Best Secured Cards That Graduate To Unsecured

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I’ve been very open about my journey to fight my way out of debt and a bad credit score. One big step I took was applying for the Capital One Platinum Secured Credit Card. Because I used the card wisely, I was able to upgrade to the unsecured Capital One Platinum Credit Card and eventually, the Capital One Venture Rewards Credit Card.

Secured cards allow you to make an initial deposit with the bank providing the card that becomes your credit limit. For example, after applying for a secured card, you would deposit $600 with the card issuer and that serves as your credit limit. This makes it easier for people with damaged or limited credit histories to qualify for secured cards. If you don’t pay your credit card bill, the bank can simply take the money it is owed from your deposit.

How secured cards differ from unsecured credit cards

The main difference between secured and unsecured credit cards is the deposit required by secured cards. Traditional, unsecured credit cards don’t require cardholders to make any deposits with their issuers.

The credit limits on unsecured cards aren’t connected to a deposit but are determined instead by the cardholder’s credit. Cardholders with higher credit scores will qualify for higher credit limits. It’s not unusual for consumers with the highest FICO credit scores — 740 or higher, typically — to qualify for credit limits of $20,000 or more with their unsecured credit cards.

Unsecured credit cards tend to come with more generous rewards programs, too. Many traditional credit cards allow cardholders to earn rewards points, free miles or cash back bonuses, while few secured cards offer rewards programs. This perk, along with higher credit limits, is why most consumers prefer unsecured credit cards.

Here’s a look at the best secured credit cards that graduate to traditional, unsecured cards over time and how these cards can help you resolve your credit history and credit score woes.

Is a secured card a good option for me?

A secured card is a good choice for consumers with low credit scores or who don’t have a long enough credit history to have generated a good credit score (or any score at all). As long as you make your monthly payments on your card on time, you’ll gradually build a strong credit history and a solid credit score. And bonus? You’ll have a chance to upgrade to an unsecured card that comes with perks, including a welcome offer and earning rewards, after you make enough on-time payments.

This makes secured cards a good choice for consumers who have low credit scores or don’t have a long enough credit history to have generated a good credit score (or any score at all). As long as you make your monthly payments on your card on time, you’ll gradually build a strong credit history and a solid credit score. And bonus? Like me, you have a chance to upgrade to an unsecured card that comes with perks, including a welcome offer and earning rewards, after you make enough on-time payments.

Best card with a welcome offer

Cardholder rating

4.6

Bankrate score

5.0

Bankrate review

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on Discover‘s secure site

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Reward Details

• 2%Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, automatically.
• 1%Earn unlimited 1% cash back on all other purchases.

What you should know

The Discover it Secured Credit Card is one of the few secured cards to come with a rewards program. You’ll earn 2 percent cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. You’ll also earn an unlimited 1 percent cash back on all other purchases.

The card charges no annual fee and lets you open an account with a deposit of as little as $200. After seven months, Discover will review your payment history and credit behavior to determine if you can graduate to an unsecured Discover credit card. 

Pros

• This is one of the rare secured cards that offer rewards.
• Discover’s first-year cash back match is one of the most valuable offers among any no-annual-fee card, let alone a secured card.
• This card poses no annual fee, no foreign transaction fees, no penalty APR and no fee on your first late payment (up to $41 thereafter), unlike the typical credit-building card loaded with fees.
• You may qualify for an upgrade to an unsecured card after only seven months of full, on-time payments — faster than some rival cards allow.

Cons

• Several other secured cards offer stronger rewards value if you don’t spend enough to benefit much from Discover’s first-year cash back match.
• Discover is not as widely accepted as Mastercard and Visa cards, so you may have trouble finding places that accept it in the U.S. and around the world.
• Other credit-building cards come with a lower ongoing APR, which may be more convenient if you carry a balance on your account.

Card Details

• No credit score required to apply. No Annual Fee.

• Your secured credit card requires a refundable security deposit, and your credit line will equal your deposit amount, starting at $200. Bank information must be provided when submitting your deposit.

• 30 points or more—that’s how much you could increase your FICO® Credit Score on average after just six months of responsible use.

• Automatic reviews starting at 7 months to see if we can transition you to an unsecured line of credit and return your deposit.

• Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus earn unlimited 1% cash back on all other purchases.

• Intro Offer: Unlimited Cashback Match for all new cardmembers—only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards.

• Get an alert if we find your Social Security number on any of thousands of Dark Web sites. Activate for free.

• Terms and conditions apply.

Best card for lower APR

Bankrate score

3.3

Bankrate review

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Why you’ll like this: This card gives you the chance to upgrade to unsecured Bank of America credit cards in the future.

What you should know

While it’s a fairly basic card, the BankAmericard Secured Credit Card does come with some nice perks. It doesn’t charge an annual fee, and you only need a $300 deposit to start an account. Additionally, you can deposit as much as $4,900 with this card — a high maximum deposit compared to other secured cards.

On its site, Bank of America says it will periodically review your account to determine if you can upgrade to an unsecured Bank of America credit card. 

Pros

• Applicants with no and low credit scores can use this card to grow their credit scores
• No annual fee unlike some secured cards
• With good credit habits, Bank of America may return your security deposit and convert this card to an unsecured card

Cons

• The interest charges from the card’s high APR could make it hard to pay balances off
• No additional benefits like cash back rewards or purchase protections

Best for automatic credit limit review after 6 months

Cardholder rating

4.4

Bankrate score

4.1

Bankrate review

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Apply now

on Capital One‘s secure site

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What you should know

You don’t need much money to start an account with the no-annual-fee Capital One Platinum Secured Credit Card. In fact, Capital One requires a deposit as low as $49. Just remember, your initial credit limit might also be low — more specifically, as low as $200. After six months, Capital One says it will start reviewing your payment and account history to see if you qualify for a higher credit limit or an unsecured Capital One credit card. 

