What Are The Best Secured Credit Cards in 2016?

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Secured credit cards are one of the best ways to build up your credit score if you find yourself in the unfortunate position of having a low credit score or just a razor thin credit profile. Here is a list of what I believe are the top 5 secured credit cards out there in 2016.

1. Discover it® Secured Credit Card

secured-card

  • No annual fee
  • Minimum deposit is $200
  • No late fee on first payment and paying late wont increase APR
  • Rewards (see below)
  • Reports to all three credit bureaus
  • Free FICO score

If you’re planning on getting into the rewards game, this is a great way to break into it, as it’s rare for a secured credit card to offer rewards (and good ones at that). This card earns 2% cash back at restaurants & gas stations on up to $1,000 in combined purchases each quarter and 1% cash back on all other purchases. At the end of your first year (as a new cardmember) Discover doubles all the cash back you’ve earned, too!

Another thing that’s great about this card is that after 12 months you Discover will evaluate whether or not to approve you for additional credit and if you’re approved they’ll transition you into the standard Discover It. The drawback to this card is that it does have a high APR at a variable 23.24. But it can’t be reiterated enough — if you’re at the “repair” stage of building your credit you should not never even think about carrying a balance.

2. Capital One® Secured MasterCard®

CAPITAL ONE SECURED

  • No annual fee
  • Minimum deposit is $49, $99, $200
  • Variable  APR 24.99%
  • Credit line increase possible
  • No foreign transaction fees
  • Reports to all three credit bureaus

This is one of the most popular secured credit cards out there on the market. It reports to all three credit bureaus so it’s a great way to build your credit profile and there’s no processing fees to go along with no annual fee and no foreign transaction fees. Furthermore, if you qualify for a low deposit, you’re only out as little as $49.

The drawback is the high interest rate of a variable 24.99%, but you should be dead set on paying your balance in full while you’re building your credit anyway, so that shouldn’t affect you too much. Another drawback is that this is one of the more difficult difficult secured credit cards to get approved for. According to NerdWallet, if you have low income (below $10,000), high rent relative to income, or bankruptcies showing on your report then you may have some issues in getting approved.

3. nRewards® Secured Credit Card – Navy Federal Credit Union

Navy-Federal-Secured-Credit-Card-300x189

  • No annual fee
  • Minimum deposit $500
  • APR 9.24% to 18.0%
  • No foreign transaction fees
  • Reports to all 3 credit bureaus
  • Rewards

This is one of the best secured credit cards the problem is that you need some form of military connection in order to be eligible. With its potential for a low APR, it can be a great asset for those consumers who think they might carry a balance from time to time. It also has a decent rewards system where you earn 1 point per dollar spent.

Here are some examples of how you can utilize the rewards:

  • 3,500 points for $25 gift card from Applebee’s® or Outback Steakhouse®
  • 5,000 points for $50 gift card from Best Buy® or Macy’s®
  • 7,500 points for $75 Navy Federal Visa® Awards Card or The Home Depot® gift card (That’s a one cent per point redemption for Visa gift cards — not bad for a secured credit card).

4. DFCU Savings Secured Visa Platinum Card

  • No annual fee
  • Minimum deposit $250
  • Variable 7.24 percent
  • No foreign transaction fee
  • Reports to all 3 credit bureaus
  • Rewards

This secured credit card has an amazing interest rate, low deposit, no annual fee or transaction fees, and decent rewards, too.  According to Beverly Harzog (credit expert), your approval does not hinge entirely on your credit worthiness. Although, DFCU conducts a credit check, they do this for identification verification purposes. There are reports of others being denied despite having decent credit scores, however, so your mileage will vary.

The reward system offers you 1 “Flex point” per dollar spent. You can learn more about the Flex Point rewards system on their website here.

The drawback is that you have to be a member of the DFCU in order to qualify for the card. If you’re an employee of the Department of State membership is free, otherwise you can the American Consumer Council for $15 (the membership lasts a lifetime).

5. USAA Secured Credit Card (Visa and Amex)

USAA SECURED CREDIT CARD

  • Annual Fee $35
  • $250 minimum deposit (accrues interest)
  • Variable APR 10.15% to 20.15% APR
  • No foreign transaction fee
  • Reports to all 3 credit bureaus

This is one card that I believe is great for getting yourself out of a credit bind when you have a host of negative remarks. I know first-hand of individuals who were approved for this card, despite having several major negative marks and scores down in the lower 500s. That’s not to say you’re guaranteed approval of course. The $35 annual fee is a bit of a drag and I’d personally go for the nRewards® Secured Credit Card first but this isn’t a bad option. And as always, USAA has renown customer service so if you value that, you can’t go wrong with this card.

Other secure credit cards

Here’s a comprehensive list of a ton of other secured credit cards ranked by Beverly Harzog. I reviewed the list and think it’s a great and accurate resource for researching  secured credit cards. You can also check to see what the Doctor of Credit has to say about secured credit cards here.

If you apply for any of these cards and get denied or are weary of getting denied, consider checking with your local bank or credit union for alternative options. Many times, smaller banks and credit unions will be more accommodating, especially if you have a good pre-existing relationship with them (checking accounts, savings accounts, etc.).

 

 

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