Credit cards are a convenient way to shop when you’re short of cash. However, if your credit score is too low, you may not be approved for a standard credit card. A secured credit card allows you to deposit money, draw against it and pay yourself back. This article discusses the requirements and benefits of five leading secured credit card providers (prices shown in USD):
1. BankAmericard Secured Credit Card
You can open an account with $200 to $5,000 at a 24.99% APR. If you can afford it, depositing the maximum amount into the account may improve your credit score more quickly. Score rankings depend heavily on the debt liabilities/total available credit ratio. In other words, keep your charges low and your credit limit high to see the fastest improvement in your credit score. There is no annual fee. Cardholders receive free monthly FICO scores and overdraft protection if their credit card is linked to a Bank of America checking account.
2. Discover It Secured Credit Card
You don’t need a credit score to apply for this card. Initial security deposits range from $200 to $2,500 with a 25.99% APR. There is no annual fee, and the monthly FICO credit score is free. One of the main attractions of this card is its generous rewards policy. Customers earn 2% cash back on restaurant and gas station purchases and 1% cash on all other charges. At the end of the first year, cardholders receive twice the amount of cashback dollars they’ve earned. There is another important feature of this Discover card. After six months, the bank reviews your account to see if you are now eligible for a traditional, unsecured credit card with a loan balance supplied by the bank’s funds instead of your own.
3. nRewards Secured Credit Card
This card is provided through the Navy Federal Credit Union and is available to its active and veteran military members. The minimum initial deposit is $200, and there are no annual or foreign transaction fees. Cardholders earn one point for every dollar spent and can exchange the points for merchandise, gift cards, and cash. Customers can access their free FICO credit score by logging into their online accounts. Lenders automatically review an account starting at six months, and cardholders with a good payment history may receive a non-secured card as a replacement.
4. Capital One Platinum Credit Card
Depending on their credit history, approved applicants deposit a minimum of $49, $99 or $200 to open an account with a $200 balance. This is a rare feature for a secured card. Usually, the initial security deposit is the credit limit. There is a relatively high 28.49% APR, but there are no foreign transaction fees, which is an excellent advantage for individuals who enjoy visiting other countries. There is a $0 fraud liability in case your card is stolen or compromised. Another great feature is the fact that the bank reviews your account after six months and may raise your credit limit with no additional deposit required.
5. DCU Visa Platinum Secured Credit Card
The Digital Federal Credit Union (DCU) offers members a secured credit card with no annual or foreign transaction fees and a 14.50% APR. The initial deposit of $500 is quite large when compared to other secured cards, but there is no maximum limit for an account. This is a great benefit for individuals trying to improve their credit scores. DCU membership is selective. However, interested parties can join one of their partner organizations to meet the restrictive requirements.
Secured credit cards provide a relatively quick way to improve your credit score. Your monthly payment history with any of these five cards is reported to all three credit repositories each month. On-time payments and a high balance are the keys to success with these cards.