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Best Secured Credit Cards When You Don’t Have Any Credit History

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There is a difference between “no credit” and “poor credit.” No credit means you’ve never taken out a line of credit. It’s common with recent college graduates who didn’t take out student loans or 18 year olds leaving the nest and entering the workforce. Poor credit is typically the result of a slip up: missing a credit card payment, defaulting on a loan, a medical bill going to collections.

A secured card offers a solution to building credit from scratch. Because you don’t have any credit history, a lender isn’t inclined to trust you. A secured card is a way to prove to a lender you can be responsible while the lender minimizes risk.

[Make sure you understand HOW to use a secured card before you get one.]

In order to open a secured card, you put down a deposit and the lender gives you a line of credit – typically the same as the amount you put down. Not all secured cards operate the same way. Some secured cards charge an annual fee while others require steep deposits.

Before you start applying haphazardly, see if your local bank or credit union offers a competitive secured card. With no credit, you may have an easier time being approved with a financial institution you’ve already established a relationship with. If the fees and deposit required from your local bank or credit union seem to steep, be sure to check out the options below.

Below, we’ve outlined secured cards with a variety of conditions, but all of which tend to approve people with no credit history.

If you’re a current college student looking to build credit, then apply first for a student credit card instead of a secured card.

Discover it® Secured

Discover it® Secured
Discover has a market leading secured credit card and even if you don’t have any credit history at all, it is still possible to get approved. This card is best for people with no credit, or scores of 670 or less.

There is no annual fee, but you need to make a security deposit of $200 or more to establish your credit line.

You also get to earn cash back: 2% at restaurants and gas stations (on up to $1,000 in combined purchases each quarter). Plus, you get 1% cash back on all your other purchases. To avoid paying interest, pay your balance in full and on time every month.

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on Discover Bank’s secure website

Rates & Fees

Savings Secured Visa Platinum Card from State Department Federal

Savings Secured Visa Platinum Card from State Department Federal
SDFCU’s Savings Secured Visa Platinum Card from State Department Federal sounds elite, but you can be eligible for as little as $5, as long as you have the $250 for the deposit.

You are eligible to join the SDFCU if you’re an employee of the Department of State or one of the extensive organizations with ties to the credit union (all listed here under “who can join”). If you don’t work for the Department of State, you may also be eligible through the American Consumer Council. You can join the ACC for only $5 if you’ve used any major consumer product or service within the past 12 months – and you probably have.

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on State Department Federal Credit Union’s secure website

nRewards® Secured Credit Card from Navy FCU

nRewards® Secured Credit Card from Navy FCU
Navy Federal Credit Union also requires military affiliation to be eligible for it’s nRewards® Secured Credit Card from Navy FCU. It also comes with the hefty deposit of $500. There is a $0 annual fee and a APR ranging from 18.00% Variable.

While there is a rewards aspect of this card, we recommend ignoring it and focusing on building your credit score above 700 so you’re eligible for a truly competitive rewards credit card.

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on Navy Federal Credit Union’s secure website

DCU Visa® Platinum Secured Credit Card

DCU Visa® Platinum Secured Credit Card The DCU Visa® Platinum Secured Credit Card comes with a hefty minimum deposit of $500, and a $0 annual fee. However, you will need to pay to join this credit union if you aren’t already a member.

  • Cost to join – $5 to join DCU + membership costs to join eligible organization if you aren’t eligible
  • Minimum deposit – $500

Just like with USAA and Navy Federal, you must be a member to be eligible. Except with the DCU, it’s easy to become a member. You can be eligible to join DCU if a relative is already member, if your employer offers membership or your community is included within field of membership. If none of these apply, you can join an organization with member privileges. Joining these organizations range in membership cost from $25 to $120. Once you join DCU, you have a lifelong membership, so you could cancel a membership with the other organization after joining.

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on Digital Federal Credit Union (DCU)’s secure website

Capital One® Secured Mastercard®

Capital One® Secured Mastercard® If you can’t afford a hefty deposit of $110 – $500, consider the Capital One® Secured Mastercard®.

Capital One offers a secured card with a $49 minimum deposit for a $200 line of credit.

Unfortunately, the $49 deposit isn’t a guarantee because it’s based on “creditworthiness.” It is possible Capital One will ask for a deposit of $99 or $200, especially if you have no credit history.

