What are the best alternatives to a secured credit card?

The best alternatives to a secured credit card are unsecured credit cards for bad credit, secured lines of credit, secured personal loans and other bad-credit loans. Other alternatives include becoming an authorized user on someone else’s credit card or borrowing from friends or family. And if your main reason for looking into secured credit card alternatives is that you’re concerned about getting rejected, you may also want to consider applying for a secured card that doesn’t do a credit check.

The best option for you will depend on your credit standing, the availability of collateral, and how willing other people are to help out. Why you’re unable or unwilling to get a secured card is important, too, as is your main financial objective.

Alternatives to a Secured Credit Card

• Unsecured cards for bad credit.
  Unsecured credit cards for bad credit allow you to qualify for a credit card without putting down any collateral. The downside is that they are typically expensive and offer low credit limits with few benefits.
• Secured lines of credit.
  A secured line of credit lets you borrow money on demand, but you have to get cash from it rather than using it directly at merchants. It requires collateral, often either money in a bank account or valuable property like a vehicle or real estate, which makes it easier for people with low credit scores to qualify.
• Secured loans.
  Secured personal loans give you a lump-sum of cash, which can be useful if you have one specific thing you need money for. Although secured loans require money or property as collateral, they often don’t have a minimum credit score requirement as a result.
• Other bad-credit loans.
  There are a few unsecured personal loan providers that cater to people with bad credit, though they tend to require scores at the upper end of the bad credit range. In some cases, credit unions may be more flexible with the credit score required. Avoid predatory payday loans that advertise bad credit acceptance but have sky-high interest rates.
• Authorized user.
  Someone else can add you as an authorized user on their credit card, allowing you to share their credit line and make purchases. The primary cardholder is responsible for your purchases, so you’ll have to work out a payment plan with them. If the account gets used responsibly, you’ll build a positive credit history. One big advantage of becoming an authorized user is that you will not have to go through a hard credit pull.
• Borrowing from friends and family.
  If you don’t want a secured card because it doesn’t really let you borrow money (since you’re borrowing against your own collateral), it might be a good idea to open a secured card anyway and then borrow from friends or family, too. That way, you’ll build credit by having the card open, but you’ll be able to borrow the money you need from other sources.
• Secured cards that are easier to get.
  Certain secured cards don’t require a credit check, so there’s very little risk of getting rejected unless you’re unable to put down a deposit.

In all, if you don’t want to get a secured credit card, the best alternative is probably an unsecured card for bad credit, because it gives you ongoing spending power and direct use at merchants. But in a lot of cases, you’re better off putting a refundable deposit on a secured card than paying the steep annual fees that come with most unsecured cards for bad credit.