What is a secured credit card?

A secured credit card helps you build credit by reporting account information to at least one of the big three credit bureaus every month. Monthly credit reporting gives you the opportunity to add positive info to your credit report, which is the key to building credit. Whether the credit that you build with your secured card is good or bad depends on your ability to pay the bills on time. You can also build credit just by having a secured card open, even if you don't use it to make purchases.

If you use a secured credit card irresponsibly, maxing it out or missing payments, you'll have negative information on your credit report. That can lead to a bad credit score. But on the flip side, responsible use of a secured card builds credit just as well as any unsecured card. The only difference between a secured card and an unsecured card is that secured cards require a security deposit and give you a credit limit equal to that deposit. Secured and unsecured cards look the same, both physically and on credit reports.

How Secured Cards Build Credit

• All major secured credit cards report to 1-3 of the major credit bureaus on a monthly basis.
• Secured credit cards report information about your payment history, balance, spending limit and more to the credit bureaus each month.
• The information secured cards report to the bureaus contributes to your credit history.
• Responsible use of a secured card results in positive information being reported, helping to cover up past mistakes or build out a thin file.
• The key to building credit with a secured card is to never miss a due date, or to just never use your card. As long as your account is open and in good standing, you're in good shape.
• Keeping your statement balance below 30% of your credit limit will help you build credit faster with a secured card.

Secured cards are the best credit cards to use if building credit is your main objective. And they're particularly useful for rebuilding credit after mistakes. Not only do secured cards report to the credit bureaus, but they also approve even applicants with bad credit. Some don't even do a credit check. And secured cards are known for low fees. The high approval odds and low fees are all because of the refundable security deposit.

But just because all major secured credit cards can help you build credit does not mean they're equally attractive. They differ in several important areas, including their annual fees, minimum deposit requirements and rewards. It's important to shop around and pick the best card for you.

To learn more, check out our guide on how secured cards work and our editors' picks for the best secured credit card offers.

Secured credit cards have both pros and cons, just like any other type of credit card, but the advantages of secured cards ultimately outweigh the disadvantages. Most importantly, secured credit cards are inexpensive, easy to get, and capable of helping you improve your credit score

Pros and Cons of Secured Credit Cards

One of the biggest pros of secured credit cards is that they're available to customers with poor or limited credit. Secured cards also report account activity to the major credit bureaus just like unsecured cards do. This means cardholders can begin to rebuild or establish credit by using the card responsibly. In addition, secured cards usually have lower fees than unsecured credit cards for people with less-than-good credit.

Among the biggest cons of secured credit cards is the fact that cardholders need $200+ to spare for a refundable security deposit. These funds usually don't accrue interest while securing the account, either. Plus, your credit limit equals the amount of your refundable deposit, so you won't be able to borrow money for expenses you cannot already afford.

It's also worth noting that secured card approval is not guaranteed, although the odds are far higher than with an unsecured card.

Bottom Line: Is a Secured Credit Card Worth it?

Yes, a secured credit card is worth it if your objective is to establish or rebuild credit and you make timely payments every month. When used responsibly, secured credit cards have far more pros than cons.

After all, it's better to place a refundable deposit that you'll get back upon closing your account with a $0 balance than it is to pay expensive, non-refundable fees. Such fees are all too common among unsecured credit cards for bad credit in particular. Secured and unsecured cards also appear no different on credit reports.

If you're looking for long-term financing or an abundance of rewards, however, a secured credit card may not be for you. But it might be a necessary stepping stone for you to get the credit card you really want.

Just remember that even though secured cards are the easiest credit cards to get, you'll still need some kind of income to be approved. A major negative on your credit report such as non-discharged bankruptcy may also prevent you from qualifying.

The main difference between a secured credit card and an unsecured credit card is that secured cards require you to place a refundable security deposit when you open your account. Apart from this security deposit, secured and unsecured credit cards aren't necessarily better or worse for your credit. The amount of this deposit typically serves as the credit limit for the secured card, which means you have to pre-pay for purchases with a secured card. You'll usually have to put down the deposit when you apply, and you'll get it back when you close your account or upgrade to an unsecured credit card. Unsecured credit cards, on the other hand, give access to a credit line that isn't “secured” with a deposit.

There is no difference between secured and unsecured credit cards when it comes to building credit. All major secured cards report account information to the major credit bureaus on a monthly basis, just like unsecured cards. In fact, you can't tell secured and unsecured cards apart on a credit report. So as long as you use either type of card responsibly, your credit score will improve.

Below, you can get a better feel for the differences and similarities between secured and unsecured credit cards by seeing how they compare in several important categories.