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on Capital One's website

Harley-Davidson® Visa® Secured Card

Harley-Davidson® Visa® Secured Card
We know it seems a little strange, but the Harley-Davidson® Visa® Secured Card from US Bank offers a good option for those not interested in paying to join a credit union and trying to avoid an annual fee (aren’t we all?).Here are the details:

  • 25.24% Variable APR – so don’t carry a balance
  • Minimum deposit – $300
  • $0 annual fee

APPLY NOW Secured

on US Bank’s secure website

View other options on our Secured Credit Card Comparison Table

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at [email protected]

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Building Credit

Build Credit with $10 a Month on a Secured Card

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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In 2008, I moved to the U.S. with my wife, Margarita, after living in Moscow. Although Margarita had an impressive career in Russia, she was not a U.S. citizen and had no credit history or credit score. If you don’t have a credit score in the U.S. this basically means you don’t exist, at least in the eyes of lenders. In fact, one in 10 Americans is considered “credit invisible,” meaning they don’t have enough credit history to produce a credit score.

This was a problem we knew we had to fix fast, especially if Margarita wanted be able to take out credit cards or an auto loan, or even apply for an apartment lease in the future.

By following a few basic steps, within 12 months, she had a very good credit score. Within 18 months, she had an excellent credit score and qualified for a rewards credit card with a $25,000 credit limit.

How to open a secured credit card

Opening a secured credit card is relatively easy. You have to provide the bank with a deposit, which is typically $200 or more. The bank will keep the deposit as collateral and will provide you with a credit limit equal to your deposit — some cards may even give you a higher limit without requiring a larger deposit. In Margarita’s example, she gave the bank a $500 deposit and received a $500 credit limit.

Once open, the credit card works like any other. Your credit limit, balance and payment information are reported to the three major credit bureaus. The only difference: If you fail to pay your credit card on time, the bank can take your deposit and apply it toward the debt.

So the bank has a guarantee that they won’t lose money. And you have the opportunity to prove that you will use your credit wisely.

How to use a secured credit card

Given that I was a bank credit risk manager at the time, I knew a bit about credit scoring. So I made sure Margarita followed this strategy:

  • She used the card every month, but for a very small amount. Her typical monthly bill would be around $10.
  • She made sure that she paid the balance in full and on time every month by signing up for automatic payments.
  • She subscribed to a credit scoring service to watch her score improve over time.

It took about six months for Margarita’s score to cross the 600 threshold. About 18 months after starting, she had a score well above 700. At that point, she applied for a rewards credit card. It had a great sign-on bonus and a  $25,000 credit limit.

So it only took a year and a half for someone to go from being a credit nobody to one of the most sought-after customers in the country. What was the trick? It is actually very simple.

3 key rules to follow

Use your card every month

In order to have a FICO® Score, you must have activity on your credit report over the past six months. If there is no activity on your report during this time, you cannot get a score.

Activity does not mean you need to go into debt. You can make a single purchase every month (even for just $1) and that is considered activity.

Keep your utilization low

One of the most important components of your credit score is utilization, making up 30% of your FICO® Score. Your utilization is calculated by dividing your statement balance by your total available credit. People with the best credit scores have utilization levels of 10% or less, but at most, you want to stay below 30%. That means if you have a credit limit of $1,000, you should not spend more than $300 a month.

The best strategy with a secured credit card is to select one small, recurring transaction and automate it. For example, use your secured credit card for your monthly Netflix or Spotify® bill.

Pay your bill in full and on time every month

The most important part of your credit score is a history of on-time payments. This factor alone comprises 35% of your FICO® Score. Even a single missed payment can have a very negative impact on your score. The best way to ensure that you don’t miss a payment is to set up autopay.

Additionally, make sure you pay your balance in full, so you will not have to pay interest. There is nothing more ridiculous than paying interest on a secured credit card. Remember: Your credit limit is equal to your deposit. You are literally borrowing your own money. But if you pay interest (at a high rate), you will be paying a bank to borrow from yourself.

This is just a long way of saying that Margarita’s approach worked. If you want to use a secured credit card to build your credit score, just use it every month for a $10 charge. And pay that balance in full and on time. As a result, your score should improve.

How to select the best secured credit card

When selecting a secured credit card, we recommend you focus on the annual fee — you shouldn’t have to pay one. You can find our roundup of the best secured cards here.

Our top choice is the Discover it® Secured.

