NerdWallet’s Best Secured Credit Cards, Spring 2013

Many people think secured cards are just for those with bad credit, but that’s simply not the case. To get a decent credit card, you’ll need a good credit score, right? Well, secured cards are one way those with little or no credit can get onto the fast track to an unsecured credit card. Whether you have bad credit or are just looking for a way to get your foot in the door, a secured credit card can help you build a strong, healthy credit history.

Secured cards require a refundable deposit equal to the amount of your credit limit so that banks are lending to you without risk.  If you’re on your best behavior and give lenders a reason to trust you, you could be graduating to a regular credit card in no time. Here are NerdWallet’s picks for the best secured credit cards.

Capital One Secured Credit Card

The Capital One® Secured Mastercard® is one of the best secured cards out there, because for a low initial deposit of $49, $99 or $200 (depending on your credit history) you’ll get a limit of $200. Most secured cards require upfront deposits of $300 or more. Moreover, its $29 annual fee is among the lowest in the business. And when it comes time to graduate to an unsecured card, you can definitely do worse than Capital One’s average credit offers.

US Bank Secured Visa

The US Bank Secured is a reliable card for those with an aversion to fees. There is an average annual fee attached of $35, but you’ll benefit from no added monthly or one-time fees like many cards on the market. It does have a higher purchase and balance transfer APR at 20.99%, but it redeems itself elsewhere. The US Bank Secured offers car rental discounts from major companies like Avis, Alamo, Hertz and National to name a few. In addition, you’ll get fraud protection so you can make your purchases without worry. Your security deposit can range between $300 and $5,000, and is kept in an interest-earning savings account. If you really play your cards right, you can move up to an unsecured card in less than a year with the US Bank Secured Visa card.

For immigrants

If you’re an immigrant, the Capital One® Cash Rewards for Newcomers can be perfect for you. Though a secured credit card, it’s intended for people who left their credit histories behind when they came to the US, rather than those who have bad credit. It has no annual fee and offers 2% rewards on travel and 1% elsewhere. Even better, there’s no foreign transaction fee, so you’ll save 3% of every purchase when you go back home. If you’re new to the US, this is a cheap, rewarding way to establish credit.

Is a secured card right for you?

If you want to build or boost your credit score without a co-signer, a secured credit card might be your only option. Don’t let the annual fees or security deposits turn you off – this is a very important step in the long process of building credit. One road to steer clear of, though, is the prepaid debit route. They don’t affect your credit score since you aren’t borrowing money, but you’ll want to particularly stay away because they’re riddled with fees. The only card we’d even come close to recommending is the American Express prepaid card. If you’re a responsible cardholder, you’ll be able to apply for a charge card, which helps build your credit without the risk of carrying a balance. But look to the secured cards first – they’re made for people looking to rebuild credit, those who are recent immigrants or even students without an income or co-signer.