While everyone with lower credit scores is going to want to find secured credit cards without any deposit, it’s just not possible. That said, you can find a secured credit card with low deposit, but it takes a lot of patience and research to find the right one for your needs.
If you’re planning to use the card to help you rebuild or build your credit, remember that it takes time. For many people, the first step is to get a secured credit card. These cards use a deposit for collateral to ‘secure’ the card if you don’t make the payments. Therefore, you’re not going to find one that doesn’t require some sort of deposit.
Some cards out there do offer other perks or features, which can be highly beneficial. Along with such, you can usually get that card unsecured or move to an unsecured credit card when your credit raises enough. Then, your deposit is returned.
What to Look for in a Secured Credit Card with Low Deposit?
Most people think that a secured credit card with low deposit can’t possibly offer rewards, but many top-brand cards do. For example, Discover It® has a reward secured card, which is a rare breed. With it, you can earn two percent back at restaurants and gas stations on $1,000 spent each quarter. You also get one percent cash back on everything else. After that first year, Discover matches the cash back you have earned, so you can get quite a few rewards.
Of course, the security deposit can range up to $2,500 with the lowest amount being $200, and that’s also your credit limit. However, such a low deposit means that you can easily save up the money and put it on your card.
Some people need even lower deposits but need a higher credit line. The Capital One Secured card gives you a credit limit of $200, but you might only have to deposit $49 or $99 of your own money.
Many secured cards also let you raise your credit line or move you to an unsecured card after you’ve made five months of payments. Plus, there are no annual fees. The only downside is that there isn’t a rewards program.
If you’re like many people, your credit needs more work than you imagine, which means some secured card issuers may still decline your application. If that happens, it is best to take a step back and research more options, especially those that don’t require any credit checks.
The issue most people have is that hard inquiries (when you apply for a line of credit or loan) look bad on your credit score and can lower it. While one or two inquiries aren’t going to do much damage, multiple inquiries all at once can. If you get declined for an offer, you may want to focus on secured cards that don’t need a credit check. The deposit for these cards can be anywhere from $200 to $3,000.
Things to Consider
Sometimes, these credit cards have annual fees; you pay to use the card, and the amount you pay is also the credit limit, and then a chunk of that is taken out for fees immediately and every year after. It’s usually best to avoid cards with fees, even if you are considering a secured card.
It is important to understand that, in most cases, the deposit you pay is the credit limit you have available to you. Therefore, having a secured credit card with low deposit means that your credit limit is also lower. However, some credit card issuers match your deposit or require you to pay a smaller amount and then give you a specified credit limit.
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