Author: Mike Anderson
If you’ve got bad credit or no credit at all, you’ll need a secured card to start getting the most out of your spending.
As your score gets better, so do your perks, including rewards and cash back. Perhaps even more importantly, you’ll be eligible for a lower APR, which means you’ll pay much less interest whenever you carry a balance.
The secured card is a perfect way to get there: most of them are accessible to every consumer, regardless of age or score, and the card companies have a system in place to protect them, the lenders, and help you, the borrower.
On the Capital One Secured MasterCard, you make a deposit in order to have a line of credit at all. The deposit’s refundable, too. You’ll get it back if you make your payments, build your score and then close out the account to move onto a rewards card, for better-credit consumers.
In order to make that happen, it makes sense to make even more deposits. Because as you do, your credit limits moves up, to a maximum of $3,000. And if you go that route, you’ll prove to credit scorers that you know how to handle the credit limit of any card.
An alternative card with no annual fee
CapOne does charge an annual fee – most do. One of the few exceptions is the US Bank Harley-Davidson Visa Secured
card. If you put down the deposit, the credit limit is higher, too, at as much as $5,000 instead of just $3,000.
The H-D card offers rewards, too, at 1% – something practically unheard of with secured cards – but it’s only redeemable at participating Harley-Davidson dealerships. Still, with no annual fee, it’s worth a look.
A secured card that may be worth the annual fee
If you’re worried about making repayment with your secured card, either don’t bother jumping into credit at all, or look at cards with a low APR. The First Progress Platinum Prestige MasterCard Secured Credit
card, for example, charges just 11.99% APR on purchases, whereas most others will charge about 20%.
It may have a $44 annual fee, but, as you likely already know, interest payments can often be much more than that.
Let’s take a look at a couple examples to hammer that idea home. Let’s say you carry a balance for a whole year’s time. The annual fee will start looking like a great alternative if that balance is any greater than $550.
If you carry a $1,000 balance for that long, the disparity becomes even clearer. You’d owe $200 on the typical secured card, but just $164 on the Platinum Prestige – and we’re counting the annual fee here. Clearly, annual fees aren’t always so bad.