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Top 5 July 2020 secured credit cards

The COVID-19 pandemic has made significant changes not only in people's lives and their financial standing but also in the entire financial sector of the U.S. Despite the fact that interest rates of most credit products have dropped, many issuers have become stricter in assessing the creditworthiness of consumers. Getting approved for an unsecured credit card has become more difficult, especially with a bad credit history. But, fortunately, there is a way out - secured credit cards. We have collected the best secured card offers from our partners so that you can get all the benefits of credit cards even during the coronavirus outbreak.

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#1 Credit Card

Annual Fee
$35
Instant Response
Yes
States Available
Any
Credit Line Increase
Request an increase at any time.
Annual Fee
$48
Instant Response
No
States Available
Any
Credit Line Increase
Increase Your Credit Limit up to $5,000
Annual Fee
$49
Instant Response
No
States Available
This offer is not available in Arkansas, Iowa, New York, Wisconsin.
Credit Line Increase
Up to $5,000 (subject to credit approval).
Annual Fee
$49
Instant Response
No
States Available
This offer is not available in Arkansas, Iowa, New York, Wisconsin.
Credit Line Increase
See terms
Annual Fee
$36 for first year. Billed $3 per month thereafter
Instant Response
No
States Available
This offer is not available in Wisconsin.
Credit Line Increase
Increase your credit line at any time by adding additional money to your security deposit, up to $3,000.

Why to choose a
secured credit card FOR BAD CREDIT

Above you can see our top five secured credit cards. Still, you may wonder why you should prefer these cards to general credit cards. Of course, there are unsecured credit cards for bad credit. However, they often charge huge interest and additional fees for activation. As a rule, secured cards come with lower APRs. Some even offer a 0% intro period.

Moreover, applying for a secured card, you have much more chances to get approved. By providing a security deposit, you become a less risky borrower for the issuer. However, it doesn't mean approval is guaranteed for every applicant (unless otherwise stated by the bank), and you will still need to prove some kind of stable income to qualify for a card.

These are just some of the main reasons why secured credit cards are often a better choice than some unsecured offers. To make sure a secured card is what you really need, look at other secured credit cards' advantages:

Credit Card
Secured cards work just like general credit cards and can be used for purchases in a similar way.
High Approval Odds
Being designed for applicants with limited/bad credit, secured cards imply a high approval rate.
Low Rates
No need to overpay for interest and fees. Secured cards offer low APRs and competitive annual fees.
Credit Building
Your account activity will be reported to the major credit bureaus, which can help you build credit.
Refundable Deposit
A security deposit may be just as low as $200. And you can get it back once you upgrade the card.

How do secured
credit cards WORK?

A secured credit card can serve you well on your way of building or rebuilding credit. But how do they actually work? Sometimes this type of card is mistakenly placed on the same footing as prepaid debit cards. In fact, secured cards are credit cards and work accordingly. You can pay with a secured card wherever regular credit cards are accepted. The only difference is a so-called security deposit that you should put in and that serves as a protection for the bank in case you fail to pay. To figure out how to handle a secured credit card properly, follow these three steps:

1.  GET APPROVED FOR THE CARD AND FUND THE DEPOSIT

Once you applied for a chosen secured credit card and got approved, you will need to make a security deposit. Your future credit line will typically be equal to it. Note that the bank will keep your deposit until you decide to cancel your account or until it is switched to an unsecured line of credit. That's why it is very important to choose the right sum to fund.

First of all, read the card terms carefully to find out an initial deposit amount range, as well as when and how you need to make it. While some issuers allow customers to make a deposit only from a checking account, others let them do this using a debit card or other alternative methods. As a rule, you will need to indicate the deposit amount and your bank account/debit card number in the application, and the issuer will charge the deposit right after approval. For example, with the OpenSky® Secured Visa® Credit Card, you can fund your security deposit from your debit card at the time of application, do it at a later date with Western Union®, or mail a check or money order. Anyway, the card will be sent only after the issuer receives the money.

