Capital One Platinum Secured Review: Great Choice for Bad Credit

Security deposit flexibility

Like all secured credit cards, the Capital One Platinum Secured Credit Card requires a refundable security deposit. With most secured cards, your credit limit is equal to your deposit, but the Capital One Platinum Secured Credit Card allows for a lower deposit for those who qualify. Your deposit may be $49, $99 or $200 for a starter credit line of $200, according to Capital One's website for this card. You can increase your limit up to $1,000 by making more than the minimum deposit before activating your account.

Even better, if you can’t pay your security deposit upfront, Capital One will let you pay it in installments of at least $20, as long as you provide the full amount within 35 days of approval, according to the website for this card. This is a great benefit for those on a fixed income.

Access to a higher credit line

Make your monthly payments on time, and you could get access to a higher credit limit in as little as six months without having to deposit more money. A higher credit limit gives you increased flexibility, but more important, it can help your credit by reducing your credit utilization, a key factor in your credit score. The lower your utilization, the better. If you have a $200 credit limit and a balance of $60, your credit utilization is 30%, which is about as high as you want it to go. If your credit line gets bumped up to, say, $300, your utilization drops to 20%.

» MORE: How do secured credit cards work?

Freedom from fees

Credit cards for people with bad credit or no credit are notorious for high fees. That's one of the reasons NerdWallet recommends secured credit cards for building credit: You have to put down a security deposit, but you get that money back when you close the account in good standing or upgrade to a regular unsecured card. The best secured cards charge reasonable fees. The Capital One Platinum Secured Credit Card keeps things light with an annual fee of $0 (see rates and fees). Like all Capital One cards, it doesn't charge foreign transaction fees, so you can take it with you if you're traveling abroad. According to the card's terms and conditions, it does charge late fees if you don't pay your bill by the due date. But you can avoid that simply by paying on time each month.

Upgrade potential

Capital One is one of the few major issuers offering credit cards for people in all credit score ranges. Its secured card is for people who are building credit. Its popular rewards cards, like the Capital One Venture Rewards Credit Card and the Capital One Quicksilver Cash Rewards Credit Card, are for people with good or excellent credit. But it also has excellent products for people in the middle, with fair or "average" credit. These include the Capital One Platinum Credit Card and the Capital One QuicksilverOne Cash Rewards Credit Card. As you use your card to establish a good payment history and build your credit, you may be able to upgrade your account to a credit card without a security deposit.

High APR

Like most secured cards, the Capital One Platinum Secured Credit Card charges a high interest rate. The ongoing APR is 29.74% Variable APR (see rates and fees). However, that doesn't have to affect you: Pay your balance on time and in full every month, and no interest will accrue. There's no introductory 0% APR period, but most credit cards for bad credit don’t offer one anyway, so you're not missing anything.

No rewards

The Capital One Platinum Secured Credit Card doesn't offer rewards. That shouldn't be a dealbreaker considering what you get a secured card for — building credit. With the low credit limits typical with secured cards and the simple fact that keeping a low balance is a smart move for building credit, you likely won't be doing enough spending to rack up significant rewards. Even so, there are some secured options that do earn rewards. Among them:

• The Discover it® Secured Credit Card. This card pays 2% cash back on up to $1,000 spent per quarter on dining and gas, and 1% back on all other purchases. It has an annual fee of $0. There's even a bonus offer for new cardholders. However, there's a minimum security deposit of $200 without the potential flexibility of the Capital One card.

• The Capital One Quicksilver Secured Cash Rewards Credit Card. This card pays 1.5% cash back on all purchases and charges an annual fee of $0 (see rates and fees). It, too, has a $200 minimum deposit, although you can pay it in installments as with the Capital One Platinum Secured Credit Card.

To see more potential card options for building or rebuilding your credit, take a look at our best credit cards.

Bank account and credit check required

With the Capital One Platinum Secured Credit Card, you'll need to fund your security deposit with a bank account and Capital One could check your credit and employment history. That can present a hardship for applicants without a bank account or a credit history.

The OpenSky® Secured Visa® Credit Card doesn't perform a credit check when you apply, and you can pay your security deposit via a money order or Western Union if you don’t have a bank account. There is a $35 annual fee, however.