A regular credit card lets you buy stuff with credit and then pay it back. But if you have minimal or bad credit or a troubled financial history, a regular credit card might not be within reach. Enter the secured credit card.
In a nutshell, a secured credit card requires an upfront security deposit and your "credit limit" is equal to the amount you deposit, so you're essentially borrowing against yourself and paying yourself back when you make your monthly payment -- kind of like a prepaid card. It's an arrangement that's particularly useful as a credit builder account for someone who needs to show a credit bureau that they can reliably pay a bill each month.
With a secured credit card, if you promptly pay your statement balance each month, you'll be able to watch your credit score improve. In fact, rather than think of it as a credit card, it might be best to consider a secured credit card as a tool to help you build or repair your credit. Be wary, though, because if you don't pay off that balance each month, you could end up with an astronomically high interest rate.
As such, our picks for the best secured credit card have two important features: no annual fee and the opportunity to recover your deposit and transition to a conventional, unsecured card once your credit is in better shape. We've also included an option here for those with a particularly low credit score who may be looking to avoid a hard credit check.
So, do you have a cash deposit at the ready sitting in your bank account for a secured credit card? We're here to help you find the best secured credit card that can help you build credit and let you eventually transition to an unsecured credit card. After our recommendations, you'll find answers to frequently asked questions about how a secured credit card works. We'll regularly update this list as new secured credit card options become available.
Best secured credit card
Capital One Secured Credit Card
APR: 26.99% variable
Annual fee: $0
Credit line limits: $200 to $1,000
Deposit refund: Considered for refundable security deposit starting at 6 months
Deposit refund detail: "We will monitor your account, and as you use it responsibly by doing things like making on-time payments, you may be able to earn back your deposit as a statement credit."
Other fees: Late payment: up to $40
Credit check: Soft check for preapproval, hard check with application
The Capital One Secured Credit Card may give you up to $200 in credit when you deposit between $49 and $99 -- making it one of the few secured cards to offer actual credit. (Your particular terms depend on your specific application and credit score.) And this card checks all of the boxes: $0 annual fee, modest minimum security deposit of $49 -- and the opportunity to get your minimum deposit back after you promptly pay your statement for six months. Also nice: Capital One will preapprove you with a soft credit check, providing a risk-free peek at eligibility before you submit an official application to the credit card company.
Best secured credit card with a higher credit line limit
APR: 22.99% variable
Annual fee: $0
Credit line limits: $300 to $4,900
Deposit refund: Periodic review
Deposit refund detail: "We'll 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."
Other fees: Late payment: up to $40; returned payment: up to $29
Credit check: Hard check with application
The BankAmericard Secured Credit Card offers the table stakes: a $0 annual fee and an opportunity to get your deposit back and transition to a standard Visa credit card account. The only real potential drawback is the slightly higher minimum credit line: $300, which is $100 more than our other top picks. Still, this is a solid offering from a well-known national bank with solid online tools and plenty of retail locations.
Best secured credit card with rewards
APR: 22.99% variable
Annual fee: $0
Credit line limits: $200 to $2,500
Deposit refund: Monthly review starting at eight months
Deposit refund detail: "Automatic monthly reviews at eight months to see if your account qualifies to 'graduate' after showing responsible use of all your credit over time."
Other fees: Late payment: up to $40 (waived for first late payment); returned payment: up to $40
Credit check: Hard check with application
Another excellent choice, the Discover it Secured credit card offers a $0 annual fee and $200 minimum credit line. You may qualify for a deposit refund after eight months of paying your statement in full and on time.
It's worth noting that this card also features a rewards program -- though be cautioned that it could tempt you to spend more than you can afford. And if you're approved for the card with a lower credit line limit, the 2% cash back at gas stations and restaurants (on up to $1,000 in combined quarterly purchases, then 1%) and 1% cash back on other purchases won't amount to much, anyway.
Best secured credit card with no credit check required
APR: 17.39% variable
Annual fee: $35
Credit line limits: $200 to $3,000
Deposit refund: None
Deposit refund detail: N/A
Other fees: Late payment: up to $38; returned payment: up to $25
Credit check: None
The OpenSky Secured credit card application doesn't require a credit check, making it a good option -- and perhaps a last resort -- for people with low credit scores. If you've been declined by another issuer, this card may be a good second choice.
