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NerdWallet’s Best Secured Credit Cards, 2015

NerdWallet’s Best Secured Credit Cards, 2015

Whether you have bad credit or you’re building a credit score from scratch, a secured credit card can speed you on your way to better terms. Make on-time payments and borrow carefully, and you may be able to establish positive credit history in a matter of months.

Unlike prepaid debit cards, secured cards can help you establish a credit history, provided that the issuer reports your payments to the credit bureaus. You’re also required to make a deposit as collateral, similar to putting a security deposit down on an apartment. As with a traditional credit card, you have to make monthly payments, too. If you default, your creditor will be able to keep the deposit, but if you close the account in good standing or transfer to an unsecured card, you’ll get your deposit back.

Secured cards are generally easier to qualify for than unsecured credit cards, but it’s still possible to be turned down. Keep in mind that lending standards vary from issuer to issuer.

Here are NerdWallet’s picks for the best secured credit cards.

Digital Federal Credit Union Visa Platinum Secured Credit Card

Digital Federal Credit Union Visa Platinum Secured Credit Card Credit Card
Apply Now

on Digital Federal Credit Union's
secure website

The Digital Federal Credit Union Visa Platinum Secured Credit Card offers more flexibility for borrowers with low credit scores. The ongoing APR is 11.5%, which is lower than most secured cards. It’s generally not a good idea to carry a balance on a secured credit card, since it may be seen as a risk factor by some issuers, but if you need to, this card makes it much less expensive. The annual fee is $0, also making it more affordable. With this card, your deposit is put in a separate savings account, and you have to keep the balance in that account above an agreed-upon amount. Usually, the minimum required deposit is $1,000, but you may be able to make a smaller deposit in certain cases.

You may not be able to qualify for this card if you have recent negative information on your credit report that you haven’t worked toward improving, such as if you have several collection accounts that you have never made payments on, or if you recently declared bankruptcy. If your credit score is extremely low, your required deposit may be greater than your credit limit, as well. But if you don’t have any credit, or if you’ve been putting a lot of work into paying off your debts and getting back on the right track, this card could be a good deal.

Capital One® Secured MasterCard®

Capital One Secured MasterCard Credit Card
Apply Now

on Capital One's
secure website

The Capital One® Secured MasterCard® may be a good pick if you’re looking for a lower initial deposit. For $49, $99 or $200, depending on your credit history, you’ll get a limit of $200. With an additional deposit, you can get a higher limit equal to your extra deposit, up to $3,000. The card’s annual fee is $0, making it a more affordable to build credit.

Because of the lower deposits, Capital One has stricter underwriting standards for these cards. You may not qualify if you don’t have a checking or savings account, if you have a bankruptcy that’s still on your credit report, if you’re behind on other payments or if your rent is almost as high as your monthly income. But if none of these situations apply to you, this card may be the most cost-effective way for you to build credit.

US Bank Secured Card

US Bank Secured Visa Credit Card
Apply Now

on US Bank's
secure website

 The US Bank Secured Card can be a good option for those who are in the beginning stages of rebuilding credit. With this card, your credit report generally doesn’t have to be completely free of negative marks. You’ll pay a little more for that accessibility, though; the annual fee is $29.

Your security deposit can range between $300 and $5,000, and is kept in an interest-earning savings account. Usually, your deposit will be equal to your credit limit. If you really play your cards right, you can move up to an unsecured card in less than a year. This way, you won’t have to cancel your account and open a new one, potentially lowering your average age of accounts.

Keep in mind that the Credit CARD Act of 2009 requires that issuers only lend to people whom they believe will be able to repay the debt. So if you have an overwhelming amount of unpaid balances, you may not be able to qualify for this offer. If you owe a more manageable amount, though, it could be an excellent choice.

Is a secured card right for you?

If you want to boost your credit score without a cosigner, a secured credit card might be your only option. Because of the required deposit and low limits, though, it’s best to avoid leaning too heavily on these cards for credit. Instead, look at your secured card as a way to prove your creditworthiness to lenders. If you can qualify for one of these cards and start making on-time payments and using credit sparingly, you may be able to improve your score enough to qualify for a card that offers better terms in the future.

Claire Davidson, a staff writer covering personal finance for NerdWallet, contributed to this report. Follow her on Twitter @ideclaire7 and on Google+.


Image via iStock.

  • Dustin

    Using a debit card as a credit card won’t get reported to the credit bureaus so it’s not useful for what the purpose of a secured card is for. Building credit.

  • Lp

    Your info is not correct, I have the US Bank secured and the limit is the same as the deposit.

  • samuel jacob

    Try opensky secured, no credit check

  • James

    In business breaking even is losing money.

  • http://www.doctorofcredit.com/ doctorofcredit

    Do you have a bankruptcy on file?

  • edubb

    I did the capital one application online and was denied however within a few days I got a letter saying I was approved and just needed to make the $200 deposit. I would contact them

  • JULIE

    I GOT APPROVED BY WELLS FARGO SECURED CARD WHEN I HAD 450 CREDIT SCORE. THEY ARE AWESOME. AFTER A YEAR THEY GRADUATED ME AND BECAME UNSECURED AND WITH INITIAL $500 DEPOSIT, A YEAR LATER I HAVE UNSECURED CARD WITH $1500 CREDIT LINE. GOOD LUCK!

  • samuel jacob

    Open sky secured card, no credit check. No hard pull

  • samuel jacob

    I have merrick with $2000 limit, open sky $2500 limit, capital one $1000 limit, piss of crap centennial $300 limit, my score at the moment is 607, will keep you posted.

    Also i added my self as authorized user on 3 diffetent credit cards with perfect 5 plus years history, has not showed up on my report yet

  • http://www.nerdwallet.com/ NerdWallet

    Hi there, Open Sky DOES do a credit check. You are not automatically approved for the card.

  • samuel jacob

    How do you know they do, did you ever apply for this card, my guess is no, i did last month and therr is no credit check….call them and find out yourself

  • http://www.nerdwallet.com/ NerdWallet

    Hi, you’re completely right and I apologize for the incorrect information. Thanks for catching the error, Samuel!

  • samuel jacob

    its no problem, also a lot of credit unions offer secured cards with no credit check like USAA

  • hsc212

    yikes i just figured that out.

  • learne

    Not true…Capital One Secured DOES graduate to unsecured after a period of 6
    months to yr with good payments. I graduated this past summer – had 1k
    on deposit since July 2012

  • Tyler

    Never gave me an unsecured card either. Took them 4 months to give me my deposit back. And that they won’t give you some of your deposit back was the reason I closed it. Too much money tied up.

  • X YZ

    I opened a secure card for $200 in May of 2013 to start rebuilding my credit. When I went to pay my card in November 2013 they increased my limit to $350 and all I did was pay my cc bill on time.

  • Jessica

    You are one of the lucky few then. I have had my secured card with them for over two years with never a late payment and almost always over minimum and I have never went over my credit limit. When I applied with them it was with the understanding that after a year I would receive my deposit back ($99 for $200 cl) and it would become and unsecured card. After over a year and not hearing anything from them I contacted them just to be told “no”. No discussing, no hope, nothing. It won’t happen. They said if I wanted the deposit back I would have to cancel the card. But they did give me a second unsecured card with a $750 cl.

  • RealityWatch

    That’s true you have to have 6 mos to 1 yr of on time payments and not going over the limit. If you do the clock starts over again.