Build your credit history with a secured credit card. Secured credit cards require a deposit, and help build credit by reporting your activity to major credit bureaus. Browse our partner offers, apply to the card that suits you, make payments on time, and keep a low balance to improve your credit score.
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Updated: January 8, 2018
Even if you don’t have great credit or you don’t have much experience with credit, there is hope.
Secured credit cards work like other cards, but they are designed for people with poor or thin credit. But there are a few things you need to know about them. Here, we tell you:
No matter your credit score, there is likely a card for you, and a secured card can get you going. Here’s what you need to know:
A secured card is a credit card designed for a consumer with bad credit or a thin credit file. They require you to pay a refundable deposit, which secures your available credit, usually several hundred dollars. Some offer no annual fee, but watch out for other fees. Because having a credit card is the easiest and fastest way to build credit, a secured card can be worth your while. Just make sure the issuing bank will report your credit behavior to the 3 major credit bureaus.
You can use a secured credit card in the same way you use an unsecured card – simply present the card to the retailer to make a purchase, provided the merchant accepts the network displayed on the front of your card (Visa, Mastercard or Discover). However, because the credit limit is typically only several hundred dollars, it’s worth your while to limit use of the card to one or two small purchases a month, then pay off the bill in full before the due date. This will allow you to build your credit more effectively by keeping your balance low compared to your available credit, called your utilization ratio.
Secured credit cards can help your credit, if you pay in full and on time each month and you make sure the issuing bank reports your credit habits to the three major credit bureaus. By paying in full and on time, you are building your credit history as well as improving 65% of your score with a single action. If you ensure that your credit habits are being reported, then you know that the credit bureaus have what they need to share with the credit score models and lenders.
You can rent a car or hotel room using a secured credit card, but keep your balance low so that the card won’t be rejected when you need it. Why? Because secured cards’ credit limits can be really low, particularly when you first get it, and the costs of a rental car or hotel room add up quickly. You definitely do not want to go over your limit, because you can be fined and even lose your card.
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