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Secured credit cards for december 2022 in the United States

Apply for a secured credit card. On 03.12.2022 you have access to 0 credit cards. Increase your chances of getting money — fill out a multi-application with a free credit rating check.

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Arrowhead Advance
3.2
Olivia H
Olivia H
01.12.2022 at 06:07
My experience with getting a personal loan from this company was quite pleasant. The service was fast, no one asked about any collateral or my creditworthiness. Such things are always annoying...
Review
Spotloan
4.4
Noah J
Noah J
30.11.2022 at 20:45
Before taking out a loan, I compared Spotloan with other lenders and found out that their rates are the most acceptable. The mobile application works flawlessly. I quickly received approval...
Review
Spotloan
4.4
Isabella H
Isabella H
30.11.2022 at 20:40
At first, I liked everything in this company. I needed a payday loan and they offered a good alternative. Almost no documents are needed, it's true...
Review
Spotloan
3.8
Camila J
Camila J
30.11.2022 at 20:40
Spotloan is like a good old friend to me. I always try to make payments on time, so I usually have no problems with creditors. This company has simplified all possible procedures for obtaining a loan...
Review
Spotloan
3.6
Emma S
Emma S
30.11.2022 at 20:40
A very convenient application of the company. You can borrow small amounts starting from $3,000. In addition, the company operates in most states...
Review
Spotloan
4.6
Mateo J
Mateo J
30.11.2022 at 20:35
If you've never seen a company that can give you a maximum of $800, then this is just about it. But they respond to the application very quickly, they also quickly approve and transfer money to you...
Review
Secured credit cards for december 2022

What is a secured credit card?

A secured credit card is one of many types of credit cards that requires a cash security deposit from the cardholder when they open an account. The deposit on the card functions as collateral on the customer's account, providing the card issuer with additional, highly effective security if a customer fails to make the payments. 

It is supposed that a client will put down some money as a deposit, which will be the credit limit for the customer's card. So, if customers do not pay their bills, the issuer can take the money directly from the customer's deposit. The deposit is usually equal to the customer's credit limit.

How secured credit cards work?

After customers make an initial deposit, secured cards work just like unsecured ones:

  • Clients can use them everywhere, including online.

  • The bill comes monthly, and clients pay for their purchases. Note that the deposit can not be used to pay for purchases.

  • Credit card holders incur interest if they carry a balance.

  • Ones can build or rebuild the credit by using the card responsibly and paying the balance on time.

  • Most credit card issuers offer both secured and unsecured cards. 

  • Annual fees are common, but generally, the total amount is not higher than $50. 

Pros and cons of secured credit card

A secured credit card has several significant advantages over other types of cards. So, they should all be thoroughly considered and analyzed for customers to decide. 

Pros

  • Unlike unsecured credit cards that are very hard to apply for, a secured credit card allows customers with bad credit history to qualify for the services. 

  • Using a secured credit card system is straightforward and easy to understand. Secured credit cards require a credit card deposit which functions as collateral and is usually held in a special collateral account. 

  • When clients apply for a secured credit card, they can request the credit limit of their own choice. Typically, it is quite high, between $250 and $5000. It depends on the amount of funds customers have on their deposits.

  •  If clients are approved, they will get a security deposit equal to the value of their credit limit, which will be transferred directly to their savings account. 

  • If customers close the deposit on time and have it in good standing, they will receive the deposit back. Sometimes they can even get it with interest when they close the card or graduate to an unsecured credit card.

  • Clients can use a secured credit card with no limitations. For instance, they may make any transaction that requires a credit card. 

  • A secured credit card has special protection of fraud prevention, detection, and resolution services offered by the client's card issuer.

  • Customers can use a secured credit card for everyday purchases. For that, they will only need to make payments each month toward their balance. 

  • If customers use the secured credit card wisely, it can have a positive impact on their credit and lead to building up good credit in just a year. Customers will have to make regular payments by their due dates every month, pay minimum deposit amounts, have low balances by spending only 30% of the credit limit and pay the full balance on a monthly basis. 