Secured vs. Unsecured Credit Cards: Key Differences

Approval Odds of Secured Credit Cards vs Unsecured Credit Cards

Secured credit cards are easier to get approved for than unsecured cards. Because you're technically pre-funding your credit line with a secured credit card, you can't spend more than you can afford to repay. The deposit is held in an account by the card issuer, so if you don't pay your bills, the deposit is used to cover the cost. That's why secured credit cards are able to offer nearly-guaranteed approval to people with bad credit, while charging very reasonable fees. That being said, secured credit cards are real credit cards – they have interest rates, and you have to pay your monthly bill on time.

In contrast, unsecured credit cards tend to be harder to get, because the card issuer takes on a lot more risk by extending an unsecured credit line. In other words, you can spend more on an unsecured card than you can afford to repay. There are unsecured credit cards for people of all credit levels, but if you have bad credit, you're likely to pay high non-refundable fees for a very small line of unsecured credit.

Choosing Between Secured & Unsecured Credit Cards

Overall, the toughest decision between secured and unsecured credit cards comes when you have damaged credit. With bad credit, it's harder to get approved for an unsecured credit card, and the unsecured options available to people with bad credit are far less attractive.

If you have limited, fair, good or excellent credit, you should be able to start with a solid unsecured card. If you've got bad credit and the flexibility to choose either a secured credit card or an unsecured one, always go secured. It will cost you a lot less in the long run and help you build credit just the same. You can check your credit score for free on WalletHub to see where you stand.

Yes, secured credit cards are worth it for people with limited or bad credit who are looking to build their credit and can afford to put up a security deposit. They often have $0 annual fees, rewards and high approval odds, and secured credit card can be a great option to help you improve your credit score if you pay the bills on time.

When a Secured Credit Card Is Worth It

• When you have limited or bad credit. Secured credit cards are good for people with bad or limited credit because they are easy to get, thanks to the collateral requirement that reduces the risk for the issuer. Some secured cards don't even require a credit check when you apply. On the other hand, people with higher credit scores can get cards with no deposit requirement, better rewards and/or lower interest rates.
• When you are looking to build credit. The primary purpose of a secured credit card is to build credit. If that is your main objective and you want an easy credit card to get, these cards are much more cost-effective than unsecured alternatives for bad credit.
• When you can afford the security deposit. A secured card requires a security deposit, which is usually a minimum of $200 to $300, to open the account. The amount of this deposit usually becomes your credit limit. You won't have access to your deposit again until you close the account with a $0 balance or upgrade to an unsecured card.
• When you know you can pay on time. Making late payments hurts your credit score, which defeats the purpose of using a secured card. Ideally, you should not only pay on time each month, but also pay your balance in full. That way, you will build your credit as efficiently as possible while avoiding interest charges.

It's worth noting that there are also unsecured credit cards for bad credit, and it's fair to wonder whether secured cards are worth it compared to them. In general, these unsecured cards often have expensive, non-refundable annual fees (while secured cards often have $0 annual fees), and their APRs tend to be higher because of the lack of collateral. However, some unsecured credit cards for people with no credit may be better than their secured card alternatives.

No, there aren't any Chase secured credit cards available right now. In fact, there's never been a secured credit card from Chase. Chase offers unsecured credit cards for people with at least good credit.

Although there is no Chase secured credit card, the same cannot be said for many of Chase's competitors. Capital One, Citi, and Bank of America are just some of the major banks that offer secured credit cards.

Here are some good secured credit card options:

The Citi Secured card has a $0 annual fee. The card requires a deposit of $200.

The OpenSky has no credit check when you apply. This card has a $35 annual fee and requires a $200 deposit.

The Capital One Quicksilver Secured card offers 5% cash back on hotels and rental cars booked through Capital One Travel, as well as 1.5% cash back on all other purchases. The card has a $0 annual fee and requires a $200 deposit.

So, even though you're not able to get a Chase secured credit card, you still have plenty of options. And they'll all help you start building your credit, plus save some money. Once you get your credit score to “good”, you can start thinking about applying for a Chase credit card.

No, there is no American Express secured credit card that is available to new applicants. American Express only offers unsecured credit cards, which do not require the cardholder to put down a refundable deposit in order to open the account. However, there are several secured credit cards from other issuers to consider.

Here are some of the best secured credit cards:

Keep in mind that, with secured cards, the deposit usually serves as the spending limit on the card, and the issuer can keep the deposit if the cardholder fails to repay what they owe. As a result, secured credit cards are relatively easy to get approved for.

Ultimately, it is worth noting that using a secured card responsibly can help you eventually build your credit to the point where you can qualify for a credit card from American Express.