Discover it® Secured

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on Discover Bank’s secure website

Rates & Fees

Read Full Review

Discover it® Secured

Regular APR
25.24% Variable
Annual fee
$0
Credit required
bad-credit
Poor/New

How the Discover it® Secured works

There is a typical $200 security deposit, but you can receive it back if: 1. You pay your balance in full and close your credit card account, 2. You qualify to be refunded your deposit during one of Discover’s monthly automatic account reviews (starting at eight months from account opening) and 3. You upgrade to an unsecured card.

Cashback rewards: In this cashback program, you earn 2% cash back at restaurants or gas stations on up to $1,000 in combined purchases each quarter and 1% cash back on all other purchases.

The cashback match. The Discover it® Secured has a new cardmember bonus where Discover automatically matches all the cash back you’ve earned at the end of your first year. The cashback rate is great in general, as few secured cards have rewards, and it’s primarily beneficial for people who typically spend on gas and dining. The cashback match you receive is unique because there is no minimum spending requirement for you to earn the additional cash back. Most cards set a three-month time period and minimum spend for you to earn a new cardmember bonus, but not Discover.

An alternative

Capital One® Secured Mastercard®

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on Capital One's website

Read Full Review

Capital One® Secured Mastercard®

Regular Purchase APR
26.99% (Variable)
Annual fee
$0
Minimum Deposit
$49, $99, or $200
Credit required
bad-credit
Limited/Bad

Upgrading from a secured card to a traditional, unsecured card

Typically, for secured cards from the major issuers such as Discover, Capital One® and Citi®, the upgrade from a secured card to unsecured card involves:

  1. An automatic review process. This checks your eligibility for an unsecured card. The review process varies by issuer, with some cards starting it eight months from account opening and others waiting until 18 months.
  2. Receive your security deposit back. If you qualify for an upgrade and your balance is paid in full, you will receive your security deposit back.
  3. Receive an unsecured card. In addition to receiving your security deposit back, you will be transitioned to a traditional, unsecured card.

If your card doesn’t have an automatic upgrade process, we recommend the following:

  1. Check your credit score often to track your progress toward building credit.
  2. Search for a new card that fits your credit score. There are plenty of options for fair, good or excellent credit — and the better your score, the more options available.
  3. Check for pre-qualification. Before you apply for a new card, check to see if there’s a pre-qualification feature. This allows you to check your approval odds and shop around for the best offer without hurting your credit score. But keep in mind that pre-qualification isn’t a guarantee of approval.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
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Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

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Building Credit

Build Your Credit Score: 6 Secured Cards With No Annual Fees – May 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Secured cards are a great way to build or improve credit. When you open a secured card, you submit a security deposit that typically becomes your credit limit. This deposit acts as collateral if you default on your account, but you can get it back if you close your account after paying off your balance. As long as you use a secured card responsibly — for example, make on-time payments and use little of your available credit — you may see improvements in your credit score. Unfortunately, in addition to the upfront deposit, this credit-building tool can have extra costs, like an annual fee.

You can avoid that expense with one of these six no annual fee secured cards, which have a variety of uses:

Cards to consider

Rewards

Discover it® Secured

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on Discover Bank’s secure website

Rates & Fees

Discover it® Secured

Annual fee
$0
Minimum Deposit
$200
Regular APR
25.24% Variable

The Discover it® Secured is a standout secured card that provides cardholders the opportunity to earn cash back while building credit. A cashback program is hard to find with secured cards, and the Discover it® Secured offers 2% cash back at restaurants & gas stations on up to $1,000 in combined purchases each quarter. Plus, 1% cash back on all your other purchases. In addition, there is a new cardmember offer where Discover will match ALL the cash back earned at the end of your first year, automatically. This is a great way to get a lot of rewards without needing to do any extra work.In addition to a cashback program, this card provides valuable credit resources such as free access to your FICO® Score and a Credit Resource Center — just note these services are available whether you’re a cardholder or not. Discover also takes the guesswork out of wondering when you’re ready for an unsecured card (aka a regular credit card) by performing automatic monthly account reviews, starting at eight months of card membership.

What to look out for: There is a high 25.24% Variable APR for this card, so you could end up paying a lot more than purchase prices if you carry a balance. Try not to overspend and make it a goal to pay each statement in full so you avoid interest charges.

