The Secured Card is back in 2012. If you have bad credit, you know that bad-credit credit cards can be pretty nasty. The unsecured, sub-prime cards had a lot of fine print and miscellaneous fees that meant that by the time you get your card, most of your credit limit was used to pay initial card fees. The Card Act tried to change some of this by imposing limits on fees, but some bad-credit card issuers have developed approaches to get around these new regulations, i.e. defining fees that are charged before you have an account. But overall, the Card Act shut down most of the unsecured, bad-credit, credit card offerings and as a result, the secured card has returned. To learn more about secured cards read What is a Secured Credit Card.
If you have bad or poor credit, a secured card is one of the best credit card options available. Unlike pre-paid cards, they can improve your credit score and unlike unsecured cards, they are generally pretty straight forward without numerous fees (although some issuers have removed the grace period, meaning unlike traditional a credit card, you are charged interest even if you pay your balance off in full every month; we’ve highlighted these issuers below and in our rankings). A secured card does require a deposit unlike unsecured credit cards but, if it’s possible, saving up your deposit can be worth it, as unsecured cards often charge fees almost equivalent to your refundable deposit. Once you have a deposit, finding the best secured card largely depends on whether you will carry a balance and for how long. In general, the best approach is to avoid running balances by paying off your card each month. If you can do this, the best bad-credit card is the one with the lowest fees. If paying your card off in full every month is not possible, then the best secured card varies. We’ve summarized the best secured cards for typical users below.
Revolving Balance Users: Low Interest Rate Secured Card
Applied Bank® Secured Visa® Gold Credit Card is a good low-purchase APR or interest rate bad-credit card if you do not pay off your balances in full every month (if you anticipate carrying a balance of over $701 over the year, please see the Best High Revolving Balance Secured Card section below instead). The interest rate is a low 9.9%, but the card has no grace period. This means it charges interests immediately when you make a purchase. If you carry over a balance, then a grace period is not that relevant to you and a low interest rate benefits you, but if you are someone who pays off your balances, then this bad-credit credit card is not a good option for you, as you are charged interest on your purchase even if you pay your full balance off immediately.
What about those of you who carry over a balance some of the time but not all the time? A top secured card for those of you in this scenario is the The First Progress Platinum Horizon MasterCard® Secured Credit Card. The First Progress secured card charges a relatively low interest rate of 14.99% and a $39 annual fee. It also includes a grace period of 25 days for you to have some time to pay off your balance without incurring any interest rate. So, if you carry a balance over only for one month, your interest rate will be low and if you want to pay off you entire balance, you have 25 days to do so.
High Revolving Balance Users: 0% APR High Fee Secured Bad Credit Card
For those that revolve a balance of over $701 a year, the Platinum Zero® Secured Visa® Credit Card from Applied Bank® is a great option for you. The card has 0% Purchase APR, hence its card name, and includes a $9.95 monthly fee, which is $119 a year. This monthly fee clearly adds up and the card does require a higher deposit of $500, which is around $200-$300 more than what is required for other cards, but if you carry balances of over $700 a year, the interest savings on this card compared to other cards make this a better bad-credit card choice. If you do not keep an average balance of over $701 a year, this card is not recommended because the costs for the monthly fee will be more than what it would cost you to use another card. In this case, see the Best Interest Rate/Best Revolving Balance Card or the Best Low Fee/No Revolving Balance Card sections.
Pay In Full Every Month: Best Low Fee Bad Credit Credit Card
If you know you are not going to carry a balance over or only occasionally carry a low balance, the Wells Fargo® Secured Card is a great option for you because it has one of the lowest annual fees at just $25. This secured card also has one of the highest maximum secured credit card limits at $10,000. If you want to make big purchases and can pay off your bills each month, this is one of the best securd cards to help you build your credit. It does require a minimum deposit of $300, which is slightly higher than the majority of other cards, but not much higher at just $50-$100. In addition, this secured card lets you customize your card with a personalized design, which we think is a pretty neat feature.
Military Service Member & Veteran Card: Low Fee, Low Interest Card
For those that are severing or have served in the military, the USAA Secured Card® is a great option. You must first be a USAA member. Once you are a USAA member, its secured card is one of the top secured card options for its low fees and interest rates, high maximum and low minimum deposit, and other great features. Both the Purchase and Cash APR are exceptionally low at 9.9%. Out of the 11 cards we reviewed, the average Purchase APR is around 17% and the average Cash APR is around 19%. The annual fee is also one of the lowest at $35 while the average is around $40. Both the maximum and minimum deposit is at one of the best amounts with $5,000 as the maximum and $250 at the minimum.
Some other great features of the USAA Secured Card® include the ability to earn an interest of 0.95% on your security deposit, the option to choose between a MasterCard and an American Express card, allowing you to take advantage of the benefits of either network, and access to CreditCheck Monitoring, an online credit review and management service, for free.
If you are always going to pay off your balance within the 25-day grace period, then the Purchase APR, or interest rate, is not going to be too relevant for you. In this case, it’s better to choose a card that has a lower annual fee; a good option is the Wells Fargo® Secured Card, as it has a lower annual fee of $25 and a higher maximum credit limit of $10,000 should you want to make larger purchases that you can pay off before the due date.
Forgetful Users: Best Late Payment Card
We do not recommend paying your bills late, as it may hurt your credit score and the fees are expensive. Nonetheless, if you are someone that occasionally forgets to pay your bills on time, the Capital One® Secured Master Card® maybe a better option for you. Like all other providers, Capital One will charge you a late fee, but the maximum late fee is lower at $19 compared to the $35 fee that the majority of providers charge. In addition, the annual fee of $29 is only slightly higher than the Wells Fargo card, so if you forget your payment once this card may save you money.
Best Credit Score Monitoring Card
For the majority of you, you want to use a secured card to help build your credit worthiness. Two providers, US Bank and Capital One, understand this and so have included with their secured cards features to help you monitor your credit score. The US Bank® Secured Visa Card offers a free credit score from Experian, one of the three credit reporting bureaus in the U.S. The Capital One® Secured Master Card® includes free enrollment in their credit score tracking service, CreditInform®, allowing you to monitor changes in your credit score. Along with this feature, Capital One offers the opportunity for users to lower their deposit while keeping a credit limit above the deposit amount if the users show a history of credit worthiness over time when using the card.
Doshound Secured Card Calculator
To find out more about each card discussed above as well as other cards we have reviewed and to approximate and compare the exact costs for you for multiple secured credit cards, visit our secured credit card page and try our secured card cost calculator.
If you have other questions, please leave a comment and we will address them as soon as possible.