Best Secured Credit Cards for May 2022

MoneyRates looks at the best secured credit cards of 2022 and explains why secured credit cards are important when establishing or rebuilding credit.
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By Geoff Williams

MoneyRates has partnered with CardRatings for our coverage of credit card products. MoneyRates and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

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If your credit score has slipped into the fair or bad range, or you’re just starting out and haven’t yet established credit, now could be the time to think about getting a secured credit card.

How do secured credit cards work?

  1. A credit card issuer offers you a credit card that, other than the name “secured,” works like any other credit card.
  2. You put down a refundable deposit.
  3. You’ll use the card to make purchases, make your payments on time, and build or rehab your credit.

What’s the best thing about a secured credit card?

Secured credit cards for bad credit or no credit are excellent tools for building your credit score. Once you’ve used proven that you can manage the responsibility of credit successfully, you’ll be able to get your deposit back and apply for an unsecured credit card.

Is there any reason not to get a secured credit card for bad credit?

For the most part, no, unless you really are struggling financially and feel things aren’t going to go well even if you do get one.

But there is reason to be cautious.

Some secured credit cards for bad credit are riddled with fees and may not be worth your time.

We’ve done the research for you to help you find some of the best-secured credit cards for 2021.

Side-by-Side Comparison of Our Picks

Secured Credit Card Security Deposit Minimum Annual Fee Purchase APR Credit Score Needed
Citi® Secured Mastercard® $200 $0 23.24% (Variable) Limited History, No Credit, New-to-Credit
OpenSky® Secured Visa® Credit Card $200 $35 17.64% (Variable) Fair/Poor/Bad/No Credit

Best Secured Credit Card with Low APR and No Annual Fee – Citi® Secured Mastercard®

Nobody wants a high APR. Ideally, you’ll pay off your credit card, secured or not, every month so you don’t have to worry too much about the APR. If you’re going to carry a balance from month to month, a high APR can end up costing you a lot of money in interest.

There is a secured credit card on this list with a much smaller APR that is worth considering — the OpenSky® Secured Visa® Credit Card

Citi® Secured Mastercard®

The Basics: For a secured credit card, Citi® Secured Mastercard® offers a pretty low APR. Just make sure you pay on time; otherwise, the APR may go up substantially.

There are other features about the Citi® Secured Mastercard®

With no annual fee, this is a good secured card for bad credit or building credit. It also comes with free FICO score access, fraud protection, and help if you become a victim of identity theft.

Citi® Secured Mastercard®

Building credit with the Citi® Secured Mastercard®

The Citi® Secured Mastercard® does its part to help cardmembers build a solid credit history. Like other secured credit cards, the Citi® Secured Mastercard®

Plus it offers auto pay and account alerts to help you stay on track where it counts. For added convenience, you can also manage your account online, in their mobile app, and by phone too.

The Citi® Secured Mastercard®

Best Secured Credit Card for Getting Approval – OpenSky® Secured Visa® Credit Card

Some people have more difficulty getting approved for a credit card than others. If you’re worried about being rejected for a credit card, the OpenSky® Secured Visa® Credit Card

There is no credit check with this card.

If you’re 18 years old or over, have a social security number, and can offer a refundable security deposit of $200, you should be able to get the OpenSky® Secured Visa® Credit Card.

OpenSky® Secured Visa® Credit Card

The Basics: Like the other secured credit cards for bad credit on this list, this is a pretty standard, no-frills secured credit card. Most secured credit cards, in general, are no-frills. secured cards are generally about building or rebuilding credit.

However, there are good reasons to consider the OpenSky® Secured Visa® Credit Card

If you don’t mind the low annual fee, you’ll appreciate the low APR.

OpenSky® Secured Visa® Credit Card

Building credit with the OpenSky® Secured Visa® Credit Card

The OpenSky® Secured Visa® Credit Card reports to the three main credit card bureaus like other secured credit cards. But the main advantage to the OpenSky® Secured Visa® Credit Card

As noted, if you’re going to get a secured credit card for bad credit or no credit, you really want to make sure you’re paying it off every month and not carrying revolving credit card debt.

Carrying a balance from month to month won’t help you build credit. You may see your credit score climb even if you’re carrying a balance, as long as you don’t get too close to your limit and are making on-time minimum monthly payments. You may be able to build credit faster and see your credit score go up higher if you pay the entire bill off every month.

What Is a Secured Credit Card?

Secured credit cards for bad credit or no credit are for people who need a first or second chance. If you’ve struggled to qualify for a credit card, then a secured credit card may be the one kind of credit card that you can easily get.

You should think about applying for a secured credit card if you don’t have a credit card and have been rejected by issuers in the past.

One of the big selling points of a secured credit card is that using one can help you build credit – which means that eventually, you can apply for an unsecured credit card.

Secured vs. unsecured credit cards

So what’s the difference between a secured credit card for bad credit and an unsecured credit card?

