The Capital One Secured MasterCard is targeted at people who have bad or limited credit and want to improve their credit score while also having the use of a credit card. Unlike prepaid debit cards which do nothing to improve your credit situation, the Capital One Secured MasterCard reports to the three major credit bureaus (Experian, TransUnion and Equifax). With responsible use, this can positively impact your credit score over time. Also, Capital One does not charge an application fee for this card so there is no risk of losing money if you are not approved.
The Capital One Secured MasterCard is straightforward in its marketing approach. There are no hidden fees and more importantly, this card comes with no annual fee (which is almost unheard of for a secured card). The annual percentage rate is very high at 24.90% but if you pay off your balance each month, this should not be a concern.
Cardholders are required to give a refundable security deposit up front which is why it is considered a “secured” credit card. Capital One actually determines the amount of deposit you will need to make based on your credit score. Typical deposit amounts are $49, $99, or $200. Lines of credit begin at $200 and increase according to how much the cardholder gives as a security deposit (maximum credit line is $3,000). A good benefit of this card is Capital One allows card members to pay the security deposit in portions if you are unable to pay it all at the time you are accepted. You have up to 80 days from the time your account is approved to fully fund your security deposit.
Understandably, there are no rewards offered with the Capital One Secured MasterCard other than being able to improve your credit score (with responsible use, of course). Cardholders may qualify for a credit line increase with no additional deposit required depending on payment history and creditworthiness. Your security deposit is refundable but is held as collateral against your credit line. It is only refunded if you close your account and pay off the balance in full.
Capital One account holders receive these features:
- Fraud Coverage
- 24/7 Customer Service
- Personalized Payment Option
The Capital One Secured MasterCard is a credit card, not debit card, and is accepted at millions of locations around the world. Another perk is that Capital One does not charge its card members foreign transaction fees.
Below we have broken down the specific details of the Capital One Secured MasterCard to help you determine if it’s the right choice for you.
No application fee:
You can apply for the Capital One Secured MasterCard without paying an application fee. Other secured cards charge you just to apply for their card with no guarantee of acceptance (so money is lost). This card does not.
Reasonable lines of credit:
The minimum credit line given is $200 which requires a $49 security deposit. Other security deposit amounts are $99 and $200 with the maximum credit line being $3,000. Your specific credit line is based on your credit score and other personal and financial history and is determined at the time of approval. Card members have the option of increasing their credit line by adding to their security deposit (but cannot exceed the $3,000 maximum).
Flexible security deposit payment:
New card holders must pay the security deposit in full within 80 days of being approved for the Capital One Secured MasterCard. This can be done over the phone or online. Once your full deposit is received, your credit card will be sent to you. This is a real benefit for people who are trying to establish or improve their credit situation and may not have all the security deposit funds available at one time.
Payment information is reported to credit bureaus:
Since this card is an actual credit card (as opposed to a debit or pre-paid card), your payment information is reported every month to all three major credit bureaus- Experian, TransUnion, and Equifax. Card members who make regular, on-time payments and do not exceed their credit limit will see a gradual improvement in their credit score. As your credit score goes up, you should be able to apply for regular unsecured credit cards which generally have lower APRs and rewards programs.
Capital One benefits:
Cardholders automatically receive additional benefits with the Capital One Secured MasterCard. These include:
- Fraud Coverage – If your card is ever lost or stolen, you have 0% liability on any fraudulent charges that are made.
- 24/7 Customer Service – Card members have 24/7 access to customer service which is available online, from your mobile device, or by phone.
- Personalized Payment Option – Cardholders can pick their own monthly due date as well as which payment method they want to use (check or online). This feature is very helpful for people who need to balance when their payments are due with when they receive their paychecks.
This card charges no annual membership fee.
No foreign transaction fees:
Another benefit to the Capital One Secured MasterCard is that there are no foreign transaction fees when you make a purchase outside of the U.S. If you often travel abroad, this feature can save you a substantial amount in unwanted fees (many cards charge 2.7%-3% per transaction).
Security deposit does not have to equal credit line:
Many secured credit cards give card members a credit line equal to the security deposit. For example, if you want a $500 credit line you must give the card issuer a $500 security deposit. A definite benefit of this card is that your credit line is determined by your security deposit but it is not a 1:1 rate. With a $49 deposit, you can start with a $200 credit line. You then have the option of increasing your credit line (maximum of $3,000) with additional deposits.
People with limited or bad credit can qualify:
If you have no established credit or have bad credit, your options are limited to begin with. This card is designed to help people in situations such as these improve their credit scores over time. It’s important to remember that this will only happen if you make regular, on-time payments and stay within your credit limit.
The Capital One Secured MasterCard offers no reward program to its customers. This card is intended to help people who have limited credit or bad credit improve their credit score over time.
High annual percentage rate:
The APR for card members is a steep 24.9% (variable). You can avoid these high interest charges by paying off your balance in full each month.
Security deposit earns no interest:
Security deposits do not earn interest for card members. They are refundable but only if you close your account and pay off the balance in full.
The Capital One Secured MasterCard offers card members the opportunity to establish credit or repair bad credit at a relatively low cost. By making regular, on-time payments your credit score will gradually improve which should allow you to apply for regular credit cards which offer more competitive rates, rewards programs, and require no security deposits.