Secured Cards to Rebuild Credit

Secured Cards to Rebuild Credit

Published on January 5, 2016 7:30 pm

increasing credit scoreThose with bad credit often got there through job loss, medical bills, and other hardships we can't always control. Whatever the case, instead of dwelling on the past, it's best to focus on the future. The catch-22 is you can't apply for a credit card with bad credit and get approved. But with secured you can, no matter how horrible your history! Know these 3 tips when using a credit card for rebuilding credit:
Tip #1 – Contrary to popular belief, you don't need to carry a balance to improve credit. What's reported to the credit bureaus is the monthly statement balance, regardless of whether you pay in full or not.
Tip #2 – Having a high balance is not better. A small portion of your credit score is based on what percentage of your available credit limit you are using. It's best to never use more than 30% of your credit limit at any given time, according to advice given by FICO.
Tip #3 – After your card is open, setting up automatic e-payments is recommended. That ensures payments will always be on-time.

2016 Secured Credit Cards to Rebuild Credit

(constantly updated with featured offers from our advertising partners)

Discover it® Secured Credit Card - No Annual Fee

Discover it Secured Credit Card No Annual FeeNow there is a great new option in secured cards from a name you trust – Discover. With the Discover it Secured Credit Card you can earn the same great cash back rewards Discover is famous for while you build your credit history – all with no annual fee. Plus, you will get to see your FICO credit score each month on your billing statements. Discover has some of the most consumer-friendly terms in the market, so this is a great option whether you are just starting out with credit or rebuilding your credit history.

  • No annual fee. No late fee on your first late payment. Paying late won't raise your APR.
  • Earn 2% cash back at restaurants & gas stations on up to $1,000 in combined purchases each quarter. Earn 1% cash back on all other purchases.
  • Discover matches all the cash back you've earned at the end of your first year - automatically. New cardmembers only.
  • Your minimum security deposit amount of $200 or more will establish your credit line (up to the amount we can approve).
  • Monthly reviews start at 12 months to see if you qualify to get your security deposit back while you continue to enjoy your Discover card benefits.
  • Reports to 3 major credit bureaus so you can build or rebuild credit with responsible use.
  • FICO® Credit Score for free on monthly statements & online.
  • Click "Apply Now" to see rates, rewards, FICO® Credit Score terms, Cashback Match™ details & other information.

Capital One® Secured MasterCard®

Capital One Secured MasterCardThe Capital One Secured MasterCard is a very popular card for rebuilding credit, as evidenced by the many stories in our card forum section. This card is a very straightforward and reasonably priced option for those with little or no credit history. It comes with no annual fee and, unlike many secured credit cards, there are no application or processing fees. Once you establish a track record of managing your account and other credit responsibly you may earn credit limit increases over time without having to increase your security deposit.

  • No annual fee, and all the credit building benefits with responsible card use
  • Unlike a prepaid card, it builds credit when used responsibly, with regular reporting to the 3 major credit bureaus
  • Your minimum security deposit gets you a $200 credit line
  • You may qualify for a credit line increase based on your payment history and creditworthiness with no additional deposit required
  • Easily manage your account 24/7 with online access, by phone or using our mobile app
  • It's a credit card accepted at millions of locations worldwide

primor® Secured Visa Gold Card

primor Secured Visa GoldIf you are in the market for a low cost secured card the primor Secured Visa Gold Card could be just the ticket to building or rebuilding your credit. Get the global acceptance and prestige of a real Visa Gold card which reports to all three credit bureaus, unlike a prepaid debit card.

  • Low fixed interest rates with no penalty rate!
  • Reports to all three nationwide credit bureaus
  • Fast, easy application process
  • No processing or application fees!
  • Guaranteed Approval* as long as your monthly income exceeds your monthly expenses by $100 or more!*
  • *See application for additional details

USAA Secured Card® Platinum MasterCard®

USAA Secured Platinum MasterCardDon't consider this unless you're in the military and even then it might not be the best idea since its annual fee is higher. The application process first requires you to qualify for USAA membership. Only military personnel qualify for full USAA benefits. Unfortunately they'll put your deposit in a 2 year CD so it will be locked up during that time... a drawback because if you manage credit responsibly you can probably qualify for an unsecured card before then.

  • Before starting the application, USAA will ask you questions to establish online access and eligibility with USAA.
  • Security deposits are held in a 2-year CD account. A penalty will apply if you close the CD before before the 2 years is up.
  • A minimum $250 initial deposit is required.
  • $35 annual fee.

Consider these factors when choosing your secured credit card...

  • Reasonable Fees – Fees should be expected, but some banks will rip you off with outrageously high fees. The application fee and annual or monthly fee should be reasonable and when combined, over the course of the first year the fees should cost no more than $120 (and hopefully a lot less).
  • Flexible Security Deposit – We all know higher credit limits are better, but maybe you can't afford much for your security deposit right now. The best cards should give you some flexibility. For example, you can start with a $500 deposit for a $500 limit, but later on when you can afford to do so, you should be given the ability to raise that to a $3,000 limit by adding more to your security deposit.
  • Reports to Credit Bureaus – Of course it's important that your account is reported to the bureaus. However, banks that offer secured credit cards (or any card for that matter) have to pay to report customer records... for that reason, some unscrupulous banks won't report because they're being cheap, make sure you watch out for them.

Remember... if you have really bad credit (multiple delinquencies, charged-off accounts or a bankruptcy) then secured credit cards to rebuild credit are likely your only option at this point. Secured cards are certainly not the most desirable type of credit card to carry (no rewards, fewer benefits) but keep your account in good standing. In a year or two you can probably be considered for a regular credit card that doesn't require a security deposit. However, it would be counterproductive to apply for a regular credit card with bad credit because every time you apply for credit (whether it be a card or loan) there is a credit report inquiry. Having too many inquiries will hurt your credit score. So, it's better to wait before applying for a non-secured credit card until you have established a good credit history and have a good chance of being approved.

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.