Can you get turned down for a secured credit card?

Yes. Unfortunately, even though a secured credit card is meant to help people who have bad credit, it still has a few requirements that need to be satisfied before being approved, such as a minimum credit score.

Which banks have a secured credit card?

There are more than 30 banks and credit unions that offer secured credit cards, including six of the largest credit card issuers. Here is a list of the major banks offering secured cards: Bank of America Capital One Citi Discover U.S. Bank Wells Fargo Here are some of the smaller banks and credit unions that offer secured cards: Capital Bank First Progress Green Dot OpenSky

What is a secured credit card?

Secured credit cards are backed by a cash deposit from you, the cardholder. The cash acts as collateral for the credit card account. This means that the issuer has security in case you’re not able to make payments on your balance. In general, secured credit cards are viewed as suitable for people who are just getting started with their credit or have a bad credit history that they want to repair.

How do secured credit cards work?

Secured credit cards work in the same way as traditional credit cards, which means they can be used to make everyday purchases and in transactions where debit cards or cash aren’t accepted — such as making an advanced booking for a hotel room. A secured credit card also: Helps to establish or rebuild credit. It's even more important to make monthly payments on time with a secured card than it is with a standard credit card. With secured cards, you need to remember that failing to make payments means that not only will your card issuer keep some, if not all, of your deposit, it will also damage your poor credit even further. Helps you transition to a traditional unsecured card. Many secured credit card accounts are automatically reviewed by the card issuer to see if you can qualify to get transferred to an unsecured credit card. When this happens, you’ll get your deposit back. Benefits you when used responsibly. Responsible use of a secured card will eventually lead to lower interest rates on cars, mortgages, and other big-ticket items.

How do I apply for and use a secured credit card?

While every issuer may handle things differently, the process pretty much follows a flow like this: Applying for the card. After you complete and submit the application form, the card issuer will evaluate how much of a risk you are by performing a credit check. If you pass this stage, you are approved. Funding the deposit. Before an issuer opens your account, you need to first pay your security deposit. In some cases, you will be given time to pull your money together to make the deposit. Or you may need to give information about your bank account so you that the deposit can be transferred right away. The card is sent to you. When you’ve made the deposit for your account, the issuer will send your new card to you. You will be able to use it just like a traditional credit card. Try to only use it for a few small purchases every month and remember to always pay on time. Pay your bill each month. Remember to pay your bill in full and on time every month to avoid incurring interest charges, since these cards tend to have very high interest rates. The better your record is, the better reports your issuer will send to the 3 major credit bureaus, which will improve your credit history and score. Upgrade your card. As your credit transitions from bad to good, you’ll be able to qualify for better credit cards, depending on your issuer.

Do secured credit cards help your credit?

Yes. Making full and on time payments of your balance can have a positive impact on your credit. And if you’re able to keep going with a good record, some issuers may even offer you a better card in as little as 6 months.

What is a security deposit on a credit card?

The security deposit serves as a refundable deposit that provides the card issuer’s safety net in case you fail to make payments on your credit card. Your issuer holds this deposit and only makes use of it should you default on payments.

How much is the security deposit?

Some cards may have a minimum deposit of $500, but in some cases you may be able to offer as little as $200 or $300. Just remember that your credit line limit is determined by the amount of your security deposit.

Compare secured credit cards for the USA

Secured credit cards

Compare secured credit cards and learn how they work.

Updated Dec. 4, 2023 |

Simply put, a secured credit card uses the money that you deposit in a security account as collateral. This money gives lenders the confidence that you’ll be able to pay them back even if you have no credit history, or a damaged credit score or credit history. Should you fail to pay back your bill, the lender can use your deposit to meet the repayment.

One of the biggest advantages of using a secured card is that it can help to improve your credit score. But keep in mind that for this to happen, you need to make payments on time every month.

Annual fee and other fees

Most credit cards have an annual fee, but some come with a $0 annual fee. You may want to take advantage of a card with no annual fee, but in doing so you could be missing out on benefits attached to the card, advantages worth more than the annual fee charged.

In some cases, you may also have to pay other fees, such as a set-up fee, a foreign transaction fee, cash advance fee or late payment fee, so be sure to read the fine print to avoid any surprises.

Interest rates and repayments

Interest rates on secured credit cards are usually higher than the ones on unsecured cards, so it’s important to always pay your balance in full each month, before interest can be charged. Having a plan to make regular full payments works to your advantage and is absolutely vital in building your credit. This will also eventually lead to your transition onto unsecured credit cards.

Credit repair and establishment

If you’ve missed payments in the past, then it’s likely that you have damaged your credit history and credit score. To get things back on the right track, consider applying for a secured secured card and making a security deposit. Using the card responsibly will help to improve your credit score.

Getting a secured card may also be the right move if you are only starting to build your credit history. While the deposit and annual fee may be expensive, setting a budget with this kind of credit card can be the solution to re-establishing your credit.

Credit history and score

Because the lender relies on the amount of money you've put down as your deposit, your credit check isn't as much of an issue when it comes to secured cards as it is with traditional cards. The lender sees your deposit as a guarantee of payment, instead of just using your credit score as an indication of whether you can pay or not. As a result, your application for a secured card will more likely be approved.