Best Secured Credit Cards: Top Picks for 2020

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The best secured credit cards often carry no annual fee.
Image Credit: Clark.com

If you have a poor credit history or are a new borrower looking to establish credit, secured credit cards can be a good way to put some plastic in your wallet.

Unlike debit or prepaid cards, secured cards are real credit cards that require a security deposit and often have a small credit limit.

If you’re looking for a first credit card, this can help build a credit history with the three credit bureaus. If you have a troubled credit history, it can be the first step toward credit card repair.

With the assistance of money expert Clark Howard, we’re going to help you avoid costly fees and ensure a clear path to an unsecured credit card by using a secured card.

The Best Secured Credit Cards to Apply for Right Now

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Team Clark spent hours reviewing the market for these cards and we put them under the scrutiny of the guidelines for usage set by money expert Clark Howard. We considered factors like annual fees, card features and a path to traditional lending when curating the list.

You can read more on our methodology for determining the best secured cards here.

Discover it® Secured

Discover it Secured offers cash back opportunities.

  • Annual Fee: $0
  • Deposit Amount: Minimum of $200, but variable based on Discover’s determined credit limit
  • Features: 2% cash back on gas station and restaurant purchases and 1% cash back on all other purchases; free FICO score access

Why This Card Made Our List

Discover it Secured checks a lot of the boxes we’re looking for in a secured card. There is no annual fee and the deposit amount is up to you once your credit limit is established. Discover also will start automatically reviewing your account after eight months to see if the deposit can be returned and your account can be transitioned to a traditional credit card.

But maybe the best perk of all is that you’re able to earn 2% cash back on purchases at gas stations and restaurants (up to $1,000 in purchases per quarter), and 1% on all other purchases. This is rare for a secured card.

Capital One® Secured Mastercard®

The security deposit for Capital One's secured card starts at $49.

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  • Annual Fee: $0
  • Deposit Amount: Tiered at $49, $99 or $200
  • Features: Earn larger credit line (without additional deposit) after five on-time payments

Why This Card Made Our List

Capital One Secured is another option with no annual fee, and you could put down as little as just $49 as a security deposit. This card also offers access to a higher credit line after five months of on-time payments, which is a good path to showing you’re capable of getting out of the secured card market altogether.

The initial credit line for this card is only $200, but Capital One says it will go up to as much as $1,000 (without requiring an additional deposit) if you follow through with good payment habits.

Navy Federal nRewards® Secured

The Navy Federal Credit Union secured card offers reward points.

  • Annual Fee: $0
  • Deposit Amount: At least $200
  • Features: 1x rewards points per dollar spent and zero-liability fraud protection; FICO score access

Why This Card Made Our List

Navy Federal Credit Union comes in strong with this secured card offering. Not only do you get to skip out on pretty much all the fees (annual, balance transfer, foreign transaction), you also get to earn rewards points and enjoy zero-liability fraud protection. In addition, you’ll get membership deals on purchases made at selection partner retailers, such as Walmart and Home Depot.

Starting at six months, the credit union will review your account to see if you’re eligible to upgrade to a non-secure card. The caveat with this card is that you’ll need to meet the credit union’s membership requirements in order to be eligible.

Citi® Secured Mastercard®

Citi is one of the largest credit card issuers in the United States.

  • Annual Fee: $0
  • Deposit Amount: Between $200-$2,500 (Based on credit limit)
  • Features: Identify theft protection and $0 liability on unauthorized charges.

Why This Card Made Our List

Citi will give you access to your FICO score online for free. That should help you track your progress on improving your credit score. Citi offers both its Identify Theft solutions and its $0 liability protection on unauthorized charges, which are nice perks typically enjoyed by traditional cardholders. One drawback could be that the initial term for the security deposit is 18 months unless Citi determines that your account is eligible to have the deposit returned.

BankAmericard® Secured

The BankAmericard has a slightly higher deposit requirement.

  • Annual Fee: $0
  • Deposit Amount: Minimum $300 and up to $4,900.
  • Features: Zero liability fraud protection, monitoring spending patterns to block potential fraud and FICO score access.

Why This Card Made Our List

The minimum deposit of $300 is a bit higher with Bank of America than some of the others on this list, but the card does come without an annual fee like all of the others. It also comes with a periodic review of the account — as well as your overall credit history — to see if you’re eligible to have your deposit refunded and placed on unsecured credit moving forward.


