Do you have a bad credit score? Or maybe no credit history at all? If you fall into either category, the bad news is the universe of cards for which you could get approved is not very large. Worse yet, the few available often have extremely high fees — either in the form of annual fees, interest rates or both.
But now for the good news! The Capital One® Secured MasterCard® is an exception. Unlike the other guys in the category, this card is quite affordable. 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 a 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 a very low annual fee of $29. There are no application or processing fees.
The interest rate is 22.9 percent variable APR on both purchases and balance transfers. 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.
The great thing about Capital One’s offer is that your refundable minimum security deposit is only $49, $99 or $200 based on your creditworthiness. Depositing the minimum will get you a $200 credit limit. The maximum limit available is $3,000.
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 being cheap (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 bad credit history. It provides the opportunity to improve your score with responsible use.
Reason #4: Access to Credit Tracker
What is Credit Tracker? 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 only $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.
Verdict for 2014?
Year after year, we hear from people all the time who have successfully used this card to help build/rebuild their credit history. When you consider the low cost and low minimum deposit, it’s clear why this is a popular credit-building card.
Don’t forget that your security deposit is fully refundable. Down the road when you are ready 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 subtracted from the deposit and the remainder will be refunded to you.
This post was written or last updated March 27, 2014