Secured credit cards are a great way for people with bad or no credit history to either repair or build their credit history. Secured credit cards work by taking a deposit (also as collateral) and then allowing consumers to charge up to that amount. For example, if a secured card asks for collateral of $500 the card holder can charge $500 worth of purchases.
[Read: What Are The Easiest Credit Cards To Get]
Unfortunately a lot of card issuers try to take advantage of the fact that consumers have few options when they have little or no credit history and these cards often have high annual fees and large APRs.
Contents
- 1 What’s Important?
- 2 What’s Not Important?
- 3 Secured Credit Cards Compared
- 4 Top 5 Secured Credit Cards
- 4.1 #5 –Capital One® Secured Mastercard®
- 4.2 #4 –Aeromexico Visa® Secured Card, Lanpass Visa® Secured Card, Lifemiles Visa® Secured Card
- 4.2.1 Our Thoughts:
- 4.3 #3 –DCU Visa Platinum Secured Credit Card
- 4.4 #2 –Navy Federal Nrewards Secured Card
- 4.5 #1 –Harley-Davidson® Visa® Secured Card
- 5 #0 – Discover It Secured
What’s Important?
There are a number of things that are important to look at when shopping for a secured card.
- Credit bureaus reported to: There are three major credit bureaus: Equifax, TransUnion & Experian. Consumers should look for a credit card issuer that reports information to all three of these bureaus to make sure their credit history shows up on all three of their credit reports.
- Annual fee:The lower the annual fee the better. Cards that have a low or no annual fee don’t only save consumers money but they can also help to improve credit scores more than a card with a higher fee. Account age (oldest account and average age of accounts) is an important scoring factor in most credit scores (it accounts for 10% of the FICO score), by having an card with a low or no annual fee a consumer is more likely to keep it open – even after they’ve been approved for a better rewards earning card.
- Minimum security deposit: Nobody wants their money to be tied up in an account that isn’t accessible and isn’t earning interest. That’s why it’s important to see what the minimum security deposit is, in most cases the lower the better. The only exception is when a consumer wants to make a large purchase (e.g a flight) and need a bigger credit limit, in this case they’ll want to look for an account with a high maximum credit limit/security deposit.
- Rewards program: Just because a consumer has poor credit history or no history at all doesn’t mean they should miss out on all of the fun of a good rewards program. Most secured cards don’t offer these rewards, but a few do.
What’s Not Important?
Some factors shouldn’t be considered when looking for secured cards, we’ve listed them below as well as why we think they’re not important.
- APR: Consumers should be paying their balance in full every month, these cards are a chance for them to build or rebuild their credit. Purchases should only be charged to the card if there is money for those purchases to be paid for. Because of this, card holders should never be paying interest and thus the APR doesn’t matter.
- Late Fees: Making a credit card payment late negatively affects an individuals credit score, the whole point of these cards is to try and improve ones score not damage it.
Secured Credit Cards Compared
Below is a table with 21 different secured credit cards, along with the minimum security deposit needed, the maximum credit limit, annual fee, APR, credit bureaus this card issuer reports to and if they offer a rewards program.
| Security Deposit | Maximum | Annual Fees | Credit Information Shared | APR | Reward Points | |
| AeroMexico Visa® Secured Card[3] | $300 | $5,000 | $25, waived first year | All three | 22.99% | Yes[2] |
| LANPASS Visa® Secured Card[3] | $300 | $5,000 | $25, waived first year | All three | 16.24% | Yes[5] |
| LifeMiles Visa® Secured Card[3] | $300 | $5,000 | $25, waived first year | All three | 22.99% | Yes[6] |
| Harley-Davidson® Visa® Secured Card[3] | $300 | $5,000 | None | All three | 22.99% | Yes[4] |
| Navy Federal nRewards Secured Card[10] | $500 | N/A | None | All three | 8.99% | Yes[11] |
| DCU Visa Platinum Secured Credit Card | $500[9] | N/A | None[8] | All three | 11.50% | No |
| Fifth Third Secured Mastercard | $300 | N/A | $24 | All three | 23.99% | No |
| Wells Fargo Secured Card | $300 | $10,000 | $25 | All three | 18.99% | No |
| Capital One® Secured MasterCard® | $49, $99, $200 | $3,000 | $29 | All three | 22.90% | No |
| OpenSky® Secured Visa® Credit Card | $200 | $3,000 | $29 | All three | 17.50% | No |
| First Progress Platinum Elite MasterCard® Secured Credit Card | $200 | $3,000 | $29 | All three | 19.99% | No |
| USAA Secured Platinum American Express® Card | $250[1] | $5,000 | $35 | All three | 9.90% | No |
| USAA Secured Platinum MasterCard® | $250[1] | $5,000 | $35 | All three | 9.90% | No |
| U.S. Bank Secured Visa® Card[3] | $300 | $5,000 | $35 | All three | 20.99% | No |
| The Secured Visa® from Merrick Bank | $200 | $3,000 | $36 | All three | 17.45% | No |
| BankAmericard® Secured Credit Card | $300 | $4,900 | $39 | All three | 20.24% | No |
| First Progress Platinum Select MasterCard® Secured Credit Card | $200 | $3,000 | $39 | All three | 14.99% | No |
| Blaze Secured Credit Card | $300 | $1,500 | $39 | All three | 24.90% | No |
| First Progress Platinum Prestige MasterCard® Secured Credit Card | $200 | $3,000 | $44 | All three | 11.99% | No |
| SKYPASS Visa® Secured Card[3] | $300 | $5,000 | $50 | All three | 16.24% | Yes[7] |
| Centennial® Classic Credit Card | $150 | $300 | $75 | All three | 36% | No |
- [1]The security deposit is placed into a CD that earns interest.
