The Best Secured Credit Cards for Your Wallet in 2021

Secured credit cards are an excellent option for consumers with less-than-perfect credit to begin rebuilding their credit. They are also great for those who have a very limited or no credit history. However, remember that a secured credit card is simply a tool to build or improve your credit score so that you can, in time, qualify for an unsecured credit card with additional features and benefits.

Secured credit cards have been growing in popularity over the last few years. Even Amazon introduced its own secured credit card in June 2019. And the COVID-19 pandemic has only increased the demand from consumers.

However, remember that secured credit cards require an up-front deposit to secure the line of credit. Once you close the card, you will receive the deposit back. The advantage of a secured credit card is that the APRs and fees tend to be low since the card is secured. However, the goal should be to use the secured credit card for a limited time and move on to an unsecured credit card.

The MoneyGeek team analyzed 100+ credit cards to find the best secured credit cards. We considered many factors, including deposits, fees, the potential to upgrade to an unsecured card and other benefits. We compared these factors against the average American’s annual spending habits and selected a few solid options for secured credit cards.

Secured credit cards may all have the same purpose, but they are not all the same. Some card issuers charge fees like an application or annual maintenance fee, while others offer excellent rewards for your spending.

As you search for the best secured credit card for your situation, be sure to take all factors — such as rewards, fees, interest rate and ability to upgrade — into consideration before selecting a card.

A secured credit card is a credit card product issued for consumers with less-than-perfect credit to build or rebuild their credit. The benefit of a secured credit card is that consumers can establish or improve their credit history without running the risk of overspending like with an unsecured credit card.

We compile and rank our lists of suggested credit cards based on publicly available data from card issuers and other reputable sources like the Consumer Finance Protection Bureau. We analyze and compare over 55 data points for approximately 2,500 cards to assign a rating for each card feature. We roughly have about 260 secured credit cards in our database to analyze, compare and recommend the best cards to consider.

A secured credit card is a bit different than a traditional, unsecured credit card. The main difference is that a secured credit card requires an up-front deposit to secure the credit line. The purpose of this is to protect the credit card issuer. However, the core benefit for secured credit card holders is that you can either build or rebuild your credit score, depending on your needs. But it will come with its share of limitations compared to an unsecured credit card.

While a secured credit card is secured through an up-front deposit, remember that a credit card bill is still considered debt. Like anything else in your personal financial picture, managing debt is an essential skill that will help you balance a budget and grow your wealth. To begin moving the needle forward, the first step is to control your credit usage, and your spending habits are a large part of that. While a credit card is a great financial tool to earn rewards and build your credit history, you still need to be careful: credit card spending can also quickly get out of control and sabotage your efforts.

In addition, when considering a secured credit card, be sure to look at the benefits of each card. While they may not be as flashy as a travel or cash back credit card, there still may be opportunities to earn rewards for your purchases. If so, that can help you offset the costs of daily purchases that you would make anyway. However, you should never spend more simply to earn a cash back bonus.

Finally, keep in mind that a secured credit card is not the only way to build your credit score. You can utilize other methods, such as:

• Paying bills that report to credit agencies
• Looking into your credit report to see if there is anything you can correct, such as a missed payment or incorrect mark.
• Applying for a credit-builder loan, or
• Having someone add you as an authorized user to their credit card, among others.

You do not need to rely on a credit card to build your credit score.

Credit cards, in general, can be a tricky financial product to understand, but we are here to help. Secured credit cards work similarly to unsecured cards, but the consumer provides a full, up-front deposit of the card’s credit line. That is where the name “secured” comes from, as the card balance is secured by the up-front deposit you submit to the credit card issuer.

There are several differences between secured and unsecured credit cards. Here are the main features that make each credit card type different:

The most significant difference is the intent and design of each product. An unsecured credit card is designed to reward consumers with good-to-excellent credit for spending on their cards. A secured credit card is designed for consumers with less-than-perfect credit or no credit to build or rebuild their credit score.

Keep in mind that if a secured credit card is the best option for you right now, it is not a permanent option. The goal should be to use the secured credit card to rebuild your credit, then move up to an unsecured credit card.

There are several benefits to using a secured credit card as an initial step into the credit card world.

• First, a secured credit card only allows for so much spending. Because the card is secured with an initial deposit, you will only be able to spend that much before you pay the balance. This gives card users an excellent opportunity to understand if a credit card is suitable for them.
• While an unsecured travel credit card has a credit limit, the card will not limit your spending and could cause issues if the cardholder spends beyond their means. But with a secured credit card, you can carefully examine your spending habits and work your way to an unsecured credit card.
• In addition, a secured credit card allows consumers to steadily make positive progress on their credit report. By spending responsibly and paying your bill on time, you will build a history of controlled spending, which will build your credit score to a healthy score.

Using a secured credit card is a bit different than an unsecured credit card. Because an up-front deposit secures the card, you cannot spend beyond the deposit amount. This is a positive as you aren’t able to spend frivolously, but it’s also a negative because it doesn’t give you true spending flexibility.

The best way to use a secured credit card to build credit is to not spend excessively and always pay your credit card bill in full and on time. Doing so allows you to avoid interest charges as well as poor marks on your credit score.

However, improving your credit score significantly is not something you can do in one or two months. It is a long-term effort that requires persistence and responsible personal financial skills. While this sounds complicated, it boils down to two points:

1. Do not overextend yourself, and
2. Pay your bills on time.

If you can master those two skills, your credit score will climb.

Secured credit cards are much different from a traditional unsecured credit card. Because they are so different, and credit card issuers don’t advertise them as heavily, there are many questions about how these cards work.