Build Your Credit Score: 6 Best Secured Cards With No Annual Fees

Build Your Credit Score

Updated: August 1, 2017

Applying for a secured card is a simple way to begin building (or rebuilding) your credit history. Secured cards are a way to prove to a lender you can be responsible without a lender having to take much risk. When you open a secured card, you put down a deposit and the lender gives you a line of credit. Typically, your line of credit matches the amount of your deposit. But just like credit cards, not all secured cards are created equal. Below are the five secured cards that don’t charge an annual fee, thus save you money as you build credit history.

Our #1 Pick from Discover

Discover it® Secured Card – No Annual Fee

Discover offers our favorite secured credit card. Unlike most credit card companies, Discover is ensuring that benefits and rewards traditionally associated only with unsecured credit cards will be available on the secured card. This card is best for people with no credit, or with scores of 670 or less. Here are the reasons why this card is our favorite:

No annual fee: There is no annual fee on this card. You do need to make a security deposit of $200 or more to establish your credit line. If you want a bigger limit, you will have to make a bigger deposit.

Bankruptcy? No problem: If you have filed Chapter 7 bankruptcy in the past, you can still qualify for this card. It is a great way for people to rehabilitate their credit.

Automatic monthly reviews: Discover will start automatic monthly reviews at month 8. If you qualify, you could be transitioned to an account with no security deposit. Even better, you could potentially be eligible for a bigger credit limit. This feature really sets Discover apart from the competition – and your goal should be to get back your deposit as quickly as possible through responsible credit behavior.

Earn cash back: Most secured credit cards do not offer any rewards. With Discover it, you have the opportunity to earn cash back while earning rewards. You can earn 2% at restaurants and gas stations (on up to $1,000 of spend each quarter). Plus, get 1% cash back on all your other purchases. Earning cash back is not the primary reason to select a secured credit card, but it is a nice option to have available.

Free FICO Credit Score: Discover will provide you with a copy of your official FICO credit score. If you use a secured credit card properly, you should expect to see your score increase over time. And by providing your FICO score for free, you will be able to watch your improvement.

You can learn more and apply by clicking on the link below:

Learn more


Citi Secured MasterCard with $0 Annual Fee

Citi® Secured MasterCard® – No Annual Fee

citi-secured-credit-cardCitibank has just eliminated the annual fee on its secured credit card. If you are declined by Discover, this could be a good back-up option. In order to qualify, you cannot have filed for bankruptcy in the last two years. Citi will hold onto your deposit for 18 months. Unlike Discover, there is no cash back available and Citi will not perform annual eligibility checks to see if you can be approved for a standard card. Here are the key facts:

  • $0 Annual Fee
  • Provide a security deposit between $200 and $2,500. Your credit limit will be equal to the amount of the security deposit you’ve submitted.
  • 22.49% Variable APR

LearnMore


Option Two – Your Local Credit Union

If you belong to a credit union, go there and ask. They probably have a no annual fee option and could set you up right away. It doesn’t hurt to ask a bank either, but they are less likely to have a no annual fee option.

Option Three – Credit Unions “Anyone Can Join”

If you don’t belong to a credit union, or don’t like the secured card options your bank offers, below are three no fee cards from credit unions anyone can join. While it may cost as much as an annual fee to join the credit union, there is also an added benefit of being a credit union member for life.

These are ranked by lowest to highest minimum deposit

JFCU-LOGO-2C

Justice Federal: Visa Classic Secured Credit Card

  • Cost to join – $5 to join JFCU or $43 if you need to join another organization to become eligible
  • Minimum deposit – $110

Eligibility

Unfortunately, not everyone can easily join Justice Federal Credit Union. JFCU provides financial services to employees of Justice, Homeland Security and the Law Enforcement Community, as well as their family members. If you believe you may qualify, then check the credit union’s member eligibility page. Those who qualify, will need a five dollar deposit and to fund their account.

However, there is a loophole.

One of the eligible associations for membership is the National Sheriff’s Association. It costs $38 to join the NSA as an auxiliary member or student. By joining the NSA first, anyone can then become a member of the Justice Federal Credit Union. This brings the cost of membership to $43.

The Secured Card

Visa Classic Secured Credit Card

  • No annual fee
  • 16.90% APR
  • Credit limits ranging from $100 up to 110% of pledged shares

 

State Department

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  • Cost to join – $1 to join the credit union (which the SDFCU usually covers) + $5 (or $15) to join American Consumer Council, if you don’t work for the Department of State.
  • Minimum deposit – $250

Eligibility

You are eligible to join the SDFCU if you’re an employee of the Department of State or one of the extensive organizations with ties to the credit union (all listed here under “who can join”). If you don’t work for the Department of State, you may also be eligible through the American Consumer Council. You can join the ACC for only $5 if you’ve used any major consumer product or service within the past 12 months – and you probably have.