- [2]1 point per $1 spent, double miles on gas and groceries, 5,000 points for first purchase, 10% discount on all AeroMexico Purchases, $99 companion ticket on renewal
- [3]Money is placed into U.S Bank savings account that earns interest
- [4]Earn 1 point per $1 spent, $10 Harley chrome gift certificate as sign up bonus, chance to win a free motorcycle
- [5]Earn 1 point per $1 spent, 10,000 points for first purchase, 10% discount on LAN purchases (up to $500 per year)
- [6]Earn 1 mile per $1 spent, 5,000 bonus miles on first purchase, 15% excess baggage redemption
- [7]Earn 1 mile per $1 spent, 5,000 bonus miles on first purchase, 1,000 bonus miles on renewal
- [8]To join DCU and be able to apply for this card you need to be a member of one of the 700 participating organizations/charities. A donation of $10 will make you a member of Reach Out for Schools. This is tax deductible.
- [9]Receive 0.05% interest on any deposit made
- [10]Card only available to members of Navy Federal credit union. Must be an active or ex military member to join
- [11]Earn one point per $1 spent
Top 5 Secured Credit Cards
#5 –Capital One® Secured Mastercard®
Pros:
- Low security deposit needed
- Reports to all three credit bureaus
Cons:
- No rewards program
- Annual fee of $29
Our Thoughts
The only real reason to apply for this card is if you think you’ll be approved with a security deposit of $49 or $99, all the top cards require deposits of $300+ so if you’re tight on funds this could be an option. The downside is there is an annual fee of $29 that’s not waived and no rewards program.
#4 –Aeromexico Visa® Secured Card, Lanpass Visa® Secured Card, Lifemiles Visa® Secured Card
Fourth place is actually a tie between three secured cards offered by US bank.
Pros:
- No annual fee for the first year
- Reports to all three credit bureaus
- Interest earned on security deposit
- Bonus points (5-10,000 depending on the card) for first purchase
Cons:
- Most card holders won’t redeem the rewards points offered
- Annual fee after the first year ($29)
Our Thoughts:
This cards are all good options and provide consumers with no annual fee for the first year. One downside is that after the first year consumers will need to pay $25, which means they’ll most likely close this account and upgrade to a non secured card with a better rewards program.
This could hurt the average age of accounts and the age of the oldest account (if this is a consumers first entry into credit). We’d suggest going with a card with no annual fee to avoid this.
The rewards programs offer are also quite strict, they can only be used for free flights and upgrades (the online stores will only ship to countries like Mexico, Guatemala, Peru, etc) and most consumers won’t accumulate enough points to actually use these. Because they are not popular airlines nobody buys these points for cash.
#3 –DCU Visa Platinum Secured Credit Card
Pros:
- No annual fee
- Reports to all three credit bureaus
Cons:
- Must join a participating organization to be eligible($10 minimum donation to Reach Out to Schools was the cheapest way we could find)
- No rewards program
- No interest earned on security deposit
Our Thoughts
Not having a rewards program really hurts this DCU card. If you’re already a participating member of one of their organizations it might be worth getting this card just to have another account aging as there is no annual fee, otherwise we’d suggest going for the #1 or #2 secured card – as both have no annual fee and a rewards program. DCU members also have access to a free FICO score if they have a checking account.
#2 –Navy Federal Nrewards Secured Card
Pros:
- No annual fee
- Good rewards program. 1 point per $1 spent, these points can be redeemed for up to 1¢ a point in prepaid Visa cards once you hit 7,500 points (starts at 0.5¢ per point)
- Reports to all three bureaus.
- Earn interest on security deposit.
Cons:
- Only available to active or ex military members.
- $500 security deposit needed.
Our Thoughts
This is easily the best card on the market. There is no annual fee and it has one of the best rewards program (if not the best) out of all the secured cards. The only reason this one isn’t #1 is because it’s only available to military or ex military.
#1 –Harley-Davidson® Visa® Secured Card
Pros:
- No annual fee
- Reports to all three credit bureaus
- Earn interest on security deposit
Cons:
- The rewards program is lacking. $1 spent = 1 point, but the points can only be redeemed for Harley Chrome Cash, which can only be used to purchase Harley Davidson products and accessories. Unfortunately none of the usual points buyers purchase this Chrome Cash.
Our Thoughts
No annual fee, interest earned on your security deposit and a rewards program? It’s easy to see why we chose this as our number one card. The only downfall is trying to actual use your Harley Davidson points/Chrome cash if you’re not a fan of the brand.
#0 – Discover It Secured
What’s better than being #1? #0! This card is simply way better than all of the other secured cards.
Pros:
- No annual fees
- Rewards program that earns cash back
- Sign up bonus of double rewards for first year
Cons:
- Reports as a secured card
I’d recommend reading our full review on this card, as mentioned it’s just a lot better than the other secured cards currently on the market.
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