Best Secured Credit Cards

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The best secured credit cards are useful for people with no credit history, or that have bad credit, to use in building a stronger credit score. This list represents our top rated secured cards across a number of categories, all driven by our rating methodology, comprehensive card database and proprietary points valuation models. We focus on highlighting the best cards possible and do not give any preference to cards from which we receive compensation. These are the cards we'd recommend to our family and friends, and they're the same ones we're recommending to you.

Best Secured Credit Cards for December 2020

• Secured Mastercard from Capital One: Best Overall
• SKYPASS Visa Secured Card: Best for Travel
• Discover it Secured: Best for Rewards
• Wells Fargo Business Secured: Best for Business
• Self Visa: Best for Credit Building

BEST OVERALL
Secured Mastercard® from Capital One

Rating As A Secured Card - 4.8

FULL REVIEW https://www.investopedia.com/capital-one-secured-mastercard-review-4798740
APPLY NOW https://www.capitalone.com/credit-cards/secured-mastercard/
On Capital One's Website

REGULAR APR (%) - 26.99% variable
ANNUAL FEE - $0
MINIMUM DEPOSIT TO ACTIVATE - $49
PAY DEPOSIT IN INSTALLMENTS - Yes
ALLOWS UPGRADE TO UNSECURED CARD - Yes
REWARDS EARNING RATE - This card does not offer a rewards program.

WHY WE CHOSE THIS CARD
The Secured Mastercard from Capital One is Investopedia's choice for Best Secured Card due to its low fees and security deposit flexibility, allowing customers to send in their account deposits in installments rather than having to make it all at once. Capital One also offers automatic credit line increase reviews after as little as six months of responsible card use. No annual fee makes this a good entry level card for those needing to build their credit.

PROS & CONS
Pros

• Credit limits can be larger than the required security deposit
• Security deposit can be paid in installments
• No annual or foreign transaction fees

Cons

• Requires a bank account
• Relatively low initial credit limits
• No bonus offers or rewards program

HIGHLIGHTS

• $49, $99 or $200 refundable minimum security deposit. Access to an authorized bank account is required to make your security deposit.
• Make the minimum required security deposit and you'll get an initial credit line of $200. Plus, deposit more money before your account opens to get a higher credit line.
• Be automatically considered for a higher credit line in as little as 6 months.
• Pick your own monthly due date and payment method—check, online or at a local branch.

BEST FOR TRAVEL
SKYPASS Visa® Secured Card

Rating As A Secured Card - 4.6

FULL REVIEW https://www.investopedia.com/skypass-visa-secured-card-review-4846265
APPLY NOW https://www.skypassvisa.com/credit/visaSecuredCard.do
On U.S. Bank's Website

CURRENT OFFER
30,000 bonus miles after you spend $3,000 within the first 90 days

REGULAR APR (%) - 16.24% variable
ANNUAL FEE - $0
MINIMUM DEPOSIT TO ACTIVATE - $300
PAY DEPOSIT IN INSTALLMENTS - No
ALLOWS UPGRADE TO UNSECURED CARD - Yes
REWARDS EARNING RATE - Earn 1 mile for every $1 you spend in eligible net purchases.

WHY WE CHOSE THIS CARD
The SKYPASS Visa Secured Card is an unusual offering in the secured card market as it provides the ability to earn airline miles and even has a bonus offer with first purchase. The caveat is that the miles are with Korean Air, so it may be best for those who have loyalty to that carrier or can get value from redeeming SKYPASS miles with partner airlines. There is a $50 annual fee but that can be justified in the first year by the one-time bonus. SKYPASS Visa Secured also offers an anniversary bonus of 1,000 SKYPASS Miles.

PROS & CONS
Pros

• Builds credit while earning miles
• Opportunity to move to an unsecured card after 12 months
• Easy-to-earn bonus

Cons

• Annual fee
• Poor for international travelers
• Your credit limit must be secured

HIGHLIGHTS

• 5,000 SKYPASS Bonus Miles after your first purchase
• 1,000 Bonus Miles at renewal
• Earn 1 mile for every $1 you spend in eligible net purchases
• Credit limit based on your deposit, from $300 to $5,000
• The deposit is used to open a U.S. Bank Secured Savings Account to ensure your card can be paid. The secured savings account is FDIC-insured, earns interest and won’t be touched as long as your account remains open and in good standing.

BEST SECURED CARD FOR REWARDS
Discover it® Secured

Rating As A Secured Card - 4.2

FULL REVIEW https://www.investopedia.com/discover-it-secured-credit-card-review-4795882
APPLY NOW https://www.discover.com/credit-cards/secured/
On Discover's Website

CURRENT OFFER
Discover will match all the cash back you've earned at the end of your first year, automatically.

