When you’re just starting, building credit can be difficult. Using a secured credit card can get around this problem. They’re a great first step to building your credit history and a popular choice. Creditcards.com reported that in 2015, 57% of college students owned a secured credit card. We’ve looked at the best credit cards for college students, so today we’re going to focus on secured credit cards in general. Not all secured credit cards are created the same. Among the various factors to consider are:
In this article, we’ll highlight the key features of a few secured credit cards that are great for building credit.
Mastercard is accepted virtually everywhere. You almost can’t go wrong with them. This card is also an Editor’s Top Pick and 5 star secured rating on Cardratings.com.This secured credit card doesn’t have any monthly fee. The security deposit ranges from $49 to $200. How much you’ll need to put up for the deposit will depend on your credit worthiness.Keep in mind that just because you don’t have a credit history doesn’t mean you have a terrible credit. Someone that has done a lot of damage to their credit can have a lower credit score than someone with no credit.Bev O’Shea, a writer for Nerd Wallet, had this to say about new credit vs bad credit, “…just as being new to credit doesn’t mean you start at zero, it also doesn’t mean you begin in the basement at 300.”APR is 24.99% variable, which is fairly common. As long as you can pay off your bill every month in full, APR really isn’t a factor.After only 5 months of on time payments, you’ll get a credit increase. Your security deposit will remain with Capital One since this is a secured card. But you’ll receive more buying power with an increased credit line.One approved, you’ll need to make the security deposit before the card can be used. This is generally the first step for activating a secured credit card. Learn more about the card here.
OpenSky’s secured credit card offering doesn’t require a credit check. Instead, the amount of your security deposit is your credit line. This also means that the more you deposit, the higher your credit line. There’s a minimum $200 deposit but you can add as much as $3000 if you want a higher credit limit. The deposit is refundable. Learn more about it here.OpenSky reports to all 3 major credit bureaus on a monthly basis, which helps you build credit fast. In fact, they say 99% of their customers start earning a credit score beginning at 6 months of use.With this card, there is a $35 annual fee.
The above 2 secured credit cards are a great place to start when establishing credit on your own. In less than a year, you can have a credit score established and be on your way to building a long-term credit history.If you’re looking to get started, now’s the time!