Secured Credit Cards: Credit – Cards No Credit Check
When credit cards are used responsibly, they can help improve your overall financial health. Secured credit cards can especially be helpful for people with poor credit scores and who want to improve their credit.
If you do not qualify for an unsecured card, which offers more flexible terms, secured credit cards for bad credit can be a good alternative.
These cards, which are usually designed for consumers with less than perfect credit, require a security deposit during application.
The deposit acts as security in case the cardholder defaults. The cards can also improve your credit when used responsibly. Some of the benefits of secured credit cards include:
- Easier approval since they have lower credit risk
- They have low APR compared to unsecured cards
- The low credit limits also reduce the risks of overspending
- If you use the card responsibly, you can qualify for a higher credit limit
How to use a secured credit card
As stated earlier, secured credit cards require a refundable deposit which acts as collateral. Since using a credit card is among the best ways to improve your credit, applying for a secured credit card can be worth your while.
Some of these cards have an annual fee, and it is also important to check for other fee charges like returned payment fees or late fees when opening the account.
Secured credit cards are used for a variety of purchases includes hotel accommodation and car rentals. You can also use the card to earn rewards.
If you want the card to benefit you, it is important that you keep your credit card utilization low, and you also need to pay on time. This will help boost your credit.
The best-secured credit cards for bad credit
- Capital One® Secured Mastercard®
The card requires a low-security deposit, and people with poor credit can also apply. It has a variable APR of 24.99%, and there are no annual fee charges. After making timely payments for the first five months, your credit line can increase with no additional deposit required. You can also manage your account 24/7 using the Capital One® mobile app. Some of the benefits of Capital One® Secured Mastercard include:
- Online access by phone
- Free monthly credit score access
- Auto rental insurance
- Extended warranty coverage
- Travel accident insurance
- Discover It ®Secured
The card has an APR of 24.99% and no annual fee charges. It can be a good option for both consumers who are still new to credit cards and those with poor credit scores. Once you open an account, you will receive an initial 200 credit line, but you are also allowed access to a higher credit limit. If you make payments on time, your security deposit will be refunded. The card also comes with rewards which include 2% cash back at restaurants and gas stations up to $1,000 in combined purchases each quarter. Other purchases attract 1% cash back. The card does not have late fee charges, and there is also no penalty APR if you make late payments.
- USAA® Secured Card Visa Platinum® Card
This credit card has an APR of between 11.65% and 21.65% variable. It also has an annual fee of $35. There are among the best credit cards to help build or rebuild your credit. A security deposit ranging from $200-$5000 is required when opening the account, and this amount also becomes your credit limit. If you are in the military, you can get access to special rates which include an APR of 4% for up to one year during deployments. Other benefits of the card include:
- Travel accident insurance,
- Trip cancellation insurance,
- Extended warranty coverage
- Baggage delay coverage
- SDFCU Savings Secured Visa Platinum Card
The card has an APR of 13.99% and does not have annual fee charges. It offers credit lines of up to $250. Cardholders also get one point on every dollar spent on purchases. Other benefits of the card include;
- Travel and emergency assistance services
- Auto rental collision damage waiver
- Lost luggage reimbursement
- U.S. Bank AeroMexico Visa Secured Card
The card has an APR of 24.99% and an annual fee of $25. It also offers airline loyalty rewards for people who may not qualify for an unsecured credit card. Additionally, you will earn two miles on every dollar spent on groceries and gas and one mile per dollar spent on any other purchases. You will also get first-use bonus miles of 3500 and a complimentary companion certificate. Other benefits of the card include:
- Travel emergency assistance
- Auto rental; collision damage waiver
- Travel accident insurance
- Wells Fargo Business Secured Credit Card
This card is considered the best when it comes to business rewards. Consumers with both good and poor credit can apply. It has an annual fee of $25. Businesses can access credit lines ranging from 0-$25000. Usually, the same amount you issue is a security deposit. The card has 1.5 % cash back on all purchases. It also has 0% fraud liability.
- Citi® Secured Mastercard
The card does not have annual fee charges. It has an ongoing APR of 24.49% variable APR. When applying for the card, a security deposit ranging from $200-$2500 is required, and the same amount acts as your credit line. The card can work well for consumers who are still new to credit cards than those who want to rebuild their credit.
- First Progress Secured Credit Cards
The cards can be a good option for consumers who have poor credit scores and want to rebuild their credit. They can also work well for those who are still new to credit cards and want to build new credit. The cards do not have minimum credit score requirements. In fact, consumers who have no credit file can also qualify. The three credit cards have varied annual fees and rates of interest. The higher the annual fee, the lower the APR. The amount you issue as a security deposit becomes your credit line limit. This deposit ranges from $200 and 00. These cards include:
- Platinum Elite
- The annual fee is $29
- Ongoing APR 19.99% variable
- Platinum Select
- The annual fee is $39
- Ongoing APR 14.99% variable
- Platinum Prestige
- The annual fee is $44
- Ongoing APR 11.99% variable
Generally, you can avoid high interest by ensuring that your balance is paid in full. You also should go for the card that charges a low annual fee. If you expect to carry a balance from one month to another, you can go for a card with a lower APR.
