Secured credit cards offer consumers who have had credit problems in the past or have no established credit history the opportunity to rebuild (or start building) a solid credit rating. When you apply for a secured card, you are required to deposit a certain amount of money into an account where it is held as collateral. Typically, these funds do not earn interest. If you should ever default on your credit card account, your deposit is then used to pay off whatever amount you owe.
Security deposits and terms vary among card issuers. Many times people who need a secured card are not in a position to put down a large amount of cash as a deposit. To help you get started, here are our three favorite secured cards all with low deposit requirements. Be sure to read our full reviews for in-depth analyses of specific terms and conditions.
This card offers the lowest deposit of any secured credit card on the market. Based on your creditworthiness, your deposit will be $49, $99, or $200 with a guaranteed credit limit of at least $200. Lines of credit increase according to how much you give as a security deposit but the maximum amount is $3,000. Another plus is you have 80 days from the time you are approved to complete your deposit (after which you receive your card).
This card is also popular because it comes with no annual fee (nearly impossible to find in the secured card market). It also charges no foreign transaction fees. Cardholders have free access to Credit Tracker which allows you to view your credit score and track your progress.
2) Secured Visa from Merrick Bank
This card gives you up to 80 days from the time you apply to send in your deposit in an amount ranging from $200 (minimum) to $3,000 (maximum). Your credit limit is equal to whatever amount you deposit. The annual percentage rate on purchases and balance transfers is 17.45% which is relatively low compared to other secured cards. You also receive free access to your FICO score which helps you monitor your credit. This card charges an annual fee of $36 which is deducted immediately and reduces your initial available credit.
This card requires a minimum security deposit of $250 but allows you to deposit as much as $10,000 over time. (There is a credit limit increase fee of $10 each time you deposit additional funds.) Your credit limit is equal to the amount of your security deposit. Card members are charged an annual fee of $39. Foreign transaction fees are 2%. The annual percentage rate for purchases is 17.99% which is fairly reasonable for a secured card (many charge over 24%). There is an introductory APR of 9.95% on balance transfers for the first six months that your account is open. After this time the APR reverts to 17.99%.