Do any of the following terms describe the state of your credit: no credit history, bad credit, impaired credit? If you fall into any of these categories, the inconvnient truth is that there are many fewer options available in the credit card marketplace vs. those who have credit history and a strong credit score. But, everyone must begin their credit life at some point and it’s always better to establish and build a positive credit history sooner than later.
So, what is the best option out there? While there are several secured credit cards on the market the best in terms of value and trust is from Capital One. The unfortunate reality is that most secured cards charge a steep cover charge in the form of an annual fee, knowing their customers don’t have many options. The Capital One® Secured MasterCard® is an exception. Unlike the other products in the category, this card is quite affordable and is offered by a reputable and major card issuer. It also happens to be the highest rated secured card on CreditCardForum, based on reviews from real consumers. Here’s why…
Reason #1: Low cost
Most cards for bad credit charge an extremely high annual fee in addition to several miscellaneous expenses, such as an application fee, processing fee and monthly servicing fee. When combined, these fees might cost you up to $150 or more per year.
Capital One’s secured credit card has no annual fee. There are no application or processing fees.
The interest rate is 24.99% variable APR on both purchases and balance transfers. While this 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.
Reason #2: 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. After you make your first five monthly payments on time, you can get access to a higher credit limit (no additional deposit required).
Based on your payment and credit history, you may even earn credit limit increases without having to increase your security deposit. This is a benefit you won’t find on most secured cards.
Reason #3: Reports to the three major credit bureaus
Watch out – I’ve heard a number of complaints about fly‐by‐night banks never reporting customer accounts to the credit bureaus. Why not? My guess would be because those banks are attempting to cut costs and pocket the savings (banks have to pay the bureaus in order to report customer accounts).
Fortunately, you won’t have to worry about that problem with Capital One. They will automatically report 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 build credit for the first time, or rebuild a checkered credit history. It provides the opportunity to improve your score with responsible use.
Reason #4: Access to Creditwise
What is Creditwise? It’s a new tool from Capital One which helps you monitor and learn about your credit. Your Capital One secured card comes with this benefit at no additional cost.
Reason #5: Fund your security deposit over time
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.
Once your account is open, if you want to increase your credit limit, you can do so at any time simply by adding to your security deposit. Once your score grows with responsible card use you can apply for an unsecured version of the card.
Reason #6: A name you can trust
There are many players in the secured card space but major national issuers have been rare. Capital One is by far the biggest issuer to compete for new customers in this market and it can be a good choice from a trust standpoint (since you have to send them a security deposit, after all) to deal with a reputable company. Plus, over time you may be given an opportunity to graduate to a non-secured Capital One credit card, which is a feature other smaller issuers typically can’t offer.
Verdict for 2016?
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.
Don’t forget that your security deposit is fully refundable. 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. This will also be the case if you decide to “graduate” to one of Capital One’s regular unsecured cards, which is a distinct option once you’ve proven your responsible credit behavior over time.
This post was written or last updated June 1, 2016