Sometimes life happens, and our credit score gets impacted when it does. If you have less-than-perfect credit or a bankruptcy on your record, you’ll need to work on rebuilding credit for the future. One way to rebuild your credit is through the use of a secured credit card. Secured cards are also a way for someone with thin to no credit who is just starting out to build some credit history.
Secured cards require a deposit to be backed against, making them a lower-risk option that those with damaged credit can generally get approved for. Secured cards work similarly to pre-paid credit cards, with a key difference being that they report to the major credit bureaus, and if your payments are made on time, they help to rebuild your credit. Most also require a bank account to be linked to the card, and they have a minimum and maximum deposit requirement.
Secured Card Approval
Though secured cards require security deposits and are designed for individuals seeking to build or repair their credit, approval is not guaranteed. Creditors will typically pull your credit report to identify unacceptable risks that would prevent approval. In addition to your credit report, you’ll need to verify that you have a consistent income to pay your monthly bill.
Best Secured Credit Cards to Rebuild Credit
Here are six secured credit cards to help rebuild and boost your credit.
OpenSky Secured Visa Credit Card
With this secured card, no credit check or bank account is required for qualification, making approval a possibility if you have damaged credit. After making your deposit of between $200 and $3,000, you can pay your bills by wire transfer, debit card, check, or money order, making it a rarity among secured cards—most require a traditional bank account for these purposes.
If a credit check and having a bank account are not a concern for you, there are cheaper options available. Also, you typically cannot upgrade to an unsecured credit card with this option.
Annual Fee: $35
Intro APR: N/A
Regular APR: 20.39% Variable APR
Recommended Credit Score: 300 – 689 (Poor to Average)
Minimum Deposit: $200
Capital One Quicksilver Secured Cash Rewards Credit Card
This $0 annual fee card offers 1.5% cash back on most of your purchases. You also earn 5% cash back on rental cars and hotels when you book through Capital One Travel. The upfront deposit required is $200. With this card, your account is automatically reviewed after six months for a possible upgrade to an unsecured card
Annual Fee: $0
Intro APR: N/A
Regular APR: 28.49% Variable APR
Recommended Credit Score: 300 – 629 (Poor)
Minimum Deposit: N/A
Chime Credit Builder Visa Credit Card
The Chime Credit Builder requires no minimum deposit, nor does it require a credit check or charge an annual fee. Instead of a deposit, the card is backed by an account that’s linked, which you have the ability to add at any point. You cannot spend more than what you have in your account, and the card allows for payment automation, so you’re always on time with payments. However, you have to be a Chime banking customer to secure this card.
If your goal is to learn how to handle credit responsibly, this card might not be for you. The safety features that cause it to freeze customers’ funds are excellent for building credit but not for learning how to handle credit well.
Annual Fee: $0
Intro APR: N/A
Regular APR: N/A
Recommended Credit Score: 300 – 689 (Poor to Average)
Minimum Deposit: N/A
Citi Secured Mastercard
If you have little to no credit, this card could be the best option for you. The Citi Secured Mastercard allows for payment scheduling and free access to your FICO score online.
Annual Fee: $0
Intro APR: N/A
Regular APR: 26.24% Variable APR
Recommended Credit Score: 630 – 589 (Average)
Minimum Deposit: $200
Discover It Secured Credit Card
If you’re ok not having a Visa or MasterCard, then this card might work well for you. It has no annual fee and offers a cash-back reward of 2% on $1,000 or less worth of spending per quarter on gas and restaurants and 1% on all additional spending.
The initial minimum deposit is $200 and has to be paid using a bank account. The account is automatically reviewed after seven months for a possible upgrade to an unsecured card.
Annual Fee: $0
Intro APR: 10.99% intro APR on Balance Transfers for six months
Regular APR: 25.99% Variable APR
Recommended Credit Score: 300 – 629 (Poor)
Minimum Deposit: $200
Petal 1 “No Annual Fee” Visa Credit Card
There are some newer credit cards on the market referred to as no-deposit alternative cards. The Petal 1 “No Annual Fee” Visa Card falls into this category. They use proprietary, nontraditional standards, like employment, bank account balances, and income, to evaluate risk. This card could be good if you have some blemishes on your credit report impacting your score. It offers some rewards with some specific merchants, as well.
Annual Fee: $0
Intro APR: N/A
Regular APR: 22.99% – 32.49% Variable APR
Recommended Credit Score: 300 – 719 (Poor to Good)
Minimum Deposit: $0
Upgrade Capability: Automatically reviewed after seven months for possible upgrade to an unsecured card
The Approval Process
The key steps to the credit approval process for a secured card include applying for the card and receiving approval of credit or rejection. If approved, you’ll fund the deposit, and the issuer will open your account. If you fail to fund the deposit, your application status will be revised from approved to rejected.
After you fund the deposit, you’ll receive your card. From there, you activate it and use it as you would any credit card. You then pay your monthly bill and work towards rebuilding your credit. Eventually, you’ll be able to upgrade to an unsecured card with better terms.
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