  • Clients can ultimately get an unsecured card, as a secured credit card is usually temporary and aims to improve customer's credit for them to qualify for an unsecured credit card that does not require a deposit, have higher credit limits, lower interest rates and sometimes better terms, and rewards programs. 

  • Clients can also use a secured credit card to learn highly effective financial instruments, management tools, and special strategies. That is how they can learn to manage credit cards using various electronic accounts, paper statements, online banking, and mobile apps.

Cons

  • Most secured credit card issuers report the customer's monthly payments and card balance to the three major credit bureaus making up the client's credit history report and ultimately determining their credit score.

  • It may be difficult for customers to make a security deposit, as the amount is very high. So, customers may need to save some money on a security deposit.

  • There may be high fees besides the deposit. Depending on the chosen card, customers must pay an application, processing, and annual fee to get the secured credit card. 

  • Clients ‌pay a higher interest rate on secured credit cards. Secured credit cards rarely offer competitive interest rates, as they fear they may default. Hence, clients can pay the balance in full each month to avoid paying high finance charges.

How to choose a secured credit card

Customers should be very precise when choosing a secured credit card. There are some major points they should consider.

  1. Credit bureau reporting. While considering a company for secured credit cards, customers who want to improve their credit can choose the companies that compile the credit reports for the three major credit bureaus: TransUnion, Experian, and Equifax. So, be sure that the card you get will report the account to all three or at least companies from the list. Note that a credit card that doesn't report a customer's credit to the credit bureaus may not improve the client's credit score.

  2. Deposit clients can afford. The security deposit allows customers with a bad credit history or no credit to qualify for a secured credit card. The system of secured credit cards implies customers paying an amount of money when they open the account, while the card issuer holds that money as collateral. Most secured cards require a minimum deposit of $200 or $300. There is also a possibility of having a larger deposit.

  3. Reasonable fees. While choosing a lender, customers must note that many of the best-secured credit cards don't charge an annual fee. If they do, a client has to be provided with significant benefits, such as a lower interest rate or the ability to qualify without a credit check. Usually, the secured card's annual fee is not more than $50.

  4. Upgrading. While considering applying for a credit card, be sure that it should not be a long-term option as, in most cases, it is aimed at building the customer's credit. So, after improving their credit, credit card holders need to be able to upgrade the account to an unsecured card and get the deposit back.

  5. A grace period. When applying for a secured credit card, ensure a grace period. Sometimes clients with poor credit scores may not have them as they have a bank account in bad stead or don't pay the full balance on the statement, which can cause higher fees and extra charges. However, if paying the statement balance fully, no interest will be charged on new purchases until the next statement's due date.

  6. Interest rate. Not less a crucial factor to consider is interest rates, or APRs, which are usually over 20% for secured credit cards. But if customers make small purchases and pay them off in full every month, the grace period will work properly, and the APR will not be needed anymore. Customers should remember that a secured credit card aims to build their credit, not charge large debt payments.

  7. Rewards. Note that some secured credit cards offer rewards as well. They can be essential for some customers, providing them significant extra benefits. If customers have low credit limits for secured cards and credit-score value, rewards may not be an essential issue for them.

How to apply for a secured credit card?

Clients are better off not applying for an expensive secured credit card, as their major goal is to build up enough credit to qualify for an unsecured credit card. Hence, there is no need to overpay.

Credit cards are secured with a deposit in a savings account and used when customers default on their payments. Various companies offer minimum and maximum deposit limits. So, future credit card holders must define what deposit they will be able to pay for and get to know all the cards with minimum security deposit requirements.

The credit limit, in most cases, will be equal to the security deposit. However, some cards offer a credit limit that differs from the security deposit.