The main distinction is that with a secured credit card, you have to give money to the credit card company to hold. With an unsecured credit card, you don’t.

It’s your chance to prove to the companies that issue credit that you can be trusted to use credit wisely and pay it back on time and in full.

How do secured credit cards work?

To get a secured credit card, you put a certain amount of money in a holding account with the company issuing the credit card. It might be $200. It might be $2,000. You’re then given a secured credit card to use, and it functions just like any other credit card.

Let’s look more closely at the differences. Here’s an example:

Say you give Credit Card Company X $1,000, you receive your new credit card, and you start using it. After a few months, you’ve spent about $800 on the credit card – but something happens, you stop making payments and, well, it just doesn’t work out.

If you part ways with the card and ghost the issuer, well, the credit card company can then keep your $1,000. That way they aren’t out any money. The credit card was secured by your initial deposit.

On the plus side, you may not be out much money either, since you gave them $1,000 and, in this hypothetical, bought $800 worth of stuff.

But this would be a serious setback on the road to rebuilding your credit.

How do secured credit cards help build credit?

If things go well and you use the secured credit without any problems, after a certain amount of time, the secured credit card may give you a higher available credit. They may even give you more credit without you having to put more of a deposit down.

Then often after a year or two, the company that gave you the secured credit card may switch you to an unsecured credit card – and you’ll receive your refundable deposit back.

In general, the longer you take to pay something off, the more expensive the item becomes. If you pay off your secured credit card (or any credit card) every month, you won’t pay any interest. You’re basically getting an interest-free loan each month. A credit card interest calculator can show you the difference.

Of course, if you’re paying an annual fee each year, you’re not quite getting a loan for free every month. But that doesn’t mean the annual fee isn’t worth it. For instance, if you think you’ll be rejected for a secured credit card and you really want one, paying OpenSky Secured Visa’s $35 annual fee and not having to do a credit check may be well worth it to you.

Pro Tip: If you think you’re going to carry any balance on a secured credit card – and it’s typically better for your finances if you don’t – then pay attention to the APR, or annual percentage rate.

That’s the interest that you’ll be charged on whatever you buy.

In general, the longer you take to pay something off, the more expensive the item becomes. If you pay off your secured credit card (or any credit card) every month, you won’t pay any interest. You’re basically getting an interest-free loan each month. A credit card interest calculator can show you the difference.

Of course, if you’re paying an annual fee each year, you’re not quite getting a loan for free every month. But that doesn’t mean the annual fee isn’t worth it. For instance, if you think you’ll be rejected for a secured credit card and you really want one, paying OpenSky Secured Visa’s $35 annual fee and not having to do a credit check may be well worth it to you.

How to Choose and Use Your Secured Credit Card

If you’re convinced you should get a secured credit card, you’ll want to decide how to choose one – and you’ll do yourself a favor if you don’t just apply for the first one you see. They all have their advantages and disadvantages.

Annual fees

For instance, you might feel like it’s worth it to pay $35 to OpenSky Secured Visa and avoid a credit check.

On the other hand, it is an annual fee. If it takes two years to rebuild your credit, then you’re out $70.

Again, that may not bother you in the least, especially if you like the fact that you can put $3,000 on the secured credit card and have a lot of available credit. But it’s worth considering.

Security deposit requirements

If your credit isn’t that bad, you might feel it’s worth migrating to the Citi® Secured Mastercard®

If your credit passes muster with them, you may be able to put down only $49 to have a credit limit of $200. That’s an advantage you might appreciate – being able to put down a fairly small amount and then getting an available credit limit of four times your initial deposit.

In other words, everybody’s going to have their own opinions on what makes a secured credit card a good or bad fit for them, and so you want to do more than just take a glance when considering which one to get.

How to choose a secured credit card for bad credit or no credit

So if you’re planning on getting a secured credit card, here are some things to consider.

  1. What’s your goal? Do you want to rebuild your credit or establish credit?Do you want to have a credit card so you can rent a car more easily? (Some rental car establishments make it a little harder for consumers to rent a car if they’re using a debit card.)
  2. Is the timing right? If you have been struggling with your finances for some time, and you’re still struggling, this may not be a good time to get a secured credit card.You do have to give some of your money to the credit card company (which will be refunded, eventually), after all. Maybe you should wait until your finances are more stable.
  3. Benefits of secured cards for bad credit. As noted, you can rebuild your credit, if you have years of financial struggles behind you and you’re new to credit cards, secured credit cards can be an effective way to establish credit.That said, if you’re, say, a college student with no bad credit history in your past, you might want to consider a student credit card.If you’ve just got a new, well-paying job but have no credit history, it might be worth looking at conventional credit cards. You may not have trouble applying for one. Everybody’s financial situation is different, though, and so it’s hard to say.
  4. Drawbacks of secured credit cards. You can get in trouble with secured credit cards just as you can with a regular unsecured credit card.They can be an excellent tool for repairing your credit, but if you’re living paycheck to paycheck and having trouble paying monthly bills, a secured credit card may not be a good idea.

