How to Use a Secured Credit Card to Build Credit

Having bad credit or no credit can complicate your financial life. Even with a reliable income but no credit history, you will be deemed a risk because you don’t yet have a track record.

A lack of credit can result in trouble finding a place to live, inability to get a car loan, or paying higher utility deposits. But, having no credit is better than having bad credit. And there is a solution to begin building your credit history.

What are Secured Credit Cards?

The main difference between secured and unsecured credit cards is that secured cards require you to send the card issuer a refundable deposit when you open your account.

Features of a secured credit card include:

  • It is a good tool for building credit, especially for applicants with poor credit, limited credit, or no credit.
  • It requires a refundable security deposit to open the account.
  • There’s less risk, and if you don’t pay your bill, the issuer will deduct the money from your deposit. That’s why these cards are offered to applicants with bad credit or no credit.
  • The card provides a small line of credit based on your original security deposit.
  • Your available credit limit will usually match your cash deposit amount, so if you deposit $250, you’ll have a $250 limit.
  • You will need to make your minimum payments each month. The deposit will not cover your monthly payment.
  • If you develop a pattern of responsible use, you will eventually boost your credit score enough to qualify for an unsecured card — which won’t require a deposit.
  • Some secured cards will allow you to upgrade your account directly to an unsecured card. For others, you’ll have to open a new unsecured credit card then close your secured credit card account. At that time, you’ll get your deposit as a refund.
  • The card usually offers one variable APR, whereas traditional credit cards provide a range of APRs.

Best Secured Credit Cards

Our suggested list of the best-secured credit cards for your unique situation.

Best if you don’t have a Social Security number: Capital One Platinum Secured Credit Card

  • Minimum security deposit: $49
  • Card details: unlimited 1.5% cashback
  • Purchase APR: 26.99% Variable
  • Credit line: A $49, $99, or $200 minimum deposit opens your account with an initial credit line of $200.
  • Rewards program: With responsible card use, like making payments on time, you could earn back your deposit and upgrade to an unsecured Platinum card. And be automatically considered for a higher credit line in as little as six months.
  • Annual fee: $0
  • Foreign transaction fee: No
  • Account alerts: You choose your due date, and they send you email and text reminders.
  • Cash advance: $10 or 3% of the amount of each cash advance, whichever is greater.
  • Balance transfers and balance transfer fees: Allows you to transfer your higher-rate balances onto a Capital One card. Balance transfer fees of 3% of the amount of each transferred balance that posts to your account at a promotional APR. You may be charged a fee for some balance transfers, usually a flat fee or a percentage of the transferred amount. Check the offer terms carefully.

Best for Rewards: Capital One Quicksilver Secured Cash Rewards Credit Card

  • Minimum security deposit: $200
  • Card details: Maximum late fee $40, and monitors your credit with CreditWise from Capital One. $0 fraud liability and be automatically considered for a higher credit line in as little as six months with no additional deposit needed. It’s free for everyone, and checking your credit does not hurt your credit score.
  • Purchase APR: 26.99% Variable
  • Credit line: $200 security deposit to get a $200 initial credit line. The maximum amount you can deposit on this secured card is $1000.
  • Rewards program: Earn unlimited 1.5% cash back on every purchase, everywhere. No rotating categories or limits to how much you can earn.
  • Annual fee: $0
  • Foreign transaction fee: None
  • Account alerts: It sends you email and text reminders and lets you choose a convenient due date.
  • Cash advance: Cardholders will pay 3% of the cash advance or a $10 minimum.
  • Balance transfers and balance transfer fees: It offers a 0% intro APR on purchases and balance transfers for 15 months; 14.99%-24.99% variable APR after that.

