If you have neglected your finances and your credit management has not been the most successful, it may be time to change your bad financial habits. A simple way to start or rebuild your credit scores or leave behind several setbacks is with the best-secured credit cards for bad credit.
Bad credit history can affect various departments of your life. If you want to hire a cell phone plan, rent an apartment or buy a car and your name appears in the credit bureau, for example, it may be difficult for you to access these goods and services. Plus, inevitable credit mistakes can haunt you for years.
However, it is not impossible to start over. That is why we present here some secured credit cards for bad credit. Perhaps the cards that we will mention are not like those that you will see advertised, with tremendous rewards or exclusive advantages.
However, keep in mind that you won’t depend on any of these options forever. The idea of such a card is to use it to build or rebuild your credit and then move on to a better card.
With these cards, you make a security deposit that protects the credit card issuer if you don’t pay. Later, when you close or update the account, you can get your deposit back. The deposit reduces risk, making secured cards some of the most accessible cards to obtain.
What is a Secured Credit Card?
A protected credit card is a financial instrument that is obtained with the help of a guaranty or security. These polymers need a premium that acts as security if you do not satisfy the stated criteria, similar to a private loan wherein you agree to the confiscation of your assets if you cannot pay.
These financial instruments tend to solve two specific consumer situations: start a credit history from scratch or restore a bad credit score. For these reasons, the limits associated with them are low, the interest rates are high, and they may include some additional fees concerning unsecured credit cards.
Secured credit cards are handy tools to amend a series of bad financial decisions. Some options allow you to get an “upgrade” of your account, granting you an uninsured plastic. This condition depends on the bank, and you will have to compare products to find out who has this benefit.
How does a Secured Credit Card Work?
The secured cards are designed for those who have a credit score between bad and fair (300-669), so you must have the money for the initial deposit.
- Depending on the institution, this amount is the one that will serve as the maximum limit to spend. There are also cases in which you give collateral of $ 49 or $ 99 and receive up to $ 200 of credit.
- Once this requirement is fulfilled, these plastics work the same as the traditional ones. Among the frequent operations, the following stand out:
- The payment of products or services in online and offline stores that accept credit cards.
- The collection of interest when you do not pay the entire balance and carry the remaining amount to the next month.
- The application of fees related to obtaining and using the card, such as application, processing, annuity, and more.
- If you fail to qualify for an unsecured credit card, you can improve your credit or start it with a secured card.
Best Secured Credit Cards for Bad Credit
Here are some of the best secured credit cards for bad credit.
- Discover it secured card
- Secured Capital One MasterCard
- Bank Americard secured credit card.
- US Bank secured Visa card.
- AeroMexico secured Visa card.
- LATAM secured Visa card
- OpenSky secured Visa credit card.
- Secured First Progress Platinum Master Card
Regrettably, some protected cards come with a slew of unpleasant fees and limitations. As a result, it’s advisable to look for a card from a trusted issuer with a low annual charge rather than a subscription payment.
To prevent interest costs, there should be a normal time limit during which you may settle your debt in full. Car rental coverage and even awards are some of the other amazing features.
Here are a few of top credit cards with good security to assist you establish credit:
Discover it secured card
This card gives 2% rebate at petrol stations and restaurants, and 1% rebate on all other transactions.
Another key point to note is that there is no yearly or monthly charge associated with this card. The cost of borrowing is 25.24 percent.
Capital One Secured MasterCard
You may put down a recoverable damage deposit of $49, $99, or $200 with this secured credit card for poor credit, based on your eligibility. You do, however, get a $ 200 credit line.
You have the option of paying your debt in full to prevent interest and fees or paying a 26.99 percent interest rate. In addition, there is no yearly charge.
Secured credit card from Bank Americard.
It’s also one of safest credit cards for those with terrible credit. Based on the quantity you put down as a downpayment, you’ll be given a credit line ranging from $300 to $4,900. If you persist to use the card after a year, you could be eligible for a refund of your downpayment.
