39|
|U.S. Bank Secured Visa Credit Card||$300 - $5,000||$29|
|Citi Secured Mastercard||$200 - $2,500||$0|
|USAA Secured Card Visa Platinum||$250 - $5,000||$35|
|State Department EMV Savings Secured Visa Platinum Card||$500||$0|
|nRewards Secured Credit Card||$500||$0|
|DCU Visa Platinum Secured Credit Card||See Terms||$0|
|First Progress Platinum Prestige Mastercard||$200 - $2,000||$49|
|Primor Secured Visa Gold Card||$200 - $5,000||$49|
What You Should Know About Secured Credit Cards
How Secured Credit Cards Work?
A secured credit card looks, feels, and acts virtually the same as an unsecured credit card. It is usually issued as a Visa or Mastercard, so it is accepted as such. The only real difference is that the credit line is established by a savings deposit on account with the issuing bank. The deposit, typically in the range of $250 to $2,500, is immediately available as your line of credit, all or in part.
With some secured cards, a percentage of your deposit is held in reserve as a “cushion” should you go over your credit limit or miss a payment. Conversely, there are some banks that may actually add some real credit on top of your secured line and, should you demonstrate a solid payment history, they will increase your credit limit on top of it. When your bank starts increasing your credit limit, you may be ready to apply for an unsecured card.
As with unsecured credit cards, you are charged interest monthly, and there is usually an annual fee. Generally, the interest rate or annual percentage rate (APR) on secured credit cards is lower than that of unsecured cards, as are the annual fees. And, just like a regular card, if you’re late with a payment, you will be charged a late payment fee. So, from that standpoint, secured credit cards do offer the opportunity to learn how to use your credit responsibly.
How Secured Credit Cards Help Build Credit
The most important aspect of a secured card is that your payments are reported to the credit bureaus (you should verify that your issuer does report payments to the credit bureaus). Depending on your overall credit and financial situation, you could build a payment history sufficient enough to qualify for additional credit within a six- to 12-month period.
Your goal should be to convert to an unsecured card as quickly as possible. To that end, it would be important to manage your use of a secured credit card as you would an unsecured card. That means making on-time payments and keeping your balance below 25% of your credit limit. It’s even better to pay it in full each month.
Secured Credit Cards Have Become Popular
You might be surprised to know that secured credit cards have gone mainstream, and their popularity is on the rise, according to a study by the Federal Reserve Bank of Philadelphia. An increasing number of people are using them out of practicality and, perhaps, in pursuit of frugality, which has become fashionable these days.
Secured credit cards have become a go-to for households and businesses that want to create more structure in their budgeting and more effectively manage their cash flow. It can also be a good option for families who want to use this as a starter credit card for their teenage children to help them learn good credit habits.
What most people may not know is that secured credit cards have come a long way since the early days when they were the only option for people without credit. In fact, an increasing number of people are learning that these tools can be an effective financial management tool.
How Secured Credit Cards Have Changed
Low Annual Fees
While they were once notorious for their high account fees, secured credit cards can now be found with fees lower than non-secured cards, or with no fees altogether. The growing interest in secured credit cards has spurred a competition among issuers, so low- or no-fee cards are widely available.
Some bank-issued cards offer an interest-bearing account that puts your deposit balance to work until you spend it.
You won’t even have to think of it as a secured credit card—rather a repository for your paycheck earnings. Most issuers can offer a direct deposit arrangement with your employer.
Earn Rewards on Purchases
An increasing number of secured card issuers are offering rewards and cash-back programs, allowing you to save money while building your credit.
Bank From Home
As with any type of credit card, most secured credit card issuers offer online access to your account, making it very easy to manage your banking, bills, cash flow, and budget.
Fraud and Warranty Protection
One of the more important reasons to use a credit card for any purchase is to gain protection against product defaults. Your money is also protected against the fraudulent use of your card.
What to Look for in a Secured Credit Card
The growing popularity of secured credit cards has increased competition among credit card issuers, which has led to many upgrades in their features and terms. Except for the source of credit, it is difficult to find the distinction between unsecured and secured credit cards. Consumers now have many more choices available to them, which increases the importance of comparing them and not settling for an average card. The following criteria should be used as a basis for comparison.