Best for Payment Flexibility: Citi Secured MasterCard

  • Minimum security deposit: $200
  • Card details: Recommended credit scores of 630-869, designed specifically for those with no credit or limited credit, not bad credit. Your account will be automatically reviewed within 18 months of opening to determine if you’re eligible to have your deposit returned early and continue using the card as an unsecured card, which is a long time to wait.
  • Purchase APR: 22.49% Variable APR
  • Credit line: $200 minimum, $2500 maximum
  • Rewards program: None
  • Annual fee: $0
  • Foreign transaction fee: There is a 3% foreign transaction fee in U.S. dollars for each foreign purchase.
  • Account alerts: Yes, as well as auto pay and flexible payment due dates.
  • Cash advance: Cash advance fee is 5% (min $10) per transaction, whichever is higher.
  • Balance transfers and balance transfer fees: The Citi Secured card has a 22.49% variable APR on purchases and balance transfers, with a 5% fee on each balance transfer, a minimum of $5.

Best Secured Card to Transfer Balances: Discover It Secured Credit Card

  • Minimum security deposit: $200
  • Card details: Automatic review starting at seven months to see if they can transition you to an unsecured line of credit and return your deposit. The recommended credit score of 300-629
  • Purchase APR: 22.99% variable APR
  • Credit line: A minimum of $200. This amount determines your credit limit. Deposits can be as high as $2,500.
  • Rewards program: Earn 2% cashback at gas stations and restaurants on up to $1000 combined purchases each quarter and automatically earn unlimited 1% cashback on all other purchases. They do dollar for dollar cash back match for the introductory offer at the end of your first year.
  • Annual fee: $0
  • Foreign transaction fee? None
  • Account alerts: You get a security alert if they find your Social Security number on the dark web.
  • Cash advance: Not available
  • Balance transfers and balance transfer fees: 10.99% intro APR on balance transfers for six months

Best No-Credit-Check Card: The OpenSky Secured Visa Credit Card

  • Minimum security deposit: $200
  • Card details: No credit check is necessary to apply. There’s a maximum late fee of $38 and an 85% average approval rate for the past five years. Get considered for a credit line increase after six months, with no additional deposit required. You could be eligible for an unsecured card after as few as six months. Nearly half of their cardholders who make on-time payments improve their FICO score 30+ points in the first three months. Easy application, apply in less than five minutes right from your mobile device. A bank account is not required.
  • Purchase APR: 17.39% variable APR
  • Credit line: This card allows you to set up a $3,000 credit limit by making an equal-sized security deposit.
  • Rewards program: None
  • Annual fee: $35
  • Foreign transaction fee: 3% foreign-transaction fee
  • Account alerts: Offer flexible payment due dates which allow you to choose any available due date that fits your payment schedule
  • Cash advance: Cash advance fee of 5% with a minimum of $6 per transaction, whichever is higher.
  • Balance transfers and balance transfer fees: This card does not allow balance transfers.

How Does a Secured Credit Card Work?

  • After you’ve paid your deposit, it works like a traditional credit card.
  • The cardholder can use the card anywhere credit cards are accepted, including online.
  • Your bill is paid monthly, and you pay for your purchases as usual, but the deposit does not go toward your card balance.
  • On-time payments and regular card use will help you build credit. A single late payment will stay on your credit report for up to seven years.
  • If you carry a balance, you will pay interest.
  • Credit card issuers usually offer both secured and unsecured cards.
  • The cards sometimes charge an annual fee of up to $50, but plenty of options don’t include a yearly fee.
  • If you don’t qualify for an unsecured card, a secured card can help you build your credit as long as you use it responsibly and pay it on time.
  • Offers fraud liability in case your card is lost or stolen.

What’s the Difference Between a Secured Card and a Prepaid Card?

The main difference between prepaid cards and secured credit cards is that prepaid cards are debit cards, while secured cards are credit cards. More importantly, secured credit cards help cardholders with credit-building by reporting payments to at least one of the three major credit bureaus, while prepaid cards do not.

How to Use Your Secured Credit Card to Build Credit

  • Use it for emergencies only, and make one or two small purchases per month.
  • Keep your account in good standing. Always pay your bill on time.
  • Don’t allow your balance to exceed 30% of your credit limit.
  • Pay your balance in full each month. This way, you won’t have to pay interest charges.
  • Monitor your credit score. When you see a noticeable increase, ask about qualifications for an unsecured card.