REGULAR APR (%) - 22.99% variable
ANNUAL FEE - $0
MINIMUM DEPOSIT TO ACTIVATE - $200
PAY DEPOSIT IN INSTALLMENTS - No
ALLOWS UPGRADE TO UNSECURED CARD - Yes
INTRO BALANCE TRANSFER APR - 10.99% for 6 Months
REWARDS EARNING RATE - Earn 2% cash back at gas stations and restaurants on up to $1,000 in purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases.

WHY WE CHOSE THIS CARD
The Discover it Secured is our choice for best for rewards because it offers valuable cash rewards and no annual fee. It's is a solid choice to build good credit habits and potentially boost credit score over time with responsible credit behavior. After eight months as a responsible cardholder, Discover will begin reviewing your account to determine if you can transition to an unsecured card. The Discover it Secured is the closest card you can find to a standard rewards credit card.

PROS & CONS
Pros

• Outstanding rewards for a secured credit card
• Cash-back is matched at the end of the first year
• Discover reviews your account after a period of responsible usage to determine eligibility for transition to an unsecured card
• No annual or foreign transaction fees

Cons

• Discover cards not as widely accepted outside the U.S. as Visa and Mastercard

HIGHLIGHTS

• No annual fee, earn cash back, and build your credit with responsible use.
• It's a real credit card. You can build a credit history with the three major credit bureaus. Generally, debit and prepaid cards can't help you build a credit history.
• Automatic reviews starting at 8 months to see if Discover can transition you to an unsecured line of credit and return your deposit.
• Get 100% U.S.-based customer service and get your free Credit Scorecard with your FICO Credit Score.

BEST FOR BUSINESS
Wells Fargo Business Secured Credit Card

Rating As A Secured Card - 4.1

FULL REVIEW https://www.investopedia.com/wells-fargo-business-secured-credit-card-review-4801558
APPLY NOW https://www.wellsfargo.com/biz/business-credit/credit-cards/secured-card/
On Wells Fargo's Website

REGULAR APR (%) - 15.15% variable
ANNUAL FEE - $25
REWARDS EARNING RATE - Earn 1.5% cash back or earn 1X point and recieve 1,000 bonus points when your company spend is $1,000 or more in any monthly billing period.
BALANCE TRANSFER FEE - See Terms
CASH ADVANCE APR (%) - 23.99%
CASH ADVANCE FEE - See Terms

WHY WE CHOSE THIS CARD
The Wells Fargo Business Secured Credit Card is our pick for best business secured card, which is an obvious choice since it appears to be the only secured business card in the market. It offers the flexibility of earning cash back or points rewards and the ability to have a credit line up to $25,000. The Wells Fargo Business Secured Card is ideal for small business owners needing to build their business credit or have experienced business credit challenges in the past.

PROS & CONS
Pros

• Flexible rewards structure
• No foreign transaction fee

Cons

• Annual fee applies to every card issued
• Minimal benefits

HIGHLIGHTS

• Choose to earn cash back or reward points.
• $500 to $25,000 credit line.
• $0 liability protection.
• Annual fee: $25 per card.
• Up to 10 employee cards.
• Spending reports available online.

BEST SECURED CARD FOR CREDIT BUILDING
Self Visa® Credit Card

Rating As A Secured Card - 3.7

FULL REVIEW https://www.investopedia.com/self-visa-credit-card-review-4799012
APPLY NOW https://www.self.inc/
On WebBank's Website

REGULAR APR (%) - 23.74% variable
ANNUAL FEE - $25
MINIMUM DEPOSIT TO ACTIVATE - $100
PAY DEPOSIT IN INSTALLMENTS - Yes
ALLOWS UPGRADE TO UNSECURED CARD - No
REWARDS EARNING RATE - This card does not offer a rewards program.

WHY WE CHOSE THIS CARD
The Self Visa is our top rated secured card for credit building because it offers an unusual on-ramp to building a positive credit history through the creation of both an installment loan and a credit card account. If you’re able to meet the Self Visa’s lenient eligibility requirements, you’re granted a CD secured loan. Once you’ve made three on-time loan payments that unlock at least $100 of value in your CD, you can open a secured card using the repaid funds as the security deposit. You earn interest on CD (while also paying interest on the loan), but the card also comes with its own set of interest rates and fees. It offers no rewards or other benefits.

