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Need Secured Credit Card
11 Sep 2019

5 Signs That Show You Could Really Use a Secured Credit Card

If you are one of the 56% of Americans who have bad credit, you understand that most conventional credit cards are out of reach for you. How do you establish a good credit score when you can’t get credit to start with? If you have a bad credit score, you need secured credit card options.

What Are Secured Credit Cards?

Many lenders offer secured credit cards to help those with no credit or bad credit establish a healthy credit history. These cards work like ordinary credit cards and are accepted anywhere that credit cards can be used.

When you are approved for a secured credit card, the lender will ask for a monetary deposit. Usually, there are three “tiers” of deposits, ranging from $100 to $300. How much money you are required to deposit will depend on your credit score.

For many cards, the amount you deposit will be your credit limit. Other cards will allow you a higher credit limit than your deposit. Again, this will depend on your credit score.

The lenders hang on to the money to protect themselves from high-risk customers who may default on their accounts. When you close the credit card account, the deposit will be refunded to you.

No one will know that your card is secured. It looks just like a traditional card.

Secured Credit Cards: A Great Way to Establish Credit

Lenders will offer secured credit cards as a concrete way to establish credit.

These cards are different from prepaid credit cards. Secured credit cards are a revolving line of credit. You can use these cards, up to their limit, again and again.

Financial institutions report your secured credit card activity to all major credit reporting agencies. With responsible use, your credit score will rise fairly rapidly.

  1. Only use 30% of the card’s credit limit.
  2. Make all payments on time.
  3. Pay more than the minimum monthly payment if you can.
  4. Sign up for a free credit monitoring service and track your score.

The Downside of Secured Credit Cards

Consumers who need secured credit card options don’t have many other choices. Lenders tend to capitalize on this and will pile fees on top of the required deposit.

Annual fees and monthly fees are not uncommon for secured credit cards. Depending on the card you choose and your credit score, you may be looking at some extremely high-interest rates, too. These fees won’t be as high as for a no credit check personal loan, but they will still cost you on an annual basis.

If you would like a credit increase, these lenders may require you to submit a new application (and a new hit to your credit). Others may allow you a credit increase but will ask for additional money towards your deposit. Some lenders do not give you credit increases at all.

Read the fine print and make sure you understand all of the fees and interest rates upfront before you agree to take the credit card offer. Look for a company that routinely offers you credit increases as a reward for responsible credit usage.

Five Signs That You Need Secured Credit Card Options

A secured card may be the right choice for you whether you are just starting out or already have an established history. Read on for some signs that you might benefit from a secured credit card.

1. Your Credit Score Is Too Low to Qualify for Conventional Credit Cards

While there are some unsecured credit card options for consumers with bad credit, a secured credit card is a great way to rebuild your credit history.

It’s much easier to get approved for secured cards with scores as low as 500. Because your deposit counts as collateral to protect the lender’s interest, it’s much easier to get approved for secured cards. It’s not uncommon for people with scores as low as 500 to get a secured card.

2. You Want to Get a Card for Your Teen

In today’s world, even teenagers should have a credit card for emergencies and to budget their spending. A secured card is a great way to help your child establish credit, have cash on hand, and manage money responsibly. The secured card can limit your child’s usage to the amount you have deposited on the card.

3. You Have Too Many Inquiries and Denials on Your Credit History

Inquiries will lower your credit score by ten points or more, and too many inquiries for quick loans or bad credit loans can keep you from being approved for credit cards, loans, auto financing and more.

If you have bad credit, you won’t be eligible for most conventional credit cards. Continuing to apply will hurt your credit even more. Even if you have been denied a traditional credit card, your chances of being approved for a secured card are good.

Use the secured card until your other inquiries lose their impact on your score, usually around a year. At that point, you can apply for a traditional card and you will have the approval power of a year’s worth of good credit as well.

4. You Have No Safety Net

Even if you don’t plan to use the secured credit card regularly, you should keep it for emergencies. If you don’t qualify for an unsecured credit card, you will most likely not qualify for a traditional installment loan. A secured credit card is a good safety net for unplanned expenses.

If you keep the card exclusively for emergencies, remember to use it once in a while and pay off the balances promptly. This will give you some activity on your credit report and give the lender a chance to raise your credit limit.

5. You Need a Tighter Budget

If you apply for a card that gives you a credit limit equal to the amount of your deposit, you will find it easier to keep yourself on a budget. Unsecured cards make it invitingly easy to impulse buy and stray from your budget.

In a way, a secured card is like spending your own money that someone else is holding for you. With that in mind, a secured credit card is a great way to stay on target.

Other Ways to Build Credit

If you’re looking to build or rebuild credit, a secured credit card is a great place to start. There are other ways to help you raise your scores, too.

Department Store Cards

You’ve most likely been asked to sign up for a department store credit card while you were checking out at the register. Signing up for these cards will give your credit a boost if you are approved.

These cards are generally easier to get than a standard card. They will also usually feature lower credit limits, helping you stay in budget.

Research the card in advance to see your approval odds before allowing an application. Some cards are easy to get while others are more difficult. Generally speaking online store cards, like Fingerhut and Wayfair, are easier to get.

Check the lender backing the card. Many of these cards are funded through bigger banks like Synchrony and Comenity. If you have had trouble with these institutions in the past, you will likely be denied store credit.

Credit Builder Loans

Credit builder loans are similar to traditional loans, except that you must pay the entire amount of the guaranteed loan before you get the money. Because the lender isn’t giving you money until after you have paid them, almost anyone can qualify for a credit builder loan.

These loans have two benefits: they give you a nice lump sum at the end of the term and they report to credit agencies as you make your payments.


Co-signers can be used for credit cards, auto financing, personal loans, and even mortgages. This option is not without risk to the co-signer, though: if you default on the payments, your co-signer is legally obligated to pay off the balance of the monies borrowed.

A co-signed loan or credit card will reflect positively on both your credit report and the co-signers report as long as you make payments on time. Remember that if you are late in paying your credit card or loan, your cosigner’s credit report will be affected, too.

Bad Credit Loans

You may still qualify for a small personal loan if you have bad credit. Creditors like to see several types of credit on your report, so getting a smaller loan with manageable monthly payments will help you raise your score.

Choosing Your Card

There are many secured cards to choose from. You can narrow down your choices and increase your odds of approval by:

  • Checking your emails for pre-qualified credit card offers
  • Opening offers you get in the mail
  • Looking for cards that offer the lowest interest rates and fees
  • Checking online to find secured credit cards with the best approval odds

If possible, find a lender that offers you increased credit limits and the chance to switch to an unsecured card after you have shown responsible credit behavior.

If you need secured credit card choices, click here to see the best options for your credit score. You can look through our blog for helpful articles like these:

5 Useful Tips for Getting the Best Personal Loan Rates
What’s a Secured Credit Card? It is the Key to Rebuilding Your Credit
5 Tips for Successfully Paying Back an Installment Loan
The Top 7 Best Credit Cards To Help Rebuild Your Credit