The bottom line: Flexible security deposit requirements and a $0 annual fee make this an excellent option for people building or rebuilding credit.
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
22.99% Variable APR
10.99% intro APR on Balance Transfers for 6 months
Recommended Credit Score
Recommended Credit Score
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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 Secured Mastercard® from Capital One 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 Secured Mastercard® from Capital One is a solid option for building credit.
Secured Mastercard® from Capital One: 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 Secured Mastercard® from Capital One
FLEXIBLE SECURITY DEPOSIT
Like all secured credit cards, the Secured Mastercard® from Capital One requires a refundable security deposit. With most secured cards, your credit limit will be equal to your deposit, but the Secured Mastercard® from Capital One 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 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, $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 Secured Mastercard® from Capital One 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 Secured Mastercard® from Capital One 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 Secured Mastercard® from Capital One 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: INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
However, there's a minimum security deposit of $200 for the Discover it® Secured, much higher than the Secured Mastercard® from Capital One's $49 or $99 options for those who qualify. Unlike the Secured Mastercard® from Capital One, 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 Secured Mastercard® from Capital One, 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. This card also has an annual fee.
Consider your options
If you’re working to build your credit, the Secured Mastercard® from Capital One 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
Frequently asked questions
With secured credit cards, your credit limit is typically equal to the amount of your deposit. However, with the Secured Mastercard® from Capital One, some applicants may be eligible for a $200 credit limit with a deposit of $49, $99 or $200. You can increase your credit limit to up to $1,000 by depositing more than the minimum before activating your card. Pay on time each month, and you can be automatically considered for a higher credit line in as little as six months with no additional deposit.
Use your card to establish a good payment history and strengthen your credit, and you may be able to upgrade your account to an unsecured credit card. The amount of time this takes can vary.
The Secured Mastercard® from Capital One reports your account activity to the three major credit bureaus. Keeping balances low and making on-time payments can help build your credit, but late payments can hurt it
You can qualify for the Secured Mastercard® from Capital One with very limited or bad credit, including scores below 630. However, approval is not guaranteed. Even with secured cards, issuers will look at your income, debts and other factors.
To open your account, you must pay your security deposit within 35 days of being approved for the card. From there, you use your card to make purchases just like you would with any other credit card, and you pay your bill each month. Important: Your deposit is not "loaded" onto the card, and it is not used to pay for your purchases. The issuer holds the deposit in case you don't pay your bill. If you upgrade to an unsecured card or close your account in good standing, your deposit will be refunded.
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