PROS & CONS
Pros

• No security deposit required
• Qualification is relatively easy
• Builds credit and helps you establish savings

Cons

• $25 annual fee
• No rewards
• 3% foreign transaction fee

HIGHLIGHTS

• Combined credit builder account and secured card products to help you build credit and save* money (minus interest and fees)
• No credit check. No credit history required.
• Start with a credit builder account that reports to all 3 credit bureaus. Each monthly payment builds credit history and savings. Choose the plan that works for you.
• Make at least 3 monthly payments on time, have $100 or more in savings progress in your account, and be in good standing.** You’ll automatically be eligible for the Self Visa Credit Card, without a credit check.
• Your savings progress from your Credit Builder Account acts as your refundable security deposit.
• The Self Visa Credit Card is accepted at millions of locations in the U.S.

What is a Secured Card and How Does it Work?
Secured credit cards resemble regular credit cards with one key difference: they require a “security” deposit, the size of which determines your credit limit with the card, at least initially. The advantage to this card type, compared with using a debit card tied to a checking account or a prepaid debit card, is that account activity is reported to all three major credit bureaus (because a secured credit card is a true credit card with a real credit limit). That reporting allows you to begin building a credit history that, providing it is positive, should in time allow you to get a regular credit card and other credit products, such as loans.

Provided you make on-time payments with a secured card, your security deposit remains untouched and is remitted back to you should you ever close the account. Some issuers even pay you interest on the deposited funds. In time, given a positive record of making payments, issuers may grant you a credit limit that exceeds the security deposit. Eventually, the issuer may also offer you the option to upgrade to a regular—that is, unsecured—credit card. In many cases, that allows the account to remain open, and its increasing age to be an asset to your credit record, which generally rewards having older accounts. If that option isn’t available, though, one can simply close the secured account and apply for an unsecured card once you’ve attained a solid credit score. The free score-monitoring feature offered by most secured cards allows you to track your progress.

Which Consumers Do Secured Cards Best Suit?
The ideal recipient of a secured credit card is someone who has never owned a credit card or any other type of credit account, such as a loan. Such prospective customers have what’s known as a “thin file”, with minimal data at credit bureaus about their payment activity, and so will especially benefit from the credit history a secured credit card will help to build. Those with poor or bad credit, because of irresponsible credit behavior in the past, can potentially gain the same advantage from a secured card. More even than credit newcomers, these customers’ actions—such as habitual late payments, credit defaults, and bankruptcy declarations—can make lenders apprehensive. And that can leave those consumers with few if any options to rebuild their credit other than a secured card.

Even if card issuers do not pull a full credit report when reviewing your application, they may want at least to verify your income and determine if you have any other accounts, like checking or savings accounts, with banks and other financial institutions. That information allows issuers to gain a fuller picture of your finances, including your ability to make a security deposit

What Are the Pros and Cons of Secured Cards?

Pros

• Provides widely accepted charge cards to those with little credit, no credit, or bad credit
• Excellent chance of approval
• Reports to credit bureaus to build personal credit

Cons

• Security deposit is required; may be difficult for those with limited funds
• Credit limit does not exceed security deposit, at least initially
• Annual fee is more common than not
• Higher APRs on balances than most non-secured cards

Can Secured Cards Really Build Credit?
In contrast to such alternatives as prepaid debit cards, all card transactions and payment activities with a secured card are reported to the major credit bureaus—Equifax, Experian and TransUnion. Good financial behavior, such as staying within your credit limit and making on-time payments, has a positive effect on your credit history, and that in turn will help you build a strong credit score.

What Are Features to Consider in a Secured Card?
These are some of the capabilities and attributes to seek in one of these cards:

Provision to Pay Security Deposits Over Time
Certain card issuers let you make deposit payments in installments over a period of time. This can facilitate reaching the required amount, especially for those who lack a bank account, a savings program, or both.

High Limits on Credit Lines
While most issuers limit the available credit limit to the size of the security deposit you’ve made, a select few give consumers a little more slack by allowing credit lines to graduate to a multiple of the deposit, like 125% or 150% of its amount. There are also variations in the maximum security deposit you can make. Some issuers cap this at $2,500 but a few allow deposits of up to $10,000.

Low or No Fees
Some issuers impose high monthly usage fees on those who own secured cards, as well as stiff annual fees to get the account in the first place. Avoid the cards from such issuers, if possible, since there are plenty of options that charge no or low fees. And, needless to say, review the fee disclosures in the terms and conditions for any card to understand its costs before you apply for it.

Free Credit Scores
Certain issuers provide this valuable service that can allow you to check your score at any time online while some print it on monthly billing statements. This can be very helpful since those seeking this type of account are in great need of seeing and tracking their score growth over time and understanding the impact of their credit behavior.

Cash-Back Rewards
While it isn’t the norm, a few secured credit cards do provide cash back rewards on their spending. The rate is typically modest, at 1% or so, but these perks are worth seeking out, provided the card meets the other items on your wish list. Rewards are credited back to your billing statement or sent to you as a check at the end of the year.

