If you want to build or repair your credit by using a credit card responsibly, you may find that you can’t get approved. How can you build credit if you can’t get credit extended to you?
A secured credit card is one solution. It’s a credit card that requires a cash deposit to secure your credit line. Your credit line is equal to your deposit amount. The deposit serves as collateral to reimburse the lender if you default on your payment. Aside from the security deposit, the card functions as a regular credit card, with a monthly payment due date, interest charged if the payment is late, various fees charged and the lender reporting to the credit bureaus each month.
When comparing secured credit cards, you want to consider interest rates, fees, minimal deposit requirements, and maximum credit line limits. We’ve reviewed dozens of lenders to find the best cards. Here are our top picks for 2019.
Review and compare secured credit cards
If you have no credit history or bad credit, a secured credit card can help you build a line of good credit. It can also offer other benefits depending on the card you choose, for example, interest on your security deposit with the USAA cards or cash-back rewards with Discover it.
Once you find the card that is best for your situation and sign up, you submit your deposit to the company. It typically subtracts your annual fee out of the credit line available and the remainder is available for use. From there you can begin to make purchases. Keep in mind that most cards provide you with at least a 25-day period from the end of your monthly billing cycle to the due date of your bill. You want to pay your balance within that time to avoid interest charges and fees and to ensure your credit card company sends a good report to the credit bureaus.
If you would like to find out more about these secured cards and others, visit our compare and review page (including user reviews) and tick the box in the left-hand menu for “secured.”