Pros

• You only need a cash deposit of $49 if you qualify ($99 or $200 minimum deposit possible, depending on your credit score) and get your security deposit back when you close your account in good standing.
• Capital One will also automatically consider you for a higher credit limit in as little as six months if you make on-time monthly payments.
• There is potential for an easier approval process if you need a credit card for bad credit.
• You may have the chance to upgrade to Capital One’s unsecured credit cards.

Cons

• The card doesn’t offer rewards for your spending, which might hamper the card’s long-term value.
• The card’s ongoing APR is relatively high and could be expensive if you carry a balance.

Card Details

• No annual or hidden fees. See if you’re approved in seconds

• Building your credit? Using the Capital One Platinum Secured card responsibly could help

• Put down a refundable security deposit starting at $49 to get at least a $200 initial credit line

• You could earn back your security deposit as a statement credit when you use your card responsibly, like making payments on time

• Be automatically considered for a higher credit line in as little as 6 months with no additional deposit needed

• Enjoy peace of mind with $0 Fraud Liability so that you won’t be responsible for unauthorized charges

• Monitor your credit score with CreditWise from Capital One. It’s free for everyone

• Get access to your account 24 hours a day, 7 days a week with online banking to access your account from your desktop or smartphone, with Capital One’s mobile app

Best for chance to upgrade to unsecured Citi cards

Citi® Secured Mastercard®

*Hover to learn more

Why you’ll like this: t’s a good choice for those who pay off their card balance every month. But there are more rewarding options if you’re looking to build or rebuild credit.

What should you know

Though you’ll need a minimum deposit of $200 to qualify for the Citi Secured Mastercard, you do have flexibility. Depending on how much you deposit, you can qualify for a credit line of up to $2,500. Like other cards on this list, the Citi Secured Mastercard does not charge an annual fee. At 18 months of card ownership, Citi will review your account to determine if you qualify for a refund of your security deposit and can upgrade to an unsecured Citi credit card. 

Pros

• The card is fairly straightforward to qualify for and lets you build credit with on-time payments that are reported to the credit bureaus.
• The credit limit is set based on your income and debt, not just your credit history.
• There’s no annual fee.
• Depending on your upfront security deposit, the credit limit could range from $200 to $2,500.

Cons

• The card offers no rewards and minimal benefits.
• The high APR, penalty APR and late fees make it costly to carry a balance.
• Several other secured cards offer better rates and rewards with fewer fees.+

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Comparing the best secured cards that graduate to unsecured

How to choose

As someone who has faced credit challenges, I used two secured credit cards — the Capital One Platinum Secured Credit Card and the Secured Self Visa^® Credit Card — to build up my credit score.

The first time, I chose the Capital One Platinum Secured card because it came with a low deposit and came with an automatic credit review after only six months after account opening. I was also interested in having a card that gave me the option to upgrade to Capital One unsecured cards.

I was able to move to the unsecured Capital One Platinum Card, then eventually the Capital One Venture Card. While the Secured Self Visa doesn’t have an unsecured credit card available for an upgrade, the good habits I developed while using it were helpful enough to let me move to unsecured cards.

What’s next?

The bottom line

Secured credit cards are a smart way to build your credit history so that you might qualify for an unsecured credit card in the future — one that comes with a higher credit limit and valuable rewards. The key is to make your monthly payments on time and to keep your debt low so that your secured card will one day graduate to an unsecured version.

Frequently asked questions

• How can you upgrade if your secured card doesn’t do it automatically?
  

  Since some secured credit cards never upgrade to an unsecured version, you’ll need to make the move to a traditional credit card on your own. First, you’ll need to build a high enough FICO credit score — 680 or higher — to qualify for a traditional card that also offer rewards programs. Fortunately, getting to this score isn’t complicated.

  The most important step is to pay your bills on time. For example, paying your mortgage, credit card bills or student loans 30 days or more past due could cause your FICO credit score to drop by 100 points or more. Paying bills on time, on the other hand, can help your score steadily rise.

  Make sure to keep your credit card debt low or nonexistent, as well. Having too much debt month to month can cause your credit score to drop. Always aim to pay off as much as you can by each due date, knowing it’s best to pay off your entire balance on or before your due date. Doing so will not only help your credit score but also ensure you won’t have to pay additional money in interest on your credit card debt.

  Once your score is high enough, then it’s time to apply for a traditional credit card. Depending on your score and other factors, such as your monthly income, you might qualify for an unsecured card that comes with a higher credit limit and rewards program.

  You’ll have to decide whether to close your secured card or keep the account open, but note that closing it could hurt your credit score. By closing an active credit card account, you’ll have less available credit — in turn, potentially increasing your credit utilization ratio. Length of credit history is also a factor in your credit score, so depending on when you opened your secure card, you may take a hit if you close it.

  This doesn’t mean that you should always keep your secured credit card account open. If you think you might be tempted to run up debt on the card and not pay it off in full, it might make more sense to close the account, and remove the temptation and take the temporary hit on your credit score.

• How can you boost your odds of qualifying for an unsecured credit card?
  

  The best way to qualify for an unsecured credit card is to practice good spending and bill-paying habits. If you pay your bills on time each month — including your secured card’s payment — you’ll steadily build a credit score or improve a weak one. You’ll also improve your credit score by paying off any existing debt.

  How long it takes to build a credit score high enough to qualify for an unsecured card varies. If your score is low, it might take months of on-time payments to boost your score to the 680+ range that’s likely needed to qualify for an unsecured credit card.

*All information about the BankAmericard® Secured Credit Card has been collected independently by Bankrate and has not been reviewed or approved by the issuer.