Secured credit cards are used as a tool to build credit history from scratch or put positive information on a credit report after negative incidents such as bankruptcy, missed debt payments or accounts in collections. By feeding positive information into a credit report, you can improve a credit score, which is essential for getting the best financial products on the market.
In order to be eligible for a secured credit card, you must provide a minimum deposit. This deposit typically serves as your line of available credit, but in same cases your line of credit may be higher. Plenty of secured cards require rather hefty minimum deposits of $300 or more, which may be prohibitive for many Americans living paycheck-to-paycheck.
Fortunately, alternatives to the high deposits exist. We’ve pulled together a list of the best secured cards that require a deposit and/or credit union membership fee of $200 or less.
$200 minimum deposit – Discover it® Secured Card - No Annual Fee
Discover offers a secured credit card with a minimum deposit of $200. This is our favorite secured credit card for a number of reasons. There is no annual fee. You can earn cash back. And our favorite feature is the automated monthly review that starts at month eight. 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.
No annual fee: There is no annual fee on this card.
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.
Earn cash back: Most secured credit cards do not offer any rewards. With the Discover it Secured Card, 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.
$49, $99, or $200 – Capital One® Secured Mastercard®
CapitalOne offers a Secured MasterCard with a minimum deposit under $200. Our preferred credit card is from Discover. However, if you don’t have $200, you might want to consider this offer from Capital One.
- $49 minimum deposit for a $200 line of credit, based on creditworthiness
- No annual fee
- 24.99% variable APR
Fine Print of the Capital One Secured MasterCard
The minimum required deposit can be as high as $200 based on your creditworthiness. So while this card could be only $49 for some, others might be asked to fork over $200.
Ensure that you don’t carry a balance as the secured card comes with a 24.99% variable APR, in the event Capital One raises its prime rate.
$100 minimum deposit – Visa Classic Secured by Justice FCU
You can join Justice FCU if you are an employee or retiree of the Department of Homeland Security, Department of Justice, or of another qualifying group, or an eligible family member. If that doesn’t apply, don’t fret. Anyone can join JFCU by first becoming a member of an eligible JFCU association like the National Sheriff’s Association, charges a $38 membership fee. It only costs $5 for eligible individuals to join JFCU, so that would raise the total cost of membership to $43.
- Minimum deposit of $100
- No annual fee
- Credit limits range from $100 to 110% of pledged shares.
- 16.90% non-variable APR.
$200 – Rate Advantage Secured Visa by Coastal FCU
Anyone can join Coastal Federal Credit Union. You can either work for an eligible business partner, have a family connection to a current member or be a member of North Carolina Sustainable Energy Association or The North Carolina Consumers Council. Anyone can join NCSEA or NCCC with an $18 membership fee deducted from your initial deposit to a savings account opened with CFCU.
The minimum deposit required to join is $100 in a primary savings account.
- $100 minimum deposit
- No annual fee
- 16.25% APR variable
- Non-member: $200
- Member: $100
Best Strategy for Rebuilding Credit
The strategy for building a strong credit score with a secured card is simple. Make one small purchase each month ($10 or less), wait for your statement to come in, pay your bill on time and in full and then repeat the next month. By making just small purchases, you’ll be using a very low amount of your overall credit limit (also called utilization), which helps drive your credit score up faster because it shows you’re responsible.
Keep an Eye on Your Credit Score and Credit Report
Once you’re in the process of building or rebuilding your credit, it helps to have a benchmark. The easiest way will be to establish a profile with one of the free credit score websites: Credit Sesame, Quizzle, Credit Karma. Do a monthly check in with your credit score to see how it’s improving.
In addition, you should also keep tabs on your credit report by downloading the report from each of the three bureaus. By law, you’re entitled to one free report from each bureau per year. You can download them all at once or space them out throughout the year. Go to annualcreditreport.com to download your free reports. Monitoring your reports will ensure all the information there is accurate and alert you about anything that may be damaging to your score, like an item in collections or reported missed payments.
A Word to the Wise
Never carry a balance on your secured card. The point of a secured card is to be building (or rebuilding) your credit history. Make one small purchase a month and pay it off on time and in full. Follow those two steps and you’ll see your credit score start to raise quickly.
Find other secured card options on our secured card comparison table.
The post Best Secured Credit Cards with Low Deposit Requirements – December 2017 appeared first on MagnifyMoney.