What makes a secured card worth choosing

A secured card is worth choosing when it reports your payment history to Equifax, Experian, and TransUnion — the three credit bureaus that calculate your credit score. Not all secured cards do this. Some report to only one or two bureaus, which means months of on-time payments may not help your score grow as fast as they could.

The cards covered here all report to all three bureaus, charge no annual fee or a low one you can recover, and let you move to an unsecured card within one to two years if you build a solid payment record. They differ in the deposit amount they require, the credit limit they give you, and whether they offer cash back or other rewards.

Your choice depends on how much you can deposit upfront and what you want to happen with your money after you close the account. Some cards return your deposit as a credit to your account; others return it to your bank account. Some let you graduate to an unsecured card without closing the secured one; others require you to close it.

Key Takeaways

  • The best secured cards report to all three credit bureaus, so your on-time payments build your credit score as quickly as possible.
  • Annual fees range from zero to around $50, and some cards waive the fee in the first year or refund it if you meet spending targets.
  • Your credit limit is usually equal to your cash deposit, so a $500 deposit gives you a $500 limit — you do not borrow against the deposit.
  • Most cards let you graduate to an unsecured card after 6 to 24 months of on-time payments, at which point your deposit is returned.
  • The card you choose matters less than using it consistently: charge a small recurring bill, pay it in full each month, and keep your balance below 30 percent of your limit.

Cards with no annual fee

The Discover Secured Credit Card charges no annual fee and gives you a credit limit equal to your deposit, which ranges from $200 to $2,500. Discover reports to all three bureaus and offers 1 percent cash back on all purchases — unusual for a secured card. After seven months of on-time payments, Discover reviews your account to see whether you can graduate to an unsecured card.

The Capital One Secured Mastercard also charges no annual fee and accepts deposits from $200 to $2,500. Your credit limit matches your deposit. Capital One reports to all three bureaus and reviews your account after six months to see if you may have access to for an unsecured card. If you graduate, Capital One returns your deposit to your bank account and closes the secured card.

The OpenSky Secured Visa Card has no annual fee and accepts deposits from $200 to $3,000. Unlike most secured cards, OpenSky does not require a credit check to open an account, which can matter if your credit is very damaged or you have no credit history. OpenSky reports to all three bureaus and your credit limit equals your deposit.

Cards with low annual fees and rewards

The Citi Secured Mastercard charges a $49 annual fee but waives it for the first year. Your deposit ranges from $500 to $2,500, and your credit limit matches your deposit. Citi reports to all three bureaus and offers 1 percent cash back on all purchases. After 18 months of on-time payments, Citi may offer you an unsecured card; if you graduate, your deposit is returned.

The U.S. Bank Secured Visa Card charges a $29 annual fee with no first-year waiver. Your deposit ranges from $500 to $5,000, and your credit limit matches your deposit. U.S. Bank reports to all three bureaus and offers 1 percent cash back on all purchases. After five months of on-time payments, U.S. Bank reviews your account for graduation to an unsecured card.

The Deserve Secured Mastercard charges no annual fee and accepts deposits from $200 to $2,500. Your credit limit matches your deposit. Deserve reports to all three bureaus and offers 1 percent cash back on all purchases. Deserve also offers a path to graduation: after six months of on-time payments, you can request a credit limit increase without adding more deposit.

How to choose between them

Start with how much you can deposit. If you have $200 to $300, Discover, Capital One, OpenSky, and Deserve all accept that amount. If you have $500 or more, all six cards are available to you. If you want to deposit $5,000, only U.S. Bank accepts that.

Next, consider whether you want cash back. Discover, Citi, U.S. Bank, and Deserve all offer 1 percent cash back on all purchases. Capital One and OpenSky do not offer rewards. If you spend $500 a month on your secured card, 1 percent cash back adds up to $60 a year — enough to cover the annual fee on the Citi card and still come out ahead.

Finally, think about how quickly you want to graduate. U.S. Bank reviews accounts after five months, Capital One after six, Discover after seven, and Citi after 18 months. OpenSky and Deserve do not specify a timeline but both allow you to request a credit limit increase without adding deposit, which is a step toward graduation. If you want to move to an unsecured card as soon as possible, U.S. Bank or Capital One are your fastest routes.

What happens after you graduate

Graduation means the card issuer converts your account to an unsecured card or offers you a new unsecured card. Your deposit is returned to your bank account, usually within five to ten business days. Your credit limit may stay the same, increase, or decrease depending on your credit score and payment history at the time of graduation.

Some issuers close your secured card when you graduate and open a new unsecured account. Others let you keep the secured card open with a $0 balance. Keeping it open helps your credit score because it increases the total credit available to you and shows a longer history with that issuer. Ask the card issuer what their process is before you open the account, so you know what to expect.

If you do not graduate within the timeframe the issuer suggests, you can still use the card indefinitely. It will not hurt your credit, but you will continue paying the annual fee (if there is one) and you will not get the benefit of an unsecured card, which usually offers higher limits and better rewards.

How to use a secured card to build credit

The card only helps your credit if you use it and pay on time. Put a recurring bill on it — a streaming service, a phone bill, or a small subscription — and set up automatic payment from your bank account for the full balance each month. This ensures you never miss a payment and never carry a balance.

Keep your balance below 30 percent of your credit limit. If your limit is $500, try not to carry a balance above $150 at any point in the month. Credit bureaus look at your balance on the day your statement closes, so if you charge $400 and pay $350 before the statement closes, the bureau sees a $50 balance, not a $400 one.

Do not close the card after you graduate to an unsecured card, if the issuer allows you to keep it open. Closing it removes available credit from your score and shortens your credit history. Instead, keep it open with a $0 balance and use it once or twice a year to keep the account active.

Frequently Asked Questions

Can I use the deposit money while the card is open?

No. Your deposit sits in a separate account held by the bank. You cannot withdraw it or use it to pay your bill. You only use the credit line the bank gives you, which is separate from the deposit. When you close or graduate from the card, the bank returns the deposit to your bank account.

What if I miss a payment on a secured card?

A missed payment is reported to all three credit bureaus and damages your score just as much as a missed payment on any other card. Some issuers may also use your deposit to cover the missed payment, which reduces your available credit. Set up automatic payment to avoid this.

Do I need a Social Security number to open a secured card?

Yes, all six cards require a Social Security number or Individual Taxpayer Identification Number. OpenSky does not require a credit check, but it does require proof of identity and a U.S. bank account. If you do not have a bank account, you cannot open a secured card.

Can I have more than one secured card at the same time?

Yes, but it is usually not necessary. One secured card used consistently for six to 24 months is enough to build credit to the point where you can graduate to an unsecured card. Opening multiple cards in a short time can lower your score temporarily because each process is a hard inquiry.

What if the card issuer denies my graduation request?

Keep using the card and request again in three to six months. Graduation depends on your credit score, payment history, and the issuer's internal policies. If you have missed payments or carried high balances, the issuer may not be ready to graduate you yet. Continuing to use the card responsibly improves your chances the next time you request.