- Platinum Elite
- BankAmericard Secured Credit Card
With the BankAmericard credit card, you can qualify for a higher credit line. The card requires a minimum security deposit of $300 and a maximum of $4,900. If you use the card responsible for the first 12 months, the bank will review your account, and you may get your deposit back. The card has an annual fee of $39 and an ongoing APR of 21.74% variable.
- OpenSky® Secured Visa® Credit Card
The card has an easy application process, and no credit check is done. It is among the best cards for consumers with bad credit scores and who want to build their credit. The card offers credit lines between $200 and $3000. The amount you give as a security deposit becomes your credit limit. Cardholders also get newsletters and online education on how to manage their finances. The card reports to the three major credit bureaus, and responsible use will help improve your credit. It also has 0% fraud liability. OpenSky® Secured Visa credit card has an annual fee of $35. The card does not charge an interest rate on purchases during the first billing cycle. Additionally, you can also log in to your account on 27/7 with mobile access using the OpenSky ®mobile app.
- DCU Visa®Platinum secured credit card
The card is also among the best-secured cards to rebuild your credit. It has no annual fee charges. Consumer information is also reported to the three major credit bureaus, and responsible use will help improve your credit score. The card has an APR of 13.5% variable. The amount you issue as a security deposit determines your credit limit. Other benefits of the credit card include:
- Free auto rental collision damage waiver, which covers consumers for collision damage or theft on auto rentals
- Extensive visa travel services
- Manage your account online
Do you have bad credit?
One of the things that define your financial standing is your credit score. This is the numeric representation of a consumer’s creditworthiness.
Lenders use credit scores to determine how likely you are to pay the debt back. Fico score, which is the most used credit score model, is calculated using data from your credit report.
This data usually includes your payment history, outstanding debt defaults, and bankruptcies. Fico’s score ranges from 300-850. Consumers with fico scores of 700+ are more attractive to lenders.
On the other hand, those with a credit score of less than 579 may have a rough time qualifying for affordable loans or credit.
Choosing a secured credit card
Some of the features to look for in secured credit cards include:
- Credit limit
- Annual fee
- Initial deposit
- Annual fee
Most secured credit cards charge an annual fee. This fee is usually charged starting from the day you open the account and is mostly divided into monthly installments.
- Credit limit
Secured credit cards usually have a lower credit limit compared to traditional cards. The credit limit increases if you make monthly payments on due time. Having a higher credit limit, your credit utilization ratio will also reduce and this will help improve your credit score.
- Initial deposit
The security deposit is usually paid before you open the account. The amount also varies depending on your credit history, but it usually ranges from $200-$500. You can get the deposit back once you qualify for an unsecured credit card or your account is closed.
To save money, it is advisable that you apply for a card with a low-security deposit and an annual fee. Other features you should consider in an unsecured credit card include:
- Credit bureau reporting
- Additional fee charges like initial processing and maintenance fees
- The APR and penalty APR
- Ability to upgrade to an unsecured credit card
Do secured credit cards really help your credit?
Secured credit cards can improve your credit score if the issuing bank reports to the major credit bureaus. For your score to improve, you also need to pay in full every month.
The card should also be used frequently since every bill you pay on time will have a positive impact on your credit score.
How much deposit is required?
Most secured credit cards give consumers a credit limit depending on the amount they give as a security deposit. But there are other cards like Capital One® Secured credit cards that give a higher credit line than your initial deposit.
If you pay your bills on time every month, you can qualify for a higher credit limit. Most banks require a minimum deposit of $200 when opening an account.
Things to consider when comparing credit cards
The main drawback of secured credit cards is the numerous fee charges. But not all secured credit cards charge a lot of fees. Again, ensure that the card issuer reports your credit information to the three major credit bureaus.
This will help build your credit over time. You should also give priority to a card that allows you to increase your credit limit after a period of time.
Lastly, ensure that the card offers rewards. Some credit cards like Discovery It® secured offer 2% cash back on restaurants and gas stations for up to $1,000 per quarter and 1% cash back on all other purchases.
Credit cards to avoid when rebuilding credit
The type of credit card you need depends on your goals, but there are also things that you need to consider when applying for a credit card.
For example, there are credit cards with hidden fees and if you do not do enough research before applying, such fees can increase the cost of the credit card.
Another thing to watch out for is the annual fee. Some cards with annual fees come with extra benefits, like reward programs, but such fees can also be costly.
There are also secured cards like Capital One® Secured Mastercard, and Discover It® secured that do not charge an annual fee.
Secured cards are the best cards for people with bad credit. When applying for the card, a security deposit is required, and the same amount becomes your credit limit.
If the card is used responsibly with regular reporting to the three credit bureaus, it will help boost your overall financial health. Once your credit card is closed, the issuer refunds your security deposit.