Low deposit

Capital One® Secured Mastercard®

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on Capital One's website

Capital One® Secured Mastercard®

Annual fee
$0
Minimum Deposit
$49, $99, or $200
Regular Purchase APR
26.99% (Variable)

The Capital One® Secured Mastercard® offers qualifying cardholders a lower security deposit compared to other secured cards. You will get an initial $200 credit line after making a security deposit of $49, $99, or $200, determined based on your creditworthiness. Typical secured cards require you to deposit an amount equal to your credit limit, so this card has added perks for people who qualify for the lower deposits.You can also receive a credit limit increase without making an additional deposit after making your first five monthly payments on time. This is beneficial for people who need a higher credit limit and don’t want to (or can’t) tie up their money in a deposit. Also, you’ll have access to CreditWise® from Capital One® and Platinum Mastercard® benefits that include travel accident insurance and price protection.

What to look out for: The $49 and $99 security deposits are not guaranteed and depend on your creditworthiness — that means you may still have to deposit $200. Also, it’s not a good idea A carry a balance on this card because it has one of the highest APRs at 26.99% (Variable).

Average deposit

Citi® Secured MasterCard®

The information related to Citi® Secured MasterCard® has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Citi® Secured MasterCard®

Annual fee
$0
Minimum Deposit
$200
Regular Purchase APR
24.74%* (Variable)

The Citi® Secured Mastercard® requires a $200 security deposit, which is typical of secured cards and a good amount to establish your credit line. You can deposit more money if you want to receive a higher credit line, but if you don’t have a lot of money available to deposit, coming up with $200 is manageable. This card doesn’t have any additional card benefits like rewards or insurances, but you can access Citi’s Credit Knowledge Center for financial management tips.

Low APR

Visa® Secured Card from MidSouth Community FCU

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on MidSouth Community FCU’s secure website

Visa® Secured Card from MidSouth Community FCU

Annual fee
$0
Minimum Deposit
$200
Regular Purchase APR
11.15% Variable

Because MidSouth Community is a federal credit union, you need to be a member to qualify for this card. Membership is limited to people who work, live, worship, or attend school in the following Middle Georgia counties: Bibb, Baldwin, Crawford, Hancock, Houston, Jones, Monroe, Peach, Pulaski, Putnam, Twiggs, Washington, and Wilkinson. If you qualify, you may be able to get a secured card with an APR as low as 11.15% Variable.

What to look out for: This card is very restricted, therefore few people will be able to qualify for this low APR secured card.

Unrestricted low APR

Affinity Secured Visa® Credit Card

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on Affinity Federal Credit Union’s secure website

Affinity Secured Visa® Credit Card

Annual fee
$0
Minimum Deposit
$250
Regular Purchase APR
12.85% Variable

The Affinity Secured Visa® Credit Card requires cardholders to join the Affinity FCU. You may qualify through participating organizations, but if you don’t, anyone can join the New Jersey Coalition for Financial Education by making a $5 donation when you fill out your online application. This card has an 12.85% Variable APR, which is one of the lowest rates available for a no annual fee secured card and is nearly half the amount major issuers charge. This is a good rate if you may carry a balance — but try to pay each statement in full.

What to look out for: There may be a membership fee associated with this card if you don’t qualify through participating organizations. The fee you may have to pay is low at $5, but it may be an issue for people who don’t want to pay anything to open a secured card.

Unrestricted federal credit union

Savings Secured Visa Platinum Card from State Department Federal

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on State Department Federal Credit Union’s secure website

Savings Secured Visa Platinum Card from State Department Federal

Annual fee
$0
Minimum Deposit
$250
Regular Purchase APR
14.24% Variable

The Savings Secured Visa Platinum Card from State Department Federal is open to anyone, regardless of residence. If you aren’t eligible through select methods including employees of the U.S. Department of State or members of select organizations, you can join the American Consumer Council during the application process. There is no fee associated with joining since State Department FCU pays the $5 on your behalf. There is a rewards program with this card where you earn Flexpoints, which can be redeemed for a variety of options like gift cards and travel. The APR can be as low as 14.24% Variable, which is reasonable considering many secured cards from major issuers are above 23%.

What to look out for: If you decide to take out this card and become a member of the SDFCU by joining the American Consumer Council, make sure you do not go to the ACC’s website and submit a $5 donation. That fee is waived by the SDFCU when you fill out your credit application. Simply select “I do not qualify to join through any of these other methods:” and select the ACC from the menu to avoid the $5 fee.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Alexandria White
Alexandria White |

Alexandria White is a writer at MagnifyMoney. You can email Alexandria at [email protected]

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Won’t impact your credit score