Credit Bureau Reporting
The primary reason for obtaining a secured card is likely building your credit—which can’t happen if the issuer doesn’t report payments to the credit bureaus. It is important to check to see that the issuer reports payments to all three credit bureaus.
Although most secured credit card accounts start out with a credit limit based on your initial deposit, some issuers allow cardholders to increase their limit by adding to their deposits. Depending on your creditworthiness, some issuers will actually increase the credit limit over and above the deposit amount.
Upgrade to a Credit Card With More Rewards
Some secured credit card issuers include a specific pathway to converting a secured credit card account into an unsecured account based on payment history. The issuers that offer this opportunity will monitor your account and, after six to 12 months of on-time payments, might automatically upgrade your account.
Secured credit card fees have come down substantially, and most offer fees below $40. Several cards have zero annual fees, but they may be laden with smaller hidden fees. Avoid cards that require monthly maintenance or application processing fees.
Generally, the annual percentage rate (APR) on secured credit cards is higher than unsecured credit cards. Although the APR shouldn’t be a major consideration (because secured credit card users should always strive to pay their balance in full each month), many cards offer reasonable rates in the range of 20% to 29%. Some cards can be found with rates below 15%.
Interest on Deposits
Some issuers treat your deposit like a savings account that can earn interest. While it may not be a critical feature, it’s nice to know that your money is working for you while you wait to use it.
Best Secured Credit Cards FAQs
Why Do Secured Credit Cards Rarely Offer Rewards to Cardholders?
The bottom line is that higher-risk customers generally hold secured credit cards; these are customers who have bad or low credit scores or have no credit at all. It's also true that most often secured credit cards have low spending limits. The best rewards credit cards usually have higher interest rates and annual fees. These premium rewards cards often come with spending minimums to reap the most benefits from the rewards.
Unsecured cards are designed to have a low barrier to entry and therefore have lower fees (or no fees) and lower interest rates. Credit card companies just don’t make as much money off their secured credit card customers as they do other unsecured cards. Because of this, they are hesitant to offer rewards for these less profitable accounts.
Will Closing a Secured Credit Card Hurt Your Credit Score?
Closing any credit card can have a small but perceptible impact on your overall credit score. Presumably, you are closing the account to graduate on to a new unsecured card, but you might want to postpone this decision until you've developed a history with the new card.
The three big credit reporting agencies—TransUnion, Equifax, and Experian—rely on a complex calculation to determine your credit score. Two of the components of their calculation may come into play if you decide to cancel any credit card, secured or not. These two elements are the mix of available credit and the impact of any new credit accounts. If you are already trying to improve your credit score, it may not be beneficial to cancel your secured credit card immediately. Instead, pay off the balance and take it out of your wallet.
What Are Your Options if You've Been Turned Down for a Secured Credit Card?
Secured credit cards are meant to offer credit to those who have no credit history or a poor one. But that doesn’t always mean just anyone can get a secured credit card, because ultimately you will still need to meet certain criteria. If you have issues with payment history (which accounts for about 35 percent of your FICO score), or if you have experienced a recent bankruptcy, you could still be denied.
What now? First, don’t keep applying to credit cards, because this will continue to degrade your overall score. Second, consider getting a share-secured loan. These loans are available from some credit unions and are a way to build credit without putting either yourself or your bank at risk.
Share-secured loans rely on a customer deposit, which is then borrowed against. Unlike a checking account or savings account, a share-secured loan helps to build your credit score back up. Some credit unions also offer credit builder loans. These loans are for clients wanting to start rebuilding bad credit and are usually for under $2,000. Speak with your credit union to see what’s available.
Review the Best Secured Credit Cards Before Making Your Final Decision
Even people with the worst credit have an opportunity at some of the best secured credit cards. Although the features and terms may not be the most friendly (e.g., higher annual fee, lower credit limit, higher APR, etc.), there are still options available. If your credit is fair to good, your options open up to secured credit cards with low or no annual fees, lower APRs, and higher credit limits.
Regardless, secured credit cards should be considered for all of their features and terms and which one offers the best opportunity to quickly and affordably build your credit. Any secured credit card should be used strictly with that goal in mind, which means limiting its use, making payments on time, and paying the balance in full each month.