How to Use a Secured Card

• Only use the card for purchases you could afford to pay for in cash
• Never be late in paying the bill. Set yourself a calendar alert up to a week before the bill is due.
• Avoid making only the minimum payment. Rather, try always to pay the bill in full each month, to avoid incurring interest charges.
• Track your credit score over time, using the tools provided with the card, and obtain a free copy of your credit report every year.
• Consider a secured card to be a temporary tool to establish a solid credit score. Use that score to get an unsecured, regular consumer credit card.

Methodology

Information Gathering
In order to track and assess the U.S. domestic credit card market, we gather scores of data points on more than 300 cards. This data is collected manually from both card-issuer websites and publicly available sources.

To ensure our information is as up-to-date as possible, we deploy automated tools that monitor changes in such key data as annual percentage rates, introductory rates, introductory periods, bonus offers, rewards earnings rates, fees and card benefits. We then rapidly make any needed updates to our card listings, reviews, and recommendations to ensure that readers have the most reliable information and advice.

Initial Scoring
Once we collect credit card data we organize it in our database according to features, which roll up into feature sets (such as rewards, interest, fees, benefits and Security/Customer Service). Each individual card feature is assigned a star rating score on a 1 to 5 scale using a formula. For instance, for a one-time bonus score we would use a formula like (if bonus is $500 or greater, then assign a score of 5; if $300-$499 then 4, and so forth). Weighting of scores. Once all of each card’s features have received a score we apply a weighting factor to each feature to arrive at a weighted average score for each card (according to the general category in which it resides, such as travel rewards).

This weighting process allows us to assign significantly more emphasis to the attributes important to a particular category, and downplay those that are less relevant to it. That allows us to objectively identify cards that stand out in their category, and why they do. For example, we apply significantly higher weight to such travel-specific features as airport lounge access or primary rental car insurance than we do to attributes such as interest rates or fees that might be more strongly considered for other categories, such as balance-transfer cards.

Earnings rates
Another critical factor we consider when rating and ranking travel cards and other types of rewards cards are the cards’ effective earnings rates. We first calculate the average value of points or miles for all the rewards cards in our database, a painstaking process that entails collecting all airline fare data by carrier across scores of popular domestic and international city-pairs along with per-night hotel charges at all major hotel brands.

The required points and miles for air travel or hotel stays from the various reward programs is then used to calculate an effective earnings rate for each card. That allows our readers to make the most informed choices. By putting a card’s large one-time bonus or earnings rates into context across many dimensions and card features, they can more readily weigh the card’s benefits relative to its costs. Uncovering the true but often opaque redemption value of rewards points or miles is, we feel, the only reliable way to make cogent choices among competing value-based cards.

Card Features We Score
As mentioned in our methodology explanation, we place significant weight on certain travel-related features in determining our ratings for each card. Specifically, we place over 50% of our overall assessment score on the combination of the following factors:

• Maximum value of any one-time bonus, whether in points or miles.
• Initial card spending required to earn any bonus.
• Redemption value of the bonus miles or points.
• Global card acceptance, as detailed by the four card networks (Visa, Mastercard, American Express and Discover).
• Options to redeem points or miles with travel partners, both airline and hotel.

Another consideration are the cards’ coverage, if any, in these travel-related areas:

• Car-rental collision insurance, whether primary or secondary.
• Travel accident insurance.
• Lost or delayed luggage insurance.
• Insurance for trip cancellation, interruption, or delay.
• Cell phone loss or damage.
• Roadside assistance and towing.
• Emergency travel medical/dental benefits.

General, non-travel related features that we consider and score include:

• Interest rates, including both introductory and regular APRs for purchases and balance transfers.
• Fees, including those for annual membership, late payments, cash advances and foreign transactions.
• Security/customer service features.
• Other non-travel benefits, such as free credit scores, ID theft protection and contactless payment capability.

How We Reach Our Final Assessments
We rely mostly on the objective scores created by our rating algorithms to determine which card is chosen as the best travel rewards credit card, as well as the ones deemed best for one-time bonuses and as co-branded airline and hotel choices.

However, we may make some adjustments from time to time, to both features and weightings that could affect rankings, which can be influenced by subjective input from our credit card experts. Any potential modifications will be consistent with Investopedia’s belief that consumers are best served by travel cards that:

• Provide superior value in earning awards travel.
• Charge reasonable interest rates in the event that balances are carried month to month.
• Charge fewer and/or more reasonable fees.
• Provide solid customer service, based on the number and quality of customer service features
• Have helpful and protective security features.

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