If you have damaged credit, the inconvenient truth is that there are far fewer options available in the card marketplace than there are for those with strong credit scores.
However, you’ve got to start your re-building journey somewhere, and a secured credit card is a good place to start. Because you have to put down a deposit to secure the credit line, the bank may be more willing to take a chance on you. Problem is, some secured cards charge steep fees, knowing their customers don’t have many options. The Capital One® Secured MasterCard® is an exception. Unlike some other products in the category, this card is quite affordable and is offered by a reputable and major card issuer.
When shopping around for credit-rebuilding cards, beware of fees, such as application fees, processing fees and monthly servicing fees. Small on their own, they can add up to a lot of money per year.
Capital One’s secured credit card has no annual fee, a rarity among secured cards. There are no application or processing fees.
While the APR for purchases and balance transfers might seem high it’s actually quite reasonable for a secured card aimed at those with bad credit. However, as with all credit cards, you can avoid interest charges entirely simply by paying your statement balance in full and on time each month.
Low minimum security deposit
The next cost associated with secured cards is the security deposit — the amount you put down to secure the credit line.
To get an initial $200 credit line, you’ll make a security deposit of $49, $99 or $200, depending on your creditworthiness. This tiered system is unique and rewards you for having better credit, instead of the one-size-fits-all deposit approach many secured cards take.
After you make your first five monthly payments on time, you can get access to a higher credit limit (no additional deposit required).
Reports to the three major credit bureaus
As a major issuer, Capital one automatically reports your account to the three major credit bureaus (Equifax, TransUnion, and Experian).
This makes their secured MasterCard the ideal choice if you are trying to rebuild a checkered credit history.
Access to Creditwise
Creditwise is a tool from Capital One that helps you monitor and learn about your credit. Your Capital One secured card comes with this benefit at no additional cost.
How the security deposit works
Don’t have the money available to fund your deposit today? That’s not a problem!
After your credit card application is approved, Capital One gives you up to 80 days to fund your full minimum security deposit (which as mentioned, will be $49, $99 or $200 based on your creditworthiness). So even if you don’t have that money today, you will have plenty of time. You can
even make partial payments as you are able, a long as you pay the full minimum amount within 80 days of approval.
Before your account is open, if you want to increase your credit limit, simply add to your security deposit.
Your security deposit is fully refundable when you’re ready to move on to a non-secured card. If at any point you decide to close your account, you will receive back your full deposit, assuming there is no balance on the card. If you do owe a balance when you cancel, the amount owed will be deducted from the deposit and the remainder will be refunded to you.
We continually hear from forum members and site visitors who have successfully used this card to help build or rebuild their credit history. When you consider the low cost and low minimum deposit, it’s clear why this is really a popular option for consumers in this segment.
Just be aware that Capital One has no official “graduation” process, meaning it won’t automatically move you to a non-secured product after you’ve rebuilt your credit. You may need to close your account and apply for another card, even if you stick with Capital One.
Why we gave it 3 out of 5 stars
|Low fees: The Capital One Secured MasterCard earns this star for having no annual or activation fees. The only money required is the upfront security deposit, which is required of all secured cards.|
|Ability to graduate: Capital One has no official policy for graduating secured-card users to unsecured products. Therefore, it does not earn this star.|
|Ability to get higher credit line than deposit: The card earns this star for allowing creditworthy applicants the ability to put down less money for the same credit limit.|
|Rewards: While rewards should never be the focus of a secured card, we like to reward secured cards that give even a small return on spending. This card, unlike some other secured products, has no rewards.|
|Unique perks: The card gives access to CreditWise, a score-tracking and credit-profile-monitoring service from Captial One.|
Our rating was based on our standards for secured credit cards.
While some issuers take advantage of their customers’ desperation with their secured products, Capital One’s secured card is a consumer-friendly option. While we docked it for its lack of graduation protocol (which means you’d have to close your account and apply for a new card when you’re ready to “replace” your secured card), the card gets stars for its lack of fees and the unique ability to get a higher credit limit than your deposit.
This post was written or last updated August, 2016