Secured credit cards are a great way for those with a limited or bad credit history to improve their credit through responsible use. Finding the right secured card, however, can be tricky. Below is a summary table that makes it much easier. Compare features of the top secured cards, then simply click on your card of choice to visit its online application.
The main factor that determines whether you’re approved for a new credit card is your credit risk. Consumers with established credit histories and high credit scores present a lower risk, so they’re the most likely to be approved for new credit.
Similarly, applicants with no or limited credit histories and/or low credit scores are least likely to be approved due to their perceived high credit risk.
Secured credit cards use a cash deposit as collateral against default, which decreases the risk for the issuer. This means they can approve a wider range of credit types without worrying about losing money if you can't repay your debt. If your credit history — or lack thereof — has made it difficult to qualify for a quality unsecured credit card, secured credit cards may be a better option.
You Must Make a Security Deposit
While you may need to undergo a credit check to determine your eligibility, many secured credit cards will approve a wide range of applicants so long as you can make the required minimum security deposit (typically $200 to $500). In most cases, the credit limit of your secured credit card will be equal to the size of your deposit.
The deposit you make for a secured credit card is fully refundable, and it will only be used by the issuer if you default on your account. If you want to recover your deposit at any time, you can do so by closing your account with a $0 balance.
Your Usage is Reported to the Credit Bureaus to Build Credit
In terms of functionality, a secured credit card works the same as an unsecured credit card. You can make purchases in-store and online, just as you would any other card.
Additionally, most secured credit card issuers report your usage and payment history to the major credit reporting bureaus, just as they would a typical unsecured card. However, this is important to verify before you choose a card, as you’ll need your payment history to be reported to the bureaus to establish and build credit.
By using the secured credit card and making the monthly payments on time and as agreed, you’ll start to build a positive payment history. Depending on your secured credit card issuer, improving your credit and showing responsible card use may result in an automatic upgrade to an unsecured credit card (and the refund of your deposit).
Read the Terms and Conditions
Just as with an unsecured credit card, secured credit card issuers have different terms and conditions. Look at the offers carefully and compare the fees they charge. Some of our top-rated secured cards don’t charge annual fees, like the Discover it® Secured and Capital One® Secured Mastercard®, but many other secured credit cards will charge an annual fee of between $25 and $99, regardless of whether you use the card.
Look for other fees as well, such as monthly account maintenance fees, credit limit increase fees, and late payment fees. These charges can really add up if you’re not aware of them.
Additionally, be sure to note the APR you will be charged, and if there is a grace period for purchases. While it’s always best to pay your bill in full each month — cards with a grace period will allow you to avoid interest entirely this way — a lower APR can be a boon in times when it’s not possible.
Editorial Note: Opinions expressed here are author's alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.
The information on this page was reviewed for accuracy on .
About the Author
Brittney Mayer Finance Contributor
Brittney is a Credit Strategist and Finance Expert who has spent years honing her knowledge of the credit industry both personally and professionally. Brittney applies her more than a decade of research experience to crafting in-depth consumer guides designed to help CardRates readers make better, more informed financial decisions.
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