Best Secured Credit Cards in January 2025

A secured credit card is a type of credit card that requires you to make a cash deposit upfront. This acts as collateral and secures your line of credit. The deposit amount is generally equal to your line of credit which means a $200 security deposit would allow you to make up to $200 in purchases with your card before having to make a payment.

How do secured credit cards work?

Paying with a secured credit card is similar to paying with unsecured credit cards. You can use your secured credit card to pay for purchases anywhere credit cards from your card issuer are accepted. Just like an unsecured credit card, a secured credit card can help build your credit history by reporting your payments to credit bureaus.

The best secured credit cards will report your credit activity to the three major credit bureaus: Equifax, Experian and TransUnion. Many secured credit cards offer regular reviews of your account after a period of time. Customers who pay their bills on time and stay well below their credit limit may graduate to an unsecured card.

If you do not pay your credit card bill, the money you owe is deducted from your deposit and your account will likely be closed. In situations where you choose to close the account yourself, as long as you have no outstanding charges, your deposit will be returned in full.

One big difference between secured and unsecured cards is that an unsecured credit card does not require a deposit, while a secured credit card does. Unsecured credit cards generally have more stringent credit score requirements and offer better rewards. Secured credit cards are useful for people with poor credit or those just establishing credit.

There are unsecured credit cards for limited or bad credit. Be careful when considering these cards, as they may come with expensive annual fees. You may be better off with a secured card that offers transparent terms and no or low annual fee. When you have poor or limited credit, the best cards generally have no annual fee or a low annual fee.

 

Secured credit cards are primarily best for two types of consumers: individuals with low credit scores or poor credit history, and consumers with no credit history or limited credit history. But whether you’re looking to build or rebuild your credit with the help of a secured credit card, it’s crucial to use your card responsibly. That means paying at least the minimum on time each month and staying below your credit limit.

When deciding which secured credit card is best for you, ask yourself these questions:

1. What type of card do I need? Consider your biggest financial priorities. Is your priority getting the best rewards? If so, a card with flat-rate cash back like the Capital One Quicksilver Secured Cash Rewards Credit Card or one with bonus category cash back like the U.S. Bank Cash+ Visa Secured Card with its bonus cash back would be a good choice. If you’re looking for a card with a lower deposit option, the Capital One Platinum Secured Credit Card might be the way to go, while a card like the OpenSky^® Secured Visa^® Credit Card is best if you wish to avoid a credit check.
2. Does it charge an annual fee? Many secured credit cards do not charge an annual fee, so you should try to avoid one that does if possible. However, you may find that a small fee may be worth paying if the card has other features that are important to you. That said, another downside of getting a secured card with an annual fee is that when you eventually close the account, it could negatively impact your credit score. Whereas, opening a card without an annual fee means you can leave your account open indefinitely for free.
3. Will I be able to upgrade to an unsecured card? Getting a secured card that offers a clear path to upgrade to an unsecured card and get your deposit back gives you a goal to work toward in your financial journey. Unsecured cards typically provide access to higher credit limits, and sometimes, bigger and better rewards and benefits.
4. What is the required deposit? A minimum deposit requirement of $200 is fairly typical, but some secured cards will require a minimum deposit as high as $300 or even $500. With the Capital One Platinum Secured Credit Card, you may be able to start with just a $49 deposit. While you may be looking for the lowest deposit possible, remember that a card that allows you to boost your deposit allows for a larger credit line. Credit utilization, or how much of your available credit you’re using, is a major factor in your credit score. Since having more available credit makes it easier to keep your utilization low, getting a credit limit increase may help improve your credit score.
5. Should I get a secured credit card with rewards? Building credit should be your main focus with a secured card. Still, as long as the credit card rewards don’t tempt you to overspend, they can give you a little return on your spending.

• Pay on time

  The most important factor in improving your credit score is to always pay your card on time. Even if you can’t pay the full amount, at least pay the minimum. Late and missed payments will hurt your score more than almost anything else.

