Best Secured Credit Cards for 2024: Top Picks for Building or Repairing Credit

If you have a poor credit history or are someone looking to establish credit, you may have found that getting a traditional credit card is difficult.

There are some alternatives on the market in 2024 that can help you build a credit reputation that will turn those denials into approvals! It just takes some dedication to show you can consistently pay bills in full and on time.

For a long time, the only option for this type of borrower was a secured credit card. Unlike debit or prepaid cards, secured cards are real credit cards that require a security deposit and offer only 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.

Some fintech companies are now disrupting this market by offering more consumer-friendly options that use alternative ways of analyzing creditworthiness. We’ll talk about those as well.

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.

This article was updated in January 2024 and I review it every three months. Detailed notes on all updates can be found here.

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Best Credit Cards for Establishing or Repairing Credit

OUR TOP CHOICE	RUNNER UP	HONORABLE MENTION
Petal® 2 "Cash Back, No Fees" Visa® Credit Card	Secured Chime Credit Builder Visa® Credit Card	Discover it Secured
Alternative credit evaluation could open you up to earn rewards and build credit without a security deposit requirement.	No credit check. Makes it easy to avoid fees and interest charges while establishing or repairing credit.	Earn 2% back on select categories and get cash back match while building credit.

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 such as 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 cards for building and repairing credit here.

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• Annual Fee: $0
• Deposit Amount: No deposit required. The Petal Card provides access to between $300 and $10,000 based on an alternative evaluation of your creditworthiness (more on that in a sec).
• Features: Get 1% cash back right away on all purchases. Earn up to 1.5% in total cash back when you pay on time. Plus, select merchants can offer bonus rewards.
• Learn More

Why This Card Made Our List

This is the first of two fintech offerings that money expert Clark Howard likes more than traditional secured credit cards.

Self-described as a “credit with a conscience,” the Petal Card is designed to put credit in the hands of creditworthy people who would otherwise have a hard time getting it.

It does this by using more than just your credit score. Petal uses a relatively new rating called a “Cash Score,” which includes factors such as how much you make, spend and save each month, to determine if you’re a candidate for their card.

And once you’re “in” with Petal, there is no security deposit required, and you’ll be eligible to earn rewards for your spending.

Petal credit cards are issued by WebBank, Member FDIC.

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card_name

• Annual Fee: $0
• Deposit Amount: There is no minimum security deposit required*. Instead, you choose an amount after funding a Chime Checking Account**. The company says that money will be “held in a secured account as collateral for your Credit Builder card, which means you can spend up to this amount on your card. This is money you can use to pay off your charges at the end of every month.”
• Features: There’s no credit check, interest fees or annual fee. You can even turn on a “Safer Credit Building” function to have the bill paid automatically each month.

Why This Card Made Our List

CHIME® is not a bank. It is another fintech that Clark says is doing good things in the secured credit card space.

He especially likes that this program doesn’t require a credit check, doesn’t have fees and allows you to choose how much to spend without the risk of incurring a high APR interest charge. Basically, you get all the good things secured credit cards should offer without many of the fee pitfalls traditionally associated with them.

Chime reports the results of this program to all three credit bureaus and touts that, on average, it helps users increase their credit scores by 30 points*** within the first eight months of use.

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Discover it® Secured

• Annual Fee: $0
• Deposit Amount: Minimum of $200, but this varies based.
• Features: You earn 2% cash back on gas station and restaurant purchases and 1% cash back on all other purchases. You also get free access to your FICO score.
• Learn More

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 will review 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 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.

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Other Secured and Credit Building Credit Cards To Consider

If one of our top choices doesn’t fit your needs, there are some other secured credit cards available that can help you achieve your goals. However, make sure that the one you chooses makes it easy to avoid fees and tracks the progress you’re making with your credit score.

Here are a few cards that just missed our Top 3:

• Navy Federal nRewards® Secured: 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 earn rewards points and can qualify to upgrade to an unsecured card in as little as three months. Note that you have to qualify for credit union membership in order to apply for this one.
• card_name: This is another good no-annual-fee secured card that has tiered deposit levels at $49, $99 and $200. And after five on-time payments, you are eligible for a higher credit limit with no additional deposit. If you display good spending and payment habits, Capital One has the option to refund your security deposit via statement credit.
• Citi® Secured Mastercard®: The deposit for this card is as low as $200 and can be up to $2,500 for those who want a little bit of spending flexibility. You get to follow your FICO progress for free with this no-annual-fee card, but it may take up to 18 months to earn unsecured status with Citi (and get your deposit back).
• U.S. Bank Secured Visa® Card: There’s nothing too flashy about this one, but it could get the job doneif none of the cards above work out. It includes no annual fee, the ability to choose your deposit amount, free access to your FICO score and autopay. You also get to choose your due date.

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Clark Howard’s Strategy for Using 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.

Secured credit cards are not the best credit product on the market and should be used only as a temporary means for improving your credit score. You will want to move on as soon as possible, because the interest rates on secured cards 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 cardholder, with the clear goal of improving your credit score and gaining 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, because that’s a factor 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 below that 30% mark could expose you 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.

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Methodology for Secured and Credit Building 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:

• 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, because those cards aren’t always available nationwide. But local institutions often 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 in annual percentage rates (APRs), because interest rates are going to vary based on your individual financial circumstances. Since Clark strongly recommends not carrying a balance on these cards, following his advice makes any concern over interest rates moot.

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Frequently Asked Questions: Secured Credit Cards

• Who Is a Candidate for a Secured Card?
• Does a Secured Card Function Like a Regular Credit Card?
• What Happens to My Security Deposit on a Secured Card?
• How Long Will I Have To Keep a Secured Card?
• What About a Secured Card from Chase or American Express?

Who Is a Candidate for a Secured Card?

Team Clark believes you should seek out a secure card only if you cannot qualify for a traditional credit card. In most cases, that means people who either do not have a sufficient credit history or have a damaged credit history.

These cards are a way to prove future creditworthiness while also increasing your credit score by displaying proper spending habits and making on-time payments.

Does a Secured Card Function Like a Regular Credit Card?

In most cases, yes.

Aside from the credit line attached to a (usually refundable) security deposit, many of the major secured card issuers allow the card to act as 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 function just like “standard” credit cards: in-person and online purchasing capabilities, credit bureau reporting and online access for getting statements and paying bills.

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 give you a credit line that tops out at the amount of money you deposit.

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.

Remember, the ultimate goal is to move to a traditional credit card. In order to do that, you must prove your reliability.

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

Currently, neither Chase nor American Express offers 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, no longer offers a secured card.

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Chime is a financial technology company, not a bank. Banking services provided by, and debit card issued by, The Bancorp Bank or Stride Bank, N.A.; Members FDIC. Credit Builder card issued by Stride Bank, N.A.

* Money added to Credit Builder will be held in a secured account as collateral for your Credit Builder card, which means you can spend up to this amount on your card.

** To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Chime Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.

** Based on a representative study conducted by Experian®, members who made their first purchase with Credit Builder between June 2022 and October 2022 observed an average FICO® Score 8 increase of 30 points after approximately 8 months.

Article Updates

• March 2024: Updated with new title image and details on the Chime Credit Builder Secured Credit Card.

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