Best Secured Credit Cards of 2024

  • Green Dot Platinum Secured Credit Card
    3.1(11)
  • Merrick Bank Classic Secured Credit Card
    1.9(33)
  • Capital One Secured Credit Card
    1.3(121)

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Best Secured Credit Cards of 2024

If you have a low credit score or limited credit history, your options for credit cards are likely also limited. That’s because card issuers want to see you have a good track record of paying back borrowed money before they lend to you.

One solution to this is a secured credit card. But be aware that not all secured cards are the same. Look for cards with low or no annual fees and a reasonable security deposit requirement. Some secured cards let you earn cashback rewards on purchases, but pay attention to other costs and fees before you apply.

For guidance, check out our readers’ reviews of some of the most popular secured credit cards out there so you can choose the best credit card for your needs.

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What is a secured credit card?

A secured credit card is a type of credit card that requires an upfront, refundable deposit as collateral. This deposit then sets the credit limit you’ll have on the card. For example, if you deposit $200 on a secured credit card account, then your credit limit is $200.

If you close your secured credit card account without a balance, your deposit is refunded. However, if you default on the account, the credit card issuer keeps your deposit.

“This collateral allows lenders to offer credit to customers who might have trouble qualifying for traditional credit cards, giving them a way to begin building credit,” explained Chris Fred, head of U.S. credit cards and unsecured lending at TD Bank. “After demonstrating responsible credit behavior and keeping your account in good standing for a period of time, often six months to a year, customers may be offered to 'graduate' to an unsecured credit card and have their deposit returned.”

Secured vs. unsecured credit cards

With a traditional, unsecured credit card, the card issuer gives you an amount of credit based on your credit history. Your “creditworthiness” is based on several factors, such as your payment history, the other types of credit you have (loans, credit cards, etc.) and how long you’ve had credit for.

Secured credit cards, on the other hand, require deposits as collateral because applicants typically haven’t already established their creditworthiness.

The deposit isn’t the only difference between the two. Unsecured cards tend to have lower interest rates and more perks, like cash back and travel miles, as a reward for having a better credit profile.

The good news is that once you’ve established a strong credit history with a secured credit card, you’ll likely be able to upgrade to an unsecured card.

How does a secured credit card work?

With a secured credit card, the amount of your deposit is equal to your credit limit — but you aren’t drawing from the deposit when you make a purchase. Instead, the card issuer provides a line of credit, and the deposited funds act as collateral. Minimum deposits for secured credit cards start around $200, but you can put thousands of dollars on some secured credit cards at a time.

It’s important to promptly pay off the balance each month since credit cards — especially secured credit cards — have high interest rates. Once you’ve established a responsible pattern of credit use, your credit score should increase enough for you to be eligible for an unsecured credit card.

After demonstrating responsible credit behavior … customers may be offered to 'graduate' to an unsecured credit card and have their deposit returned.”
Chris Fred, TD Bank

However, if you are more than a month late on a payment, the issuer will report that to the credit bureaus, which will lower your credit score. After more than one past-due payment, you will likely have to pay a fee, your credit score will go down and your interest rate could go up. If you don’t make the minimum balance payments for several months, your issuer will close your account and keep your deposit. You could wind up in collections if the deposit doesn’t cover your balance plus late fees and interest, which will further damage your credit profile.

A secured credit card can be a valuable financial tool to build (or rebuild) your credit score. When you make regular payments on a secured credit card, it signals to the credit reporting agencies that you are more likely to repay creditors in the future, even if you’ve missed payments for bills or loans in the past.

» MORE: Ways to improve your credit score

How to choose a secured credit card

“For prospective cardholders, consider associated fees as some secured cards come with annual fees, while others are fee-free,” said Fred. “You should also examine the secured card's interest rate, or APR. Remember, lower is better because it means you'll pay less in interest if you carry a balance.”

Consider the following factors when shopping for a secured credit card:

  • Fees: There are some secured credit cards that come with no fees; however, annual fees of $30 to $40 or more are common.
  • APR: As of August 2023, the average annual percentage rate (APR) on credit cards hovered around 21%, according to the Federal Reserve. Secured credit cards often have higher APRs than unsecured, so check the rate before committing.
  • Deposit amount: Minimum deposits typically start at $200, but check this amount (and what you can reasonably deposit) as you compare cards. Some cards may allow maximum deposits up to $5,000 if you need access to (and can afford) a larger credit line.
  • Rewards: While the best credit card rewards are reserved for unsecured credit cards and people with excellent credit scores, you can sometimes get rewards with a secured card. For example, the Discover it Secured offers up to 2% cash back.
  • Upgrading: Check with the issuer about what the process and expected timeline is for upgrading to an unsecured or partially unsecured card once you’ve established a positive credit history. For example, with the Capital One Platinum Secured, you’re automatically considered for a credit line increase after six months of responsible use.
  • Customer service: Read customer reviews on sites like ConsumerAffairs to get a feel for how other customers have felt about that issuer and card.
  • Credit score reporting: Be sure to confirm that a secured credit card issuer reports your credit activity to all three major credit bureaus (Experian, TransUnion and Equifax). Otherwise, all your responsible budgeting and timely payments won’t benefit your credit score.

A ConsumerAffairs reviewer in New York said the secured credit card they chose was useful for helping their credit score, but you need to be aware of the limitations and ensure you use it responsibly.