Features of secured credit cards

Is there an annual fee? That might not be a serious drawback if you feel the card has some pluses, but you do want to ask yourself if it’s worth it.

Are there annoying fees, in general? Are there any perks?

Generally speaking, most secured credit cards for bad credit don’t have many perks – but the Citi® Secured Mastercard®

If you’re choosing between cards and one card has some slightly better perks, that may make the choice for you.

Smart Strategy: The Fastest Route to Building Credit

If you’re convinced you need a secured credit card for bad credit, and you feel like you know what you need to look for, you might be thinking, “What’s my fastest route to building credit?”

Building credit takes time. Even if you’re doing everything right, you need to keep doing everything right for months before you’re going to see any real difference.

You might see your score climb within a month or two, but keeping your expectations in check for at least six months is more realistic.

Of course, how fast your credit score improves and by how much depends on numerous factors, including how deep a hole you were in and how actively you’re borrowing money – and paying it back.

Bottom-line, though – if you’re trying to fix a long patch of financial errors, a secured credit card can help you reach a robust, healthy credit score. It’s just that it doesn’t happen overnight.

Checklist for building credit fast

Here’s what you should be trying to do to move the needle in the right direction on your credit score:

1. Pay your bills on time.

Pay your secured credit card bill on time. Even one day late can be bad news.

Your credit score won’t drop if you pay a day or two late (in fact, federal law states you have 30 days before a late bill can be reported to a credit bureau); but you will get late fees – not just from your secured credit card, but your electric bill, your car payment and so on.

Late fees, whether it’s your credit card or cell phone bill, equal less money overall, and less money overall makes it more likely that you’re going to have trouble paying your bills on time. And then eventually you may start being more than 30 days past due.

A late fee with a secured credit card for bad credit can be especially harsh since your APR could be raised.

2. Keep your credit utilization ratio, also known as a credit utilization rate, under 30%.

Lenders like it when people use no more than 30% of their available credit.

If you have a credit limit of $200, as you might with the Citi® Secured Mastercard®

That may come as a surprise. You might think, “What the heck? You’re giving me available credit up to $200, but you’ll look down on me if I take out $100?” Why should anyone care if you take out $200 as long as you pay it back within a month?

It’s a bit difficult to disagree with that logic. But if you want to improve your credit faster, you’ll keep your credit utilization ratio to 30% or less.

3. Check your credit report periodically.

You might know that you have a spotty credit history and that all of those late and missed payments aren’t errors. But at the same time, there may be some actual mistakes in your credit report. You owe it to yourself to check out your report every once in a while, and it’s free to do.

If you do find an error, dispute it. A study by the Federal Trade Commission found that one out of five borrowers has an error on their credit report.

If you can demonstrate that a debt showing up on your credit report doesn’t belong to you, there are actions you can take to get it removed. You may see your credit go up by a few points or even more depending on the severity of the error.

Pro Tip: Federal law makes it possible for everybody to get a free credit report from each of the three major credit bureaus – Experian, Equifax and TransUnion – once a year.

If you request a report every four months, from a different bureau every time, you could, in theory, be checking on one report for free every four months.

What Credit Score Do You Need for a Secured Credit Card for Bad Credit?

The good news is that you don’t need a high credit score for secured credit cards.

You may need to have higher than the basement floor of a score for some secured credit cards; but others, like OpenSky® Secured Visa® Credit Card

Credit scores are generally from 300 to 850 (and so 300 would be that basement floor). A fair credit score is usually considered 580 to 669.

You may want to try for a secured credit card if you’re at the bottom of a fair credit score range, but you may be able to get an unsecured credit card even if you have a 580. If you have less than a 580, you can certainly apply for unsecured credit cards; but if you get turned down, then definitely a secured credit card is the way to go.

That is, especially if you want to rebuild your credit. If your credit score is in what’s considered poor condition (300 to 579), secured credit cards for bad credit can be excellent tools for rebuilding credit.

Methodology

While not a complete list of all the secured credit cards available, our study looks at popular secured credit cards and selects the best of those cards. It is a subjective study, but we picked secured credit cards that are less likely to get people into financial trouble and, therefore, more likely to help them build credit.

People can get into trouble with any credit card, of course, if they misuse it. But the Citi® Secured Mastercard®

About Author
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Geoff Williams
Geoff Williams is a freelance journalist and author in Loveland, Ohio. His articles have appeared in publications such as MoneyRates.com, CardRatings.com, U.S. News & World Report, CNNMoney.com, The Washington Post, Entrepreneur Magazine, Forbes.com, Life magazine, Ladies’ Home Journal, Entertainment Weekly, Cincinnati Magazine and Ohio Magazine. Williams is also the author of several books, including “Washed Away: How the Great Flood of 1913, America’s Most Widespread Natural Disaster, Terrorized a Nation and Changed It Forever” and “C.C. Pyle’s Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America“