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The 5 Best Secured Credit Cards That Build Credit

Last updated 03/15/2024 by

Ben Luthi
Getting a secured credit card that builds credit is one of the best things you can do to build or rebuild your credit history.
That said, not all secured cards do a good job of helping you build credit. Some issuers don’t report to all three credit bureaus, making it difficult to boost your credit score based on all three of your credit reports.
As a result, it’s important to know how secured credit cards can help you build credit in the first place and where to look to get the right one.

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How a secured credit card can help you build credit

Your credit score is made up of several different factors, including your:
  • Payment history
  • Amount of debt
  • Length of credit history
  • Mix of credit
  • New credit
While a secured credit card affects all of these, we’ll cover the top two because they’re the most important.
As you use your new secured credit card and make payments on time each month, it helps you establish a positive payment history.”
For starters, your payment history makes up 35% of your credit score. As you use your new secured credit card and make payments on time each month, it helps you establish a positive payment history.
“If you do that consistently for six months, you will dramatically improve your credit score,” says Jason Decker, credit expert and travel rewards consultant at Nomad Travel Hacker.
You can even take it a step further and pay off the balance in full each month. This won’t impact your credit score either way, but it’s a smart way to use credit because you’ll avoid paying interest.
Second, how much you use your secured credit card can impact your credit score. Your credit utilization –– which is calculated by dividing your current balance by your credit limit –– helps show how responsibly you manage debt, and a high utilization can hurt your score.
The lower your credit utilization, the better. “If you can’t pay off the balance in full, then at least keep the credit utilization under 20%,” says Decker. “Make several payments throughout the month to keep your balance low.”

How to find a secured credit card that builds credit

Because you can build credit with a secured card without going into debt or paying interest, it’s worth taking the time to find a good one.
Here are 5 of the best secured credit cards that build credit.

This credit card is unique among secured credit cards because it doesn’t require a credit check or even a checking account to get approved. So if you have some major negative items on your credit report, you don’t have to worry about getting declined.
Also, the card’s APR is relatively low compared with other secured cards, which tend to charge upwards of 20% or 25%. Your credit line can be as low as $200 or as high as $3,000.
The card doesn’t really come with any special perks, though, and you’ll pay a $35 annual fee. But if you need a secured card and are afraid you won’t get approved anywhere else, this one’s a solid choice.
If you think you’ll need to carry a balance on your new secured credit card, consider this card. The card’s interest rate is far below the average of 15.32% for all credit cards, according to the Federal Reserve.
Your initial credit limit can be between $200 to $1,000 with a matching security deposit. After that, you can increase your limit up to $5,000 with additional deposits.
The main drawback to the card is that it charges a $48 annual fee. So, if you don’t plan on paying interest, it’s likely not worth it. But if you do, it may be worth paying the fee to get the extra interest savings.
If you can qualify for this card, it might be the best of the bunch. It’s one of the few secured credit cards that offer rewards.
It offers 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. Plus, you can earn unlimited 1% cash back on all other purchases.
What’s more, Discover will match all the cash back you earn during your first year, so you’re essentially getting a minimum of 2% cash back during that time. That matches some of the best cash-back credit cards on the market.
Your security deposit and credit limit start at $200, and, unlike most secured credit cards, you can get your deposit back before you close the account. Discover will start checking to see if you qualify after eight months.
The card charges no annual fee, but the APR is high. Also, Discover isn’t widely accepted overseas, so opt instead for a Visa or Mastercard if you travel internationally often.
This card offers a low APR like the Applied Bank card, but it doesn’t come with the annual fee. There’s also no balance transfer or cash advance fees, which can be helpful for some.
The main drawback to this card is that you have to be a member of Digital Federal Credit Union to get approved. You can become a member if:
  • Someone you are related to is a current member.
  • The company you work for or retired from is a participating employer.
  • You belong to a participating organization.
  • You live, work, worship, or attend school in a community which has been designated as underserved and the credit union has a branch in it.
Joining a participating organization isn’t too hard, so it’s worth it if you want the card.
What really sets this card apart is that, if you’re eligible, your initial security deposit doesn’t necessarily have to match your credit limit. You’ll get an initial $200 credit line after making a security deposit of $49, $99, or $200, which is determined based on your creditworthiness.
The card also offers access to a higher credit line after five months of on-time payments with no additional deposit required. The card has no annual fee and no foreign transaction fees, so it’s a great travel companion if you’re headed overseas. That said, its APR is steep.

Picking the right secured credit card that builds credit

There’s no single secured credit card out there that’s best for everyone. As you consider these and other top secured credit cards, it’s important to consider your needs and preferences.
You must be sure that the secured credit card reports to the credit bureaus or it’s pointless”
Check each card for fees, interest rates, and other features. Then pick the one that suits you best. Also, “you must be sure that the secured credit card reports to the credit bureaus or it’s pointless,” says Decker.
All of the cards we’ve listed above report to all three credit bureaus, and most credit cards from major issuers do the same. That said, if you don’t recognize a bank name, reach out to them before you apply to make sure they report to all three bureaus.
As you do your due diligence, you’ll have an easier time achieving your goal of a better credit score.

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Ben Luthi

Ben Luthi is a personal finance writer and a credit cards expert who loves helping consumers and business owners make better financial decisions. His work has been featured in Time, MarketWatch, Yahoo! Finance, U.S. News & World Report, CNBC, Success Magazine, USA Today, The Huffington Post and many more.

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