If you have bad credit and are looking to rebuild your credit score, a secured credit card can be a valuable tool. Secured credit cards require a security deposit, which acts as collateral and usually determines your credit limit. Since the issuer has this deposit as a safety net, they are more likely to approve applications even from those with bad credit. This article will help you find the best secured credit card for bad credit.
Note: The information in this article is based on data available as of September 2021 and can change over time. Please check with the card issuers for the most current information.
What to Look for in a Secured Credit Card
When looking for the best secured credit card for bad credit, consider the following factors:
- Low or No Annual Fees: Look for a card with low or no annual fees to minimize costs.
- Reporting to Credit Bureaus: Ensure the card issuer reports your activity to the three major credit bureaus. This is crucial for rebuilding your credit.
- Reasonable APR: Although you should aim to pay the balance in full each month, a reasonable APR is essential in case you need to carry a balance.
- Graduation to an Unsecured Card: Some issuers will let you upgrade to an unsecured card after a period of responsible use.
- Deposit and Credit Limit Options: Look for flexibility in deposit amounts and the possibility of increasing your credit limit without an additional deposit.
Top Secured Credit Cards for Bad Credit
Here are some secured credit cards that are highly regarded for helping individuals with bad credit:
Discover it® Secured
- Annual Fee: $0
- Security Deposit: Minimum of $200
- APR: Check with the issuer for the most current rate.
- Rewards: 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, and unlimited 1% cash back on all other purchases.
- Credit Bureau Reporting: Yes
- Upgrade Options: Discover reviews accounts for possible upgrade to an unsecured card starting at eight months.
Capital One Platinum Secured
- Annual Fee: $0
- Security Deposit: $49, $99, or $200 for an initial credit line of $200, based on your creditworthiness.
- APR: Check with the issuer for the most current rate.
- Rewards: None
- Credit Bureau Reporting: Yes
- Upgrade Options: Capital One periodically reviews accounts for credit limit increases and potential upgrade to an unsecured card.
OpenSky® Secured Visa® Credit Card
- Annual Fee: $35
- Security Deposit: Minimum of $200
- APR: Check with the issuer for the most current rate.
- Rewards: None
- Credit Bureau Reporting: Yes
- Upgrade Options: None, but you can apply for an unsecured card with another issuer after building credit with this card.
Secured Mastercard® from Citi®
- Annual Fee: $0
- Security Deposit: Minimum of $200
- APR: Check with the issuer for the most current rate.
- Rewards: None
- Credit Bureau Reporting: Yes
- Upgrade Options: Citi may periodically check your account for eligibility to upgrade to an unsecured card.
Conclusion
When rebuilding credit with a secured credit card, it’s crucial to make timely payments and keep your credit utilization low. The Discover it® Secured and Capital One Platinum Secured are often cited as top options due to their low fees and upgrade options. The OpenSky® Secured Visa® and Secured Mastercard® from Citi® are also viable options. It’s important to carefully read the terms and conditions and choose the card that best suits your financial situation and goals.