Find out whether the lender reports to the credit bureaus. If a customer wants to use the credit to establish or reestablish the credit, they have to make sure that the credit card issuer reports to the major credit bureaus. Note that secured credit cards that don't report to bureaus are likely unable to help clients improve their credit rating.

Some secured credit cards have very high-interest rates and fees. So, customers must avoid applying for such a lender and consider an alternative company with better conditions. So, customers have to do a comprehensive search for the credit card they are considering, read reviews, and get much more information on the credit card issuer.

The basic credit card eligibility criteria vary based on the type of credit card and the provider but generally include:

  • Age. Customers must be 21 years old to apply for a credit card in the United States. They can also apply if they are at least 18 and have a parent's permission or a verifiable source of income.

  • Residency status. Most secured credit card issuers require clients to be permanent residents or citizens of the U.S.

  • Income is a paramount factor that significantly influences the qualification process.

  • Credit history. Clients must have a good credit history to apply for most credit cards. If they have poor credit, they can rebuild their credit score with the help of a secured credit card.

The application process usually includes several steps. First, customers must fill out a credit card application and attach some necessary information. It usually includes:

  • The customer's name

  • Date of birth

  • Social security number

  • Mother's maiden name

  • Monthly housing payment and whether a client rents or owns

  • Employment status

  • Income

  • Contact information, such as phone number, address, and email.

Credit card companies can use one's social security number to check the credit. However, it can negatively affect a client's credit score, so it is much better to have a few credit cards they are applying for to have no negative consequences afterward.

After applying, the credit card company will review all the details of the customer's application. If approved, a customer will soon be mailed out a card. Credit card companies usually tell clients their credit limit for a secured credit card and provide them with a digital card number clients can use to make purchases online. 

Ways to use secured credit cards

There are several ways to use a secured credit card. 

  • Making small purchases to pay off each month. That is how customers can show credit card issuers they can use it responsibly and pay off their balance. To pay close to a deposit with flying colors, customers must make a few monthly purchases and pay the bill in full on time. There is also a strict rule that customers must carry their balance. That is how they can avoid paying extra interest on purchases and build credit much faster.

  • Paying on time more than the minimum required. If customers make the minimum payment on time, they can build good credit much faster, pay off more of their balance and reduce the credit utilization ratio or the amount owed. All these factors influence customers' credit scores.

  • Setting payment alerts for the secured credit card that will remind them what credit card bill should be paid so as not to miss the payment on the billing date. Customers can also set up a "Payment Due" text alert with the help of their issuer or set a monthly "alarm" that notifies clients a week before the bill is due.

  • Enrolling the secured credit card in auto-pay. That is a great tool to avoid late payments, which allows the issuer to automatically deduct the monthly balance from the customer's bank account. Moreover, this way, customers do not need to keep track of their bills.

  • A secured credit card can be used on everyday purchases. 

FAQ

What does a secured credit card mean?

A secured credit card is one of many types of credit cards that requires a cash security deposit from the cardholder when they open an account. Also, it is an invaluable tool that allows credit cardholders to access credit and provides them with the opportunity to build credit and qualify for an unsecured card.

Do Secured cards build credit?

Yes, a secured credit card is one of the easiest and quickest ways to build a customer's credit. To build good credit and qualify for various financial solutions, clients must use the card regularly, keep their balance below 30% of the credit limit, or, even better, stay below 10%.

Do Secured credit cards pull your credit?

Secured credit cards are a highly convenient instrument for building a customer's credit score. So, there are no hard checks and pulls on the client's credit history and‌ no credit reports from particular credit bureaus. Instead, secured credit cards require card members to deposit cash in a bank account to hold as collateral.

What are secured credit card disadvantages?

Even though secured credit cards have many advantages over other types of credit cards, they still have some drawbacks that should be considered when a customer considers that option. First, secured credit cards have high fees and interest rates. Second, secured credit cards may charge high application, processing, or annual fees. These cards typically have high-interest rates, as credit card issuers require high default rates from customers with poor credit scores.