  If your due date slips your mind, make the payment as quickly as possible, because many issuers don’t report a late payment to the bureaus until you’re behind 30 days or more. Also, set up automatic payments if possible (most issuers offer this option) — this will help you make on-time payments and avoid expensive late fees and interest.

• Keep your utilization low

  Next, pay attention to your credit utilization — that is, how much of your available credit you’re using. The closer you are to maxing out your credit card, the riskier you seem to lenders and the more your credit score will suffer. A good rule of thumb is to keep utilization at 30% or less. For example, on a card with a $200 credit limit, aim to never have more than a $60 balance at any time.

• Avoid applying for too many cards

  In addition to payment history and utilization, avoid applying for new credit too frequently. When you apply for credit, the prospective lender checks your credit report, which generates what’s called a hard inquiry. Each hard inquiry may knock your credit score down a few points. Plus, opening new cards reduces your average age of accounts. Fewer recent inquiries and a longer average age of accounts are both better for your credit score.

• Check your credit report

  Take a close look at your credit report to see if you have any old debts in collections or errors on your credit report. While using a secured credit card can help you improve your score, taking care of blemishes on your credit report is also a crucial part of building credit. While you’re at it, take advantage of any credit scoring and credit-monitoring tools that your issuer offers — this will help you catch missed payments or suspicious activity on your credit report before it gets out of hand.

   Tip:

  You can get free copies of your credit reports in a few different ways, but going through annualcreditreport.com is one of the easiest. You can request reports from the three major bureaus – Experian, Equifax and Transunion – at one time.

Some issuers allow you to graduate from a secured credit card to an unsecured one, and refund your deposit. For example, Discover and Navy Federal Credit Union offer clear timelines for account reviews and upgrades.

Others, like Capital One, offer the opportunity to graduate to an unsecured card, but may not specify a timeline for reviews. Capital One does, however, offer automatic reviews starting at six months to increase your credit line.

 

The following tips will improve your chances of upgrading to an unsecured card:

• Use your card. Issuers like to see you’re using your card, not leaving it inactive for months at a time. If you’re concerned about overspending, consider putting a recurring subscription (such as Netflix or Spotify) on your card, set up autopay and put your card away somewhere safe.
• Pay on time. This is the most important factor in demonstrating responsible credit management.
• Keep credit utilization low. Avoid maxing out your card. Pay in full every month if possible.

If your issuer doesn’t offer a chance to move to an unsecured card, you can build credit with a secured credit card for a year or more, and then apply for an unsecured card on your own. Once you pay off your secured card in full and close the account, you should get your deposit back.

If you don’t want to put cash down for a security deposit, there are other options to explore if you have a limited credit history or lower score:

• Become an authorized user on someone else’s credit card. If a parent, spouse or other family member can add you as an authorized user on their credit card, many major card issuers will give you the benefit of their credit history and on-time payments. You don’t even need to use the card. Just make sure the primary cardholder has responsible usage and good credit history, or they could end up hurting your credit score.
• Apply for a store credit card. It can be easier for applicants with less than stellar credit to be approved for store credit cards, from retailers like Target, Lowe’s and Kohl’s. You’ll typically get a low credit limit at first, but these cards do give you the chance to build your credit score over time.
• Consider student credit cards. If you’re a college student with limited credit history, you can also look into student credit cards. You must be at least 18 years old and have a source of income to qualify for a student credit card, and you may have to verify your student status.
• Look into personal loans. A personal loan can help you build credit just like a credit card. If you do get a personal loan with a low credit score, you’ll typically pay higher fees and interest rates than someone with better credit.
• Check out credit builder loans. You may be able to find a credit builder loan through a bank, credit union or online lender. Unlike a traditional loan, you don’t get any money upfront. Instead, you’ll receive your loan amount after finishing your payment plan. Credit builder loans aren’t free — you’ll likely have to pay interest and possibly fees for opening the account. However, your on-time payments will be reported to the credit bureaus, hopefully raising your credit score.