There is no annual fee and a basic interest rate of 25.24 % here.
Visa card issued by US Bank.
Your credit line with the US Bank protected Visa card may range from $300 to $5,000, based on your downpayment.
You have the option of paying your debt on time (you select your final payment date) or paying the interest rate of 21.24 percent. There is also a $29 yearly charge.
The AeroMexico Visa card is a secured Visa card.
The AeroMexico secure Visa card is among the few secured cards with benefits for those with weak credit. Every dollar spent earns you one point in the AeroMexico Club Premier program, with petrol and food earning you twice the points. When new cards make their first transaction, they will get 5,000 extra miles and a partner ticket.
A 10% discount on AeroMexico plane tickets sales and a $ 99 partner ticket per year with renewals are also included in this group. This card has a $25 yearly fee and a 25.25 percent rate of return.
LATAM Visa card
This card offers a number of benefits, including rewards and travel savings. You’ll also get 5,000 credits after your first usage, plus an extra point for each and every dollar you spend. It also gives a one-time 10% rebate on LATAM Airways tickets sales of up to $ 500 annually. A minimal amount of $300 is required.
This card also has a 25.24 percent interest rate. The card is free for the first 12 months, but afterwards, you must pay a fee of $ 25 every year.
Protected Visa credit card from OpenSky.
It’s one of the safest credit cards for those with terrible credit. You may make frequent purchases and put down a security deposit of as little as $200. The low interest rate of 19.64 percent is a considerable advantage. Most crucially, the card has a $35 yearly charge linked to it.
Secured First Advancement Platinum Master Card
You pay a $29 yearly fee plus a damage deposit that becomes your line of credit with the Protected First Advancement Platinum Master Card. This card has a 19.99 percent annual percentage rate (APR) and transmits to all three major credit agencies. There is no need to do a credit check here.
The most crucial thing to remember is that there is a yearly charge.
Advantages of Getting a Secured Credit Card
The use of a secured credit card revolves around incurring less risky attitudes, controlling expenses, and making financial decisions more in line with your economic situation. In addition to facilitating approval for a line of credit, it has other benefits:
They serve to report your payment behavior to the main bureaus. Unlike a prepaid or debit one, these products account for your credit history.
They can give you the ability to generate dividends. Some banks put the deposit in a savings account, which allows you to earn interest and a few extra dollars as long as the contract lasts.
They are very effective in rebuilding the score affected by bad decisions. If you pay on time, improve your balance management, and increase your score, you can eventually opt for an unsecured credit card.
With these products, the deposit is a guarantee that the bank takes when you stop paying. Unless your debt is more outstanding than the collateral, you won’t have to deal with the collections department. The entity keeps the money, and you forget about the annoying collectors.
Frequently Asked Questions
Which Secured Credit Card is Easiest to get?
Today, the OpenSky® Secured Visa® Credit Card is the easiest to get.
Can I get a Credit Card with a 500 Credit Score?
With proper research, you can get a credit card with a 500 credit score
Can I get a Credit Card with a 450 Credit Score?
A sound card in this category is the Citi® Secured Mastercard®.
What is the Fastest way to Build Credit?
The fastest way to build credit includes the following:
- Pay your bills frequently.
- Dispute credit report errors promptly
- Seek higher credit limits.
- Opt for a secured credit card
Will having two Secured Credit Cards help More?
It will not help more. In addition, all secured credit cards usually come with their own set of fees.
How much do you have to put down on a secured credit card?
The minimum amount you have to put down on a secured credit card is between $200 to $300. With much more deposit, your credit limit will also be higher.
In conclusion, anyone who has bad credit would not qualify for most traditional credit cards. However, that doesn’t imply that there are no options on the market. Thus, the highlight of the best secured credit cards for bad credit above would be indispensable for all.
I am Lavinia by name and a financial expert with a degree in finance from the University of Chicago. In my blog, I help people to educate by making wise choices regarding personal investment, basic banking, credit and debit card, business education, real estate, insurance, expenditures, etc.