But you'll have to pay the price: There's a $35 annual fee. And given that part of the credit rehab process is leaving credit accounts open for as long as possible -- in order to build back a credit history and work toward lower credit utilization, you may end up paying that annual fee for years to come. Still, if the card helps rebuild your credit, it's well worth the cost.
Best secured credit cards, compared
| Card issuer | Capital One Secured | BankAmericard Secured | Discover it Secured | OpenSky Secured |
|---|---|---|---|---|
| Annual fee | None | None | None | $35 |
| APR | 26.99% variable | 22.99% variable | 22.99% variable | 17.39% variable |
| Credit line limits | $200 to $1,000 | $300 to $4,900 | $200 to $2,500 | $200 to $3,000 |
| Deposit refund | Considered for higher credit line and deposit refund starting at 6 months | Periodic review of account for deposit refund | Monthly review starting at 8 months to refund deposit | None |
| Other fees | Late payment: up to $40 | Late payment: up to $40; returned payment: up to $29 | Late payment: up to $40 (waived for first late payment); returned payment: up to $40 | Late payment: up to $38; returned payment: up to $25 |
| Credit check type | Soft for preapproval, hard with application | Hard | Hard | None |
What is a secured credit card?
This type of credit card usually requires an upfront deposit equal to the credit limit. So, for a card with a credit limit of $500, you'd need to deposit $500. Secured credit cards are still subject to late and rejected payment fees and generate interest on outstanding balances. As such, a secured credit card presents lower risk to card issuers and allows them to extend lines of credit to borrowers who don't meet the minimum credit score threshold.
How much should I deposit when I open an account?
We recommend depositing no more than $300 to $400 for a secured credit card. Given that you want to keep your credit utilization low by paying off the account two or three times per month, the actual limit doesn't matter too much. Any additional funds should be placed in a bank account (either checking or savings) to ensure you're keeping your card balance at $0.
How is my credit score calculated?
Credit scores are calculated by looking at a variety of factors related to your personal credit, including length of credit history, payment history, amounts owed, new credit and credit mix. The exact weight of each factor depends on the score model (FICO, VantageScore, or other) and your own credit history. If, for example, you have no credit history, the other factors may be weighted more heavily. (Check out this article for more information on credit scores.)
How long does it take to improve my credit score?
After opening a secured credit card account, it will take around one to two months for the secured credit card issuer to report it to a major credit bureau, at which point it will begin impacting your credit report and your credit score. Then it takes several additional months before the account's activity is substantial enough to make a difference. If you maintain a low or $0 balance and manage the rest of your financial house responsibly, you could raise your score several hundred points in a year or two, but it'll depend on your particular situation. If you have a longer credit history with a number of issues, it will take longer. If you have a shorter history, each month's activity will play a much larger role.
Why do you recommend paying off the account two to three times a month?
By paying off your account more than once a month, you greatly reduce the risk of paying late, missing a payment or getting charged interest for an outstanding balance. We recommend choosing set days to make payments, like the 15th and 30th of every month, or the 10th, 20th and 30th.
How often should I use my secured credit card?
Swipe it two or three times a month to ensure the account is considered active. There's just no reason to use it any more than that, or make it your primary way of paying for things. A secured credit card is a tool for repairing damaged credit from an unsecured card or cards or establishing and building credit. To simplify your finances, it's best to make other purchases with cash or a debit card. Studies show that consumers who pay with credit tend to spend more than they would if they paid with cash, so if you're trying to right the ship or start on the right track, it's best to first establish a budget through cash or debit card purchases to ensure you don't spend beyond that budget.
Should I keep a secured credit card once my credit is in better shape?
Yes. Keeping the account open, active, and with a $0 balance will continue to improve your credit score as the length of the credit history grows and you maintain a low credit utilization.
Is there ever a situation when I would use a secured credit card like a balance transfer credit card?
No. We don't ever recommend transferring a balance to a secured credit card. Some websites may tout particular secured credit cards for introductory 0% APR offers but we strongly advise against transferring a balance. If you're looking for a card for balance transfers, check out our article on the best balance transfer credit cards or look into other ways of dealing with credit card debt.
More credit card recommendations
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