Clark Howard’s Strategy for Secured Credit Cards

Understand the Function of a Secured Credit Card

Money expert Clark Howard wants you to make sure that you enter this credit relationship with the goal already in mind: Improve your credit and transition to an unsecured credit card.

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Secured credit cards are not the best credit product on the market and should only be used as a temporary means for improving your credit score. You will want to move on as soon as possible because the interest rates usually aren’t good, the lender is holding your deposit money hostage and you typically have a small credit limit.

Watch for 4 Red Flags

When you’re picking out a secured credit card, Clark wants you to watch out for four potential red flags:

  • Exorbitant annual fees
  • No path to traditional credit card lending
  • Non-deposit upfront fees (Clark calls these “junk fees from predatory lenders”)
  • Lack of sufficient grace period for payments

You can read more about these red flags and Clark’s philosophy on avoiding them here.

How to Use a Secured Credit Card

Clark has some advice for getting the best results as a secured card holder, with the clear goal of improving your credit score and receiving access to a traditional credit card as quickly as possible.

“For people to do best with their secured card — whatever their limit is — they should use the card several times a month but charge very little on it,” he says.

Clark recommends that you utilize no more than 30% of your authorized credit limit. That is a core behavior that the card issuer will be evaluating.

So, for example, you won’t want to carry more than a $150 balance on a card with a $500 limit.

Failure to stay underneath that 30% mark could leave you exposed to being labeled as a “high-risk” borrower.

Clark also wants you to be sure to pay your balance in full each month on the secured credit card. It will only help build your credit score.

Methodology for Secured Credit Cards

For the purposes of determining which cards are “best” in this category, we took the above input from money expert Clark Howard and sought to find cards that best fit his strategy.

Team Clark spent many hours reviewing the available secured credit cards on the market, assessing them for things like:

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  • Annual fee
  • Path to traditional credit cards
  • Rewards and perks
  • Grace period for interest
  • Additional fees (transaction or otherwise)
  • Refundability of security deposit

We did not include offerings from local or regional banks and credit unions due to availability concerns. Often, local institutions will have desirable cards, so we do recommend that you compare your local bank or credit union’s secured credit cards to the ones that made this list.

We also did not factor APR, because interest rates are going to vary based on your individual financial circumstance. Clark recommends not carrying a balance on these cards. That should curb the concern over the interest rate.

Frequently Asked Questions: Secured Credit Cards

Who Is a Candidate for a Secured Card?

Team Clark believes secured cards only should be sought out by people who cannot acquire a traditional credit card. In most cases, credit-seekers who cannot get a traditional credit card are those who either do not have a sufficient credit history or have a damaged credit history.

These cards are a way to prove future credit-worthiness while also increasing your credit score with proper spending habits and on-time payments.

Does a Secured Card Function Like a Regular Credit Card?

In most cases, yes.

Aside from the credit line being attached to a (usually refundable) security deposit, many of the major secured card issuers allow the card to act like a traditional card.

As part of the analysis for the best secured cards on the market, we made sure that all of the cards listed in this article had standard credit card functionalities like in-person and online purchasing capabilities, credit bureau reporting and online access for bill pay and statements.

What Happens to My Security Deposit on a Secured Card?

In the most basic terms, the credit card issuer is holding your deposit as insurance for your outstanding balance. That’s why many card issuers will only give you a credit line that matches the amount of money deposited.

While you should check with the issuer before you make a deposit, typically the deposit is refundable if all balances are paid upon closure of your account. If you haven’t paid your balance and try to close the account, the credit issuer is likely to apply the deposit to the amount you owe.

How Long Will I Have to Keep a Secured Card?

Generally, it can take anywhere from 6-18 months for the issuer to review your payment history and determine if it will change your terms. Some card issuers promise to automatically review your credit status periodically to see if you are eligible for a refund of your deposit and a new credit card offer.

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Remember, the ultimate goal is to move to a traditional credit card. In order to do that, you must prove your reliability in things like responsible spending and on-time payments.

What About a Secured Credit Card from Chase or American Express?

Currently, neither Chase nor American Express offer a secured credit card. Though they are among the biggest credit card issuers in the United States, they are not actively seeking this type of account. Wells Fargo, which used to have a popular option in this market, has removed its secured card from the market.

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