2.  RECEIVE THE CARD AND USE IT RESPONSIBLY

Dealing with the deposit and getting the approved card in the mail is not the last step. Now your main goal is to use it right in order to improve your credit score. Try hard to make at least minimum payments on time. Another important factor is keeping your card credit utilization ratio under 30%. And if you don't want to pay interest, pay off your balance in full each month by the due date. Remember that the issuer has every reason not to return the security deposit if you regularly miss payments. In this case, the bank will start paying the balance you carry using your deposit and may even cancel the card. Besides that, you are going to significantly spoil your scores.

3. SWITCH TO AN UNSECURED CREDIT CARD

If you follow the rules described above, your credit score will be gradually improving. After about 12-18 months on average, there will come the moment when you can get upgraded to an unsecured credit card. Banks' policies on this issue vary. In some cases, after a while, issuers may themselves begin to check the possibility of switching your card to an unsecured one. In other cases, you yourself will have to monitor your credit and ask the bank for an upgrade. It also happens that the bank makes no provision for such an opportunity at all. Then, when your score is good enough, you can simply apply for another issuer's unsecured credit card.

How to choose a secured card to build credit?

Now you know how to get maximum use out of a secured credit card in order to improve your bad score. However, the main question still remains open: "How to choose the right credit card?" Before submitting an application, it is essential to familiarize yourself with the card agreement, including reading the fine print. It will help avoid pitfalls in the future. So, when looking for a secured card, pay attention to the following features in the first place:
Annual Fee
This fee is charged annually for card maintenance. Therefore, the lower, the better.
0% intro APR
A secured card with a 0% intro APR period is a real godsend. Make purchases and pay no interest.
Security Deposit
If you don't have much money, the minimum required deposit amount may be decisive.
Credit Limit Increase
Check if you can provide an additional deposit and ask for a credit limit increase after a while.
Credit Check
Credit checks affect your credit score and may slightly decrease it. No credit check - great!

Let's compare
secured credit cards BY MAIN
FEATURES:

viewing 0-0 of 0
Annual Fee
$35
$48
$49
$29
$49
$39
$36 for first year. Billed $3 per month thereafter
0% Intro APR on Purchases
N/A
n/a
N/A
N/A
0% (6 months on Purchases)
N/A
N/A
Ongoing APR on Purchases
17.39% (variable)
9.99% (Fixed)
9.99% (V)
19.99% (V)
12.99% (V)
13.99% (V)
17.45% Variable
Credit Line
Credit line from as low as $200
Increase Your Credit Limit up to $5,000
See terms*
See terms*
Credit Line Secured by Your Fully-Refundable Deposit of $200 - $2,000 Submitted with Application
See terms*
$200-$3,000
Credit Line Increase
Request an increase at any time.
Increase Your Credit Limit up to $5,000
Up to $5,000 (subject to credit approval).
Up to $5,000 (subject to credit approval).
See terms
Up to $5,000 (subject to credit approval).
Increase your credit line at any time by adding additional money to your security deposit, up to $3,000.
No Credit Check
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Instant Response
Yes
No
No
No
No
No
No
Late Payment Fee
Up to $38
Up to $38
Up to $40.00
Up to $40.00
See terms*
Up to $40.00
Up to $40
Build Credit
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Checking Account Required
No
No
No
No
No
No
No
Payment System
Visa®
Visa®
Mastercard®
Mastercard®
Mastercard
Mastercard®
Visa

Alternatives to secured cards to help you in hard times

If for some reason you cannot get approval for a secured card or just want to consider other options, you have some other offers to choose from. For example, you may consider prepaid debit cards. Of course, they will not help you build credit since they do not report to the credit bureaus. Nevertheless, they can also be a good alternative to cash and are quite convenient for paying for purchases and bills. Another option is personal loans. With a loan, you get money in your bank account, usually within 1-2 business days, and then pay it back in equal monthly installments with added interest. Unlike debit cards, lenders submit reports to the credit bureaus, which can help improve a credit history. All in all, whatever you choose, make sure that the terms correspond to your expectations and you are able to make all the necessary payments on time.

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