Best Secured Credit Cards: Which Card Suits You Best?

Hi guys and welcome to the Smart Investor channel. On this video, we are going to review the best secured credit cards according to our research. We will review the pros and cons of each card, compare rewards and benefits, and learn how to pick up the right card for your needs. Let's start. A secured credit card is backed by a cash deposit or item from the cardholder. Since there is collateral with the account, the cardholder can usually get a credit card The collateral will be seized if the cardholder cannot make payments or if they default on their payments. When you apply for these credit cards, there will be an amount you have to deposit to get the credit card. In most cases, the cash deposit will be equal to the credit card limit. So, if your credit card limit is $500, the cash deposit you need to put down is also $500. Credit card issuers might make you do this if they view you as a risky borrower and are worried you might not be able to make payments. What should you look for in a secured credit card? There are many things you need to look for when trying to choose a secured credit card. You need to make sure you are choosing the right one for you while still getting a limit you can use. Make sure to check for cards with the following features so you can be sure you are getting the best secure card for you. Make sure the card reports to a credit agency. This is very important if you want to be able to bill credit and one day get a credit card that is unsecured. Reporting to the three credit bureaus means you will be able to raise your credit score every time you make the payment on time. Get a card that has regular reviews. Regular review is important because it might mean you can get an unsecured card sooner. Otherwise, you might have to apply for a new card on your own which can be more difficult. Ask the company how often they review borrowers and what you need to show to be able to get an unsecured card sooner. No fees or low fees. Putting down a cash deposit can be hard enough, but it will be harder if there are high fees you need to pay for and keep up with. Try to look for a card that doesn't have any fees. Rewards. Any credit card that has rewards is a good idea because it will allow you to be able to earn points and cash back while you are doing your regular spending. Here are recommended secured credit cards. Discover It Secured. The Discover It Secured credit card is a great way to build your credit history while still earning cash back rewards like a normal credit card. This is a great credit card option for students as well as folks trying to repair their credit history. Establish your credit line by providing a security deposit from $200 to $2500 after being approved. Bank information must be provided when submitting your deposit. Automatic reviews starting at 8 months to see if Discover It can transition you to an unsecured line of credit and return your deposit. Citi Secured Mastercard. The Citi Secured Mastercard is different from other secured credit cards. It is designed for individuals that have no credit or individuals with limited credit. Individuals with bad credit are not eligible to have the card. It's a great plus for you if you qualify because they don't charge an annual fee and they report all card activities to all the three main credit bureaus. The Citi Secured Mastercard offers no rewards. Some of the benefits you can get from using this card include free FICO score access, account alerts, and flexible payment due dates. However, there is a high annual percentage which is one of the disadvantages of using this card. Capital One Secured. Building your credit with a reliable secured credit card may be a very smart move. However, not all secured credit cards are designed equal. Capital One Secured Mastercard has some unique attributes that can win you over and make you trust them. Capital One Secured cards make deposits less formidable and this is one of the unique qualities of Capital One Secured Mastercard. Capital One Secured card does not give any reward. However, using this card comes with some benefits. Zero fees on a foreign transaction, travel accident insurance, secondary car rental insurance, extended warranty, and 24-hour travel assistance services. Some of the limitations of using this card are the relatively low initial credit limit and the no bonus offer program than other card issuers. OpenSky Secured card. The no credit check feature is probably the most exciting thing about the OpenSky Secured credit card. This is perfect for anyone trying to build credit, whether you're just starting out or trying to rebuild previously damaged credit. The OpenSky Secured credit card operates like the conventional unsecured credit card, except that it doesn't check your credit. This means a poor credit score will have no impact on your account approval. You're only required to pay a refundable security deposit, $200 to $3,000, when you create an account. This deposit is what determines your credit card limit. So if you deposit $400, your credit card limit is set to $400 and you can begin using it immediately. This card can be used to make regular purchases wherever a visa is accepted. It offers you fraud protection and the secured status of your card is kept confidential. You are even eligible for special visa discounts. First Progress Platinum Elite. While there are several secured cards available to help you rebuild your credit, the First Progress Platinum Elite has some advantages. You can open an account with a deposit of $200 to $2,000. Your credit limit will be determined by the amount of your deposit. So if your deposit is $500, you'll have a credit limit of $500. In addition, the First Progress Platinum Elite reports to all three major credit bureaus. Every monthly payment you make is reported to Equifax, TransUnion, and Experian. This makes it easier to build your credit faster. This is a basic secured card, but you should be aware that there are fees and charges associated with your account. The annual fee for the card is $29, which is lower than that of comparable secured cards. Now, besides reviewing the top cards in the category, it's important to understand how to make the smartest choice for your needs. Four tips to make the most of your secured card. Using your secured card the right way will ensure you are not overspending and that you are using the secured card in the right way. Follow these tips to make sure you are maximizing your secured card. Make sure you are paying off the full balance. Paying off the balance every month shows you are a responsible spender and that you're using the secured card in the right way. Use the card regularly. You will be able to raise your credit score faster if you're using the card regularly. Just make sure you're not spending too much or more than you can pay back once the billing cycle is over. Make sure you don't reach the spending limit. Even though your spending limit might be high, this doesn't mean you need to max out the card every month. Consider only making small purchases that keep you well under the spending limit. Set reminders for the payment. Make sure you know the days that the payments are due and do not forget them as this can cause you to lose your cash deposit if you are defaulting on payments. It will also be reported to the credit bureaus that you're not making payments on time. What will my credit limit be? Your credit limit will depend on your credit score and finances. People with higher credit scores or low debt to income ratios are often given higher credit limits because they are viewed as less risky. If it's your first credit card and you're building credit for the first time, your credit limit will probably be low, usually between $200 to $500. Credit limits can be increased once you have had the credit card for a while and are making regular on-time payments. You will need to request the credit limit through the credit card company. Who should consider a secured card? A secured credit card is a great first card for people who are building credit and have never had a credit card. It can also be a good choice for those who have low credit and are trying to build it and make it higher. It will help you rebuild credit. When can I apply for an unsecured card? You will need to wait for your credit score to improve some before you apply for an unsecured card. Sometimes the credit card company will alert you when you might be eligible and it will give ways to apply. Make sure you are waiting until you are pre-qualified before you apply for one. That's it for now. Thank you for watching. On our website you can find side-by-side credit card comparisons, extensive reviews, and full guides that can help you maximize your credit card rewards or build credit responsibly. What is your favorite card? We would love to know your thoughts, so feel free to share them in the comments below. I hope you enjoyed it and don't forget to subscribe to our channel to get the best financial videos as soon as they go live.