Best Secured Credit Cards

Once you fall into a pit of bad credit, it can seem impossible to climb out again.

There's one main way to set yourself back on the right track, but it seems counter-intuitive – using a credit card.

Yes, even though credit cards likely got you into this mess in the first place, in order to get out of it, you'll have to demonstrate responsible use of a credit card.

But how can you do that when no banks or issuers will give you (and your poor credit) a chance?

That's where secured credit cards come in.

How do secured credit cards work?

Normal credit cards are unsecured, meaning you don't need to offer any sort of collateral or down payment in order to get the card and borrow money with it.

Secured credit cards are the opposite – they work by having you pay a predetermined amount upfront to establish a credit limit.

For example, if you give $3,000 for a downpayment, usually your credit limit will be around that amount. You can then borrow within this limit, making sure to pay off every month, just like a normal credit card.

Making a deposit for your secured credit card

Most American secured credit cards have a minimum security deposit of around $200 to $300, but this largely depends on the card and the issuer.

Sometimes you'll be granted a credit limit higher than the security deposit, and other times your credit limit can increase after paying off your balance for a number of consecutive months.

Can I get a secured credit card with no deposit?

Most secured credit cards require a deposit, but some of them may refund your deposit after you demonstrate responsible use for a certain amount of time.

If you're worried about putting hundreds of dollars towards a limit, some security deposits can be as low as $49 – a much more palatable fee.

What is a secured credit card used for?

There are 2 main things secured cards are used for – building credit and fixing credit.

Secured credit cards are a good way to build credit

If you're getting your first credit card but aren't a student, a secured card is a great way to establish a credit report. Students have plenty of options for student-specific cards that don't require security deposits, but they can also apply for a secured card if they wish.

Once you've paid your bills on time for a couple months to a year, you'll likely have a decent enough score to apply for better cards. Make sure to check your credit score and report every once in a while so you know how things are going.

If you have bad credit, a secured card could be good for you

But the other major thing secured credit cards are used for is remedying bad credit.

Once your score falls within the "poor" range, most issuers will be very reluctant to accept your applications for their cards. In their eyes, you've demonstrated poor credit use in the past and are therefore likely to do so again.

In order to show them that you're ready to be a responsible credit card user, you need to prove it. And secured credit cards are one of your only options for doing that.

A couple months or years of responsible credit use on these cards will help raise your credit score.

Of course, if you don't feel certain you'll pay off all of your bills every time, getting another credit card can just make your situation worse. So ask yourself if it's better to wait to get yourself back on your feet, or if you're confident you're ready to improve your credit.

Can I earn rewards on my secured credit card?

Most secured credit cards don't let you earn rewards, so they're best used as an intermediate between poor credit and getting a good rewards credit card down the road. Stick with them for a while to improve your credit score, then move on to more profitable cash back or travel cards when you can.

That being said, there are some secured cards that will give you rewards – but they're likely to require a slightly better credit score. Keep an eye out for this perk if it's important to you.

Compare Secured Credit Cards