The best secured credit card with no annual fee is the Discover it® Secured Credit Card because it gives 1 - 2% cash back on purchases and has a 0% foreign transaction fee to go along with its $0 annual fee. The Discover it® Secured Credit Card also matches 100% of the cash rewards a new cardholder earns the first year. And it reports to all 3 major credit bureaus each month.
As you can see, there are several really good secured credit cards with no annual fee, and they're available even to people whose credit is damaged. Any no annual fee secured credit card is an excellent way to start building up a positive payment history and rebuilding one's credit score.
Eventually, it will be easier to qualify for unsecured credit cards with better terms. But unsecured cards for people with poor credit almost always charge annual fees.
There are a couple secured credit cards I like, that don’t charge annual fees. One of them is the Capital One Platinum Secured Credit Card, and the other is the Discover it® Secured Credit Card card. The Discover it® Secured Credit Card card is especially great, since it gives you cash back on all your purchases: 2% on gas stations and restaurants, and 1% on all other purchases.
I had a Citi® Secured Mastercard®, and it didn't have any annual fees. It's got no rewards, like Discover it® Secured Credit Card, but I didn't have any worries about getting approved. Also, the fees were super low, and it seriously bumped my score over 2 years. It was something like 100? Obviously, it didn't do it alone, but you gotta admit: that's pretty good.
The best secured credit card to rebuild credit is the Capital One Platinum Secured Credit Card because of its low deposit requirement and $0 annual fee. The deposit is $49, $99 or $200, depending on your credit standing, but you’re guaranteed a $200 credit limit.
To be clear, all major secured credit cards can help you rebuild your credit. They all report account information to the major credit bureaus every month. And all those with low annual fees and low deposit requirements are in the running for the top spot. But the Discover it Secured Credit Card, Capital One Platinum Secured and OpenSky cards each bring something special to the table.
Choosing the best secured credit card to rebuild credit is only the first step toward actually rebuilding. You must also use that card responsibly month after month so that positive information flows to the credit bureaus. Regularly adding positive information to your credit reports gradually covers up negative records from the past.
Your card will report positive information as long as you pay your bill on time every month. Using less than 30% of your spending limit each month or paying multiple times per month can help too. But if you really want to rebuild your credit, you’ll need to get the rest of your finances in order as well. That means paying down debt, catching up on past-due accounts and steering clear of collections accounts.
If you are denied for a secured credit card, you could apply for a different secured card (one with a higher approval rate), become an authorized user on someone else’s credit card account, or apply for a credit-builder loan. Some secured credit cards don’t even check your credit when you apply. So you will only be turned down if you do not have a U.S. mailing address, a Social Security number (or Individual Taxpayer Identification Number), or enough money to fund your deposit and make monthly payments.… read full answer
In general, secured credit cards are much easier to get than unsecured cards because they require a refundable deposit that also serves as your credit limit. Because there’s less risk for the issuer, secured cards are able to offer nearly guaranteed approval, even to people with damaged credit. But that doesn’t mean everyone is accepted, and some secured cards are easier to get than others.
Typically, if you’re denied for a secured credit card, the card’s issuer will send you a letter explaining why. That can be a good place to start when determining your next steps.
What to do if you’re denied for a secured credit card:
Apply somewhere else. Just because you didn’t meet one credit card company’s requirements doesn’t necessarily mean you’re disqualified from every secured card on the market. In particular, make sure to check out credit cards with no credit check.
Become an authorized user. If someone adds you to their account as an authorized user, you’ll get a card and be able to make charges, but the primary cardholder will be responsible for paying the bills. And if they pay on time, your credit standing will improve.
Apply for a credit-builder loan. Many credit unions and banks offer small loans to help people build or rebuild their credit. Much like a secured card, you’ll need to make a deposit when you apply for a so-called credit-builder loan.
Focus on your open accounts. If you have a mortgage, student loan, auto loan, or line of credit, making your payments on time will help build up your credit score. That will make it easier to get approved for a credit card.
Why was I denied for a secured credit card?
The most common reasons people are denied for a secured credit card include having a bankruptcy or tax lien on their credit report, not having enough income to meet their monthly obligations, and having an extremely low credit score. Past delinquencies with the issuing bank, current delinquencies anywhere, and invalid application information could all be reasons as well.
The specifics vary by card, though. So, if you were denied for a secured credit card, don’t lose hope. Just apply for one of the several secured cards with no credit check, and manage your account responsibly once you’re approved. You can also sign up for WalletHub’s free credit analysis for additional help getting your credit score back on track.
The easiest unsecured credit cards to get generally work best for minor emergencies. You will only receive a small amount of spending power, after all.
Unsecured credit cards for people with bad credit also tend to be very expensive, charging lots of fees and high interest rates. So, if you don’t need a small emergency loan, the best course of action is to improve your credit inexpensively with a secured card. Secured cards are cheaper than unsecured cards, build credit just as effectively, and offer the closest thing you’ll find to guaranteed approval.
Personally, I'd go for the Capital One Platinum Secured Credit Card. It's a Mastercard, so it's accepted everywhere and Capital One is a respected bank with better customer service imo.
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