The Bottom Line: Flexible security deposit requirements and a $0 annual fee make this an excellent option for people building or rebuilding credit.
- No annual fee, and all the credit building benefits with responsible card use
- Unlike a prepaid card, it builds credit when used responsibly, with regular reporting to the 3 major credit bureaus
- You will get an initial $200 credit line after making a security deposit of $49, $99, or $200
Pros & Cons
Qualify with limited / bad credit
No annual fee
No foreign transaction fee
Alternate Pick: No credit check
Compare to Other Cards
26.99% Variable APR
24.99% Variable APR
10.99% on Balance Transfers for 6 months
Recommended Credit Score
Recommended Credit Score
Recommended Credit Score
Pulling together the money for a security deposit can be a major hurdle in getting a secured credit card, one of the best tools for building or rebuilding your credit. The Capital One® Secured Mastercard® makes deposits a little less daunting, and that's a big reason why it's one of NerdWallet's favorite secured cards.
With an annual fee of $0 and a handful of features of special interest to people working on improving their credit score, the Capital One® Secured Mastercard® is a solid option for building credit.
Capital One® Secured Mastercard®: Basics
Card type: Secured.
Annual fee: $0.
Interest rate: The ongoing APR is 26.99% Variable APR.
Deposit requirement: Get a $200 credit line with an initial deposit of $49, $99 or $200, for those who qualify. You can deposit more money before your account opens to increase your credit limit up to a maximum of $1,000.
Foreign transaction fees: None.
Why you might want the Capital One® Secured Mastercard®
FLEXIBLE SECURITY DEPOSIT
Like all secured credit cards, the Capital One® Secured Mastercard® requires a refundable security deposit. With most secured cards, your credit limit will be equal to your deposit, but the Capital One® Secured Mastercard® allows for a lower deposit for those who qualify. Your deposit may be $49, $99 or $200 for a starter credit line of $200. You can increase your limit up to $1,000 by making more than the minimum deposit before activating your account.
Best of all, 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. This is a great benefit for those on a fixed income.
Access to A higher credit line
Make your first five monthly payments on time, and you could get access to a higher credit limit 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, $500, your utilization drops to 12%.
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® Secured Mastercard® keeps things light with an annual fee of $0. Like all Capital One cards, it doesn't charge foreign transaction fees, so you can take it with you if you're traveling abroad. The card does charge a late fee of up to $39 if you don't pay your bill by the due date, but such fees are easily avoidable.
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.
Drawbacks and alternatives
Like most secured cards, the Capital One® Secured Mastercard® charges a high interest rate. The ongoing APR is 26.99% Variable APR. However, that doesn't have to affect you: Pay off your balance every month, on time and in full, 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.
Like most secured cards, the Capital One® Secured Mastercard® doesn't offer rewards.
There are a few secured cards that do offer rewards, though, like the Discover it® Secured. 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 for new cardholders: Discover will automatically match all the cash back you’ve earned at the end of your first year.
However, there's a minimum security deposit of $200 for the Discover it® Secured, much higher than the Capital One® Secured Mastercard®'s $49 or $99 options for those who qualify. Unlike the Capital One® Secured Mastercard®, the Discover it® Secured provides a credit limit equal to your security deposit in all cases — and not a penny more.
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
To qualify for the Capital One® Secured Mastercard®, you must have a checking or savings 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.
The Green Dot Visa® Secured Credit Card doesn’t require a good credit or a bank account, either. You can make cash deposits at participating retailers, including 7-Eleven, CVS, Dollar General, Rite Aid, Walgreens and Walmart, for a fee. You can also mail in a check for free. The annual fee is $39.
Consider your options
If you’re working to build your credit, the Capital One® Secured Mastercard® is one of the better choices available. Its flexible security deposit requirements, low fees and upgrade potential make it a solid starter card.
No matter which card you choose, using a secured credit card responsibly can help you build your credit score. Keep it up, and you should be able to graduate to a card with lower fees and interest, greater rewards — and no security deposit at all.
on Capital One's website
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