The Secured Card

EMV Savings Secured Visa Platinum Card

  • 7.49% APR
  • No annual fee
  • Minimum deposit –$250

 

DCU

Digital Federal Credit Union (DCU)

  • Cost to join – $5 to join DCU + membership costs to join eligible organization if you aren’t eligible
  • Minimum deposit – $500

Eligibility

You must be a member of DCU in order to apply for the secured card. You can be eligible to join DCU if a relative is already member, if your employer offers membership or your community is included within field of membership. If none of these apply, you can join an organization with member privileges. Joining these organizations range in membership cost from $25 to $120. Once you join DCU, you have a lifelong membership, so you could cancel a membership with the other organization after joining.

The Secured Card 

Visa Platinum Secured Card

  • No annual fee
  • 12.00% APR (18% penalty APR)
  • Minimum deposit – $300

Option Four – Banks

If you don’t want to join a credit union, these banks offer instant online applications with no annual fee.

Harley Davidson Visa Secured Card from US Bank

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We know it seems a little strange, but the Harley Davidson Visa Secured Card from US Bank offers a good option for those not interested in paying to join a credit union.

  • 23.49% APR – so don’t carry a balance
  • Minimum deposit – $300
  • No annual fee

Capital One secured card

Capital One secured cardIf you currently can’t afford the $110 – $500 deposit, consider the Capital One  secured card with a $49 minimum deposit for a $200 line of credit. Capital One used to have an annual fee of $0.

However, this deposit is based on what Capital One deems as “creditworthy.” It is possible it will ask for a deposit of $99 or $200.

Understand how to use your secured card properly

Once you’re approved, be sure to use your secured card responsibly. You can find more tips on how to use a secured card and build your credit history here.

The post Build Your Credit Score: 6 Best Secured Cards With No Annual Fees appeared first on MagnifyMoney.

What to Do When Your Parents Kick You Off Their Credit Card

parent_credit_card

Plenty of parents make their kids authorized users on their credit cards, and for good reason. Credit cards provide a way to build credit, giving teenagers an early financial leg up (provided the card is managed responsibly) by establishing a credit history before they’re old enough to get a credit card on their own.

It can also be a great chance for parents to supervise how their children are spending and help them learn financial lessons, like making payments on time or reading a credit card statement. Even checking credit scores and reports through free credit score tools (such as those on Credit.com) and free annual credit reports at AnnualCreditReport.com can help them reach their financial goals.

But at some point, there comes a time when all parents cut the cord (and the card), kids must make it on their own in the world of credit. What now?

If that recently happened to you, there are two starting points where you’ll likely find yourself: having a good credit score or having a not-so-good credit score.

If Your Credit Scores Are Good

If your parents have been making timely payments on the card you also carry, you likely have a credit score that is good enough to get your own credit card. If that’s the case, you can consider some of these credit cards for good credit. If you’re still in school, you might want to consider a credit card specifically designed for students.

Remember, if you’re under 21, you’ll need to demonstrate an ability to repay or have a willing co-signer to qualify — federal law prohibits issuers from extending credit cards to you otherwise. You should also check your credit before applying so you know where your score stands, because the inquiry will temporarily ding it.

If your parents are only just now starting to talk about removing you as an authorized user from their card, it might be a good idea to ask them to wait until you apply for a new card in your own name. This will ensure that your credit score remains high — closing credit card accounts can have a negative impact on your credit scores — while you go through the application process.

Better yet, you can ask your parents to take your card but keep you as an authorized user on their account. As long as they are making payments on time and not carrying high balances, this will help you even further in establishing a good credit history. That’s because roughly 15% of major credit scores is based upon the length of your credit history. So the longer you’ve had credit, the more points you’ll earn toward your total credit score.

If Your Credit Scores Aren’t So Hot

If your parent or parents are having financial difficulties and haven’t been making timely payments on the credit card or have run up a high balance — credit utilization is a big factor in credit scores — you might not have very good established credit.

The good news is, you have options, and getting disconnected from your parents’ credit could be a very good thing for your scores. Authorized users are not considered responsible for making payments, so if negative information is appearing on your credit reports because of the account, you can contact your lender and asked to be removed from it. After that, the account should stop appearing on your credit reports. If it doesn’t, you can file a dispute with the credit bureaus.

Next, you can start on your own financial road by first checking your credit scores to see exactly where you stand. You might also want to check your credit reports to make sure everything on them is accurate (see the free credit scores and reports links in the second paragraph). If afterward you’re certain you have “thin” or “bad” credit, there are some credit cards — both secured and unsecured — that you can consider applying for to help you establish or rebuild credit.

If you find out through checking your credit scores that the situation is actually not all that bad, you can try applying for a credit card for fair credit.

Credit cards can be a simple way to establish and build credit, but they’re not your only option. You can also consider credit-builder loans to get you started.

Whatever your decision, remember that your credit is an important for everything, from getting a car loan to renting an apartment, opening utilities and sometimes even landing a job. So taking care of it should be a top priority. You can build good credit in the long-term by making all loan payments on time, keeping debt levels low, limiting new credit inquiries and only adding a mix of credit accounts as your wallet and score can afford them.

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Image: digitalskillet

The post What to Do When Your Parents Kick You Off Their Credit Card appeared first on Credit.com.