How Quickly Does a Secured Credit Card Build Credit?

It can also take one to two months after you begin using your secured card for it to start bumping up your score. According to Experian, if you’re brand-new to building credit, it could take up to six months for a credit score to even show up on your report.

But after the first year to 18 months of use, your credit score should be reflected and have improved enough to qualify for an unsecured card.

What If My Application for a Secured Credit Card is Denied?

You will get denied if you have bad credit or a bankruptcy on your credit report. You’re entitled to a free credit report to figure out why this happened. And you can also get copies from all three major credit bureaus — Experian, Equifax, TransUnion at Review them for any potential problems, and if you find any errors, fix them.

What Are the Differences Between a Secured Credit Card and an Unsecured Credit Card?

  • Aside from the security deposit, there’s not much difference in how secured and unsecured cards work.
  • You’ll pay a lower annual percentage rate than with secured cards
  • Your credit limit will be higher
  • There will be more perks (rewards, lower fees, cashback, etc.)
  • Card offers can work in your favor (0% balance transfers, cash advances)
  • If you have poor credit, an secured credit card may be your only option

Why Does My Credit History Matter?

Your credit history is your purchasing power. It dictates your ability to get a loan, secure housing, and sometimes even a job.

Good credit shows that you are responsible and possess healthy financial habits by paying your bills on time and keeping debt minimum. Lenders take a risk on you when they give you a loan. Lenders determine your creditworthiness by scores derived from the three largest credit reporting companies; Experian, Equifax, and TransUnion.

These scores dictate the loan rates you will receive. The higher your score, the better your interest rate and the cheaper the overall cost of the loan will be to you. Some people will start out with no credit, which doesn’t mean the score is zero. It means there simply are no reports with the three major credit bureaus.

It’s important to regularly monitor your credit reports to ensure that errors aren’t dragging down your score. You can get a free copy each year at

What’s a FICO Score?

A FICO score is a credit score created by the Fair Isaac Corporation (FICO). Lenders use scores taken from Experian, Equifax, and TransUnion, along with other details on borrowers’ credit reports to assess credit risk and determine whether to extend credit to you.

FICO Scores are calculated using many different pieces of data from your credit report. This data is grouped into five categories:

  • payment history (35%)
  • credit utilization (30%)
  • length of credit history (15%)
  • new credit (10%)
  • credit mix (10%)

Your FICO scores are broken down into these categories:

  • Excellent credit: 720-850
  • Good credit: 690-719
  • Fair credit: 630-689
  • Poor credit: 300-629

A point difference when you are at the cusp of the next tier can make a massive difference in the overall cost of your loan.

Can I Qualify for a Credit Card Without a Social Security Number?

Many credit card companies want applicants to provide a Social Security number. A Social Security number helps prevent fraud and protects you from identity theft.

It’s not impossible, but banks will ask for alternative forms of ID for the application process, and you may not be able to apply for some of these credit cards online without an SSN. You may need to go into a bank branch and apply in person instead.

Suppose you don’t have a Social Security number, An ITIN, or Individual Taxpayer Identification Number. In that case, it may work instead, along with other documentation required to verify an applicant’s identity. However, not all lenders require this.

Discover, and Barclay’s do not allow applications without an SSN.

The Bottom Line

Building your credit history is as essential as maintaining creditworthiness. It can affect where you live if you can get an auto loan, your employment, utilities, and the ability to secure a business loan.

You need good credit to live comfortably. Once you know how to build a good credit score, you’ll be able to take advantage of all of the positive financial opportunities associated with good credit.


Can I Qualify for a Secured Credit Card if I Don’t Have a Savings Account?

Yes. Credit card companies will only look at your credit score, current employment, and income to determine your eligibility for a credit card.

Do Secured Credit Cards Have Any Application Fees?

No. You should never have to pay an application fee for a credit card. Never pay to open an account if you don’t need to.

What Does FDIC Mean?

Member FDIC indicates that the federal government covers your bank. A Federal Deposit Insurance Corp. (FDIC) insured account is a bank account at an institution where deposits are federally protected against bank failure or theft.