“There are many actions you cannot do with this card. There's no rewards and you do have to pay a $39.00 annual fee,” they said. “However, if you're wanting to increase your credit score this card will help you do that. Every month you must pay down your credit card so that you owe very little or nothing on the due date. If you do this your credit score will increase little by little.”

How to get a secured credit card

Secured credit cards are relatively easy to qualify for, but approvals are not guaranteed. You must be 18 years old and be able to verify your identity, plus have enough available funds to put down the initial minimum deposit.

Other eligibility requirements vary by issuer. For example, some issuers will approve applicants for a secured credit card without any credit check at all, but these typically come with higher fees. Some issuers require that you have U.S. citizenship, while others offer secured credit cards to permanent or temporary residents. Some issuers require you already have a bank account, while others allow cash deposits.

If you’re denied a credit card, the issuer should give you a reason as to why. Depending on the reason, you may be able to apply with another issuer that has more forgiving criteria, or you may need to find an alternative. Just keep in mind that your credit score will take a small hit every time you apply for a new card, secured or not.

» MORE: How to check your credit score

Alternatives to secured credit cards

If you’re ineligible for a secured credit card, there are other ways to build your credit or access the funds you need. Depending on your financial situation and your reason for applying for credit, you may want to consider any of the following options.

Authorized user
When you’re an authorized user on someone else’s credit card, you basically get to piggyback off that person’s creditworthiness. You’ll get your own card in your name, but it’s linked to their account, and they take primary responsibility for the account.

If that person has good credit habits, your own credit score could go up, too. However, if they have bad habits, like a tendency to make late payments, your score could suffer, too.

Credit-builder loan
A credit-builder loan is similar to a secured credit card in that you need to put down an amount of money upfront. The lender then deposits those funds into a savings account, which you’ll get back once you pay the loan amount back in installments (with interest), typically over six months to two years.

While credit-builder loans can’t lend you more money than you can deposit and therefore aren’t an option for borrowing, they are a way to build your credit score, since the lender reports your payments to the credit bureaus.

Prepaid debit card
With a prepaid debit card, you load money onto the card and can then use it to make purchases. It works like a debit card but isn’t connected to a checking or savings account.

While a prepaid card gives you the ability to pay for things with plastic, it unfortunately won’t do anything to increase your credit score, as these cards don’t report to the credit bureaus.

Secured personal loan
If you need to borrow money rather than just increase your credit score, a secured personal loan may be an option. With this type of loan, you put up some sort of collateral.

There are personal loans for bad credit, although they often come with high interest rates and less-than-ideal terms. Be sure to shop around and watch out for predatory lenders that charge sky-high rates and fees.

Co-signer
If you have someone who is willing to be a co-signer for you on a personal loan, you could access the money you need without the costly fees and rates of bad credit loans.

A co-signer doesn’t have access to the money borrowed (unlike with a co-borrower), but accepts responsibility for repaying the loan should you default. Because of this, lenders are willing to offer better terms and rates.

Are secured credit cards worth it?

A secured credit card is only worth it when used correctly. To use a secured credit card most effectively, only make purchases a few times each month and promptly pay the balance. Pay attention to how your credit score is improving over time — many card issuers provide free credit score updates — and ask about upgrading to an unsecured card with the same issuer.

Vicki, a ConsumerAffairs reviewer in North Carolina, said they were able to upgrade their Citi Secured credit card in just eight months: “I paid the balance every month. Within 8 months, Citi is returning my security deposit and issuing a non-secured MasterCard. What's not to like about that? I used less than 10% of the credit limit each month, too. Significantly increased my credit score.”

Responsible credit utilization is an excellent way to improve your credit score quickly, but credit card options are limited if you’re just starting out or recovering from a financial misstep. After you’ve paid the initial deposit as collateral, a secured card functions almost like an unsecured card. Just be sure not to fall behind on your payments, as you’ll end up with an even lower credit score than before.

“The key to building credit with a secured card is to never miss a due date, spend within your credit limit and, at the very least, use your card occasionally,” said Fred. “As long as your account remains open and in good standing, you're on the right path to improving your creditworthiness.”

FAQ

Can you be turned down for a secured credit card?

Yes, it is possible to be turned down for a secured credit card if an issuer deems you too risky or if you don’t have enough available funds to put down the initial minimum deposit. You can also be denied a secured credit card if you have a pending bankruptcy filing or outstanding tax obligations.

What credit score do you need for a secured credit card?

Since secured credit cards are geared toward people with poor credit or no credit history, they typically have easier eligibility requirements than unsecured cards. However, the minimum credit score varies depending on the issuer. Some secured credit cards have no credit check at all.

What is a good interest rate on a secured credit card?

The average credit card APR is around 21% as of publishing, but you can expect the rate on a secured credit card to be slightly higher than that. Currently, an APR at or under 30% is generally a good rate for a secured card.

How long does it take to upgrade to an unsecured card?

Depending on your issuer, you may be able to upgrade to an unsecured card in as soon as six months with responsible card usage. If your credit score is extremely low or you have late payments, upgrading will take longer.


Guide sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
  1. Federal Reserve, "Consumer Credit - G.19.” Accessed Oct. 23, 2023.
  2. Experian, “How Much Should You Deposit for a Secured Card?” Accessed Oct. 23, 2023.
  3. Experian, “What to Do When Your Credit Card Application Is Denied.” Accessed Oct. 23, 2023.

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