The best secured credit card for bad credit is Discover it® Secured Credit Card because it has a $0 annual fee, rewards you with 1 - 2% cash back on purchases, doubles the rewards you've earned after the first year, and accepts people with bad credit. The Discover it Secured Credit Card's main approval requirements are being 18+ years old and having enough income to afford monthly bill payments, plus a refundable security deposit of $200 or more.

Most secured credit cards are open to applicants with bad credit. The more lenient approval requirements are due to the fact that your security deposit will act as collateral for your credit limit. There are several secured credit cards that people with bad credit might want to consider.

Best Secured Credit Cards for Bad Credit:

• Best Overall: Discover it® Secured Credit Card$0 annual fee. Earn 2% cash back at gas stations and restaurants (up to $1,000 spent each quarter combined), and 1% back on all other purchases. Minimum deposit of $200.
• No Credit Check: OpenSky® Secured Visa® Credit Card$35 annual fee. Minimum deposit of $200.
• Low Deposit: Capital One Platinum Secured Credit Card$0 annual fee. Minimum deposit of $49, $99 or $200 (depending on factors such as income, debt, and creditworthiness) in exchange for a starting credit line of $200.
• Cash Back: U.S. Bank Cash+® Visa® Secured Card$0 annual fee. Earn 5% cash back on two categories of your choice (up to $2,000 each quarter), 5% back on prepaid air, hotel and car reservations booked in the Rewards Travel Center, 2% back on your choice of one everyday category (like gas stations, EV charging stations, grocery stores or restaurants) and 1% back on all other purchases. Minimum deposit of $300.

In general, secured credit cards are the best type of credit card for people with bad credit. Secured cards offer the highest approval odds of any credit cards, and they tend to be a lot cheaper in the long run than unsecured cards for bad credit.

You just have to make sure to pay your bill on time and preferably in full, every month. If you do that, your credit should steadily improve. And that should help you qualify for a credit card upgrade sooner than you might think.

The best secured credit card with no credit check is Chime Credit Card because it is among the cheapest options. The card does not charge membership fees or interest, and there is no minimum amount for the security deposit, though your deposit will act as your credit limit. There are, however, a few more secured credit cards with no credit check to choose from.

Best Secured Credit Cards with No Credit Check

The annual fees on secured credit cards with no credit check range from $29 to $48 per year. The cards require a minimum deposit of $200. All these cards report information to the big 3 major credit bureaus each month. So, any of them can help you immediately begin rebuilding your credit.

Still, it's important to note that even a secured credit card with no credit check has some approval requirements. You have to be at least 18 years old, for one thing, and you need enough money for the refundable security deposit as well as your monthly bill payments.

Why You Shouldn't Rule Out Secured Cards With a Credit Check

Before you apply for a secured credit card with no credit check, make sure you actually need it. Even secured cards that require a credit check are pretty easy to get. They're meant for people with bad credit, and the refundable security deposit you place reduces the risk for issuers.

Individual issuers may have specific requirements that rule some people out. For example, you can't get most secured cards with a non-discharged bankruptcy on your credit report. But there are plenty of other cards whose main requirement is that you have enough money to fund the security deposit. Plus, while they may do a credit check, most applicants should still get approved.

What You Need to Know About Credit Checks

Keep in mind that the hard inquiry that comes with a credit check shouldn't be too big of a deal, if you end up opening an account. The score damage will be temporary. And you won't be able to qualify for any worthwhile loans until you improve your score anyway. So, if you don't need the best possible score right now, taking a short-term hit to achieve long-term gains is the way to go.

Finally, if you're nervous about getting rejected, you can check for pre-approval before applying. Pre-approval doesn't mean you're guaranteed an account. But it is a sign that your odds of approval are extremely high. If after all that you're not confident in your ability to get approved, you can always go for a secured credit card with no credit check.

One of the best secured credit cards to rebuild credit with is the Capital One Quicksilver Secured Cash Rewards Credit Card because it has a $0 annual fee, reports to the credit bureaus, and gives 1.5 - 5% cash back on all purchases. The minimum deposit is $200, and the amount you put down will act as your credit limit.

Another good option is the OpenSky® Secured Visa® Credit Card. It doesn't even require a credit check when you apply, which makes it great for rebuilding really bad credit. Or, if you want to enjoy some perks while you rebuild, the U.S. Bank Altitude® Go Visa® Secured Card offers 1 - 4 points per $1 spent on purchases.

Some of the Best Secured Credit Cards to Rebuild Credit

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. Also, all those with low annual fees and low deposit requirements are in the running for the top spot. But the cards listed above bring something special to the table.

How to Rebuild Credit with a Secured Credit Card

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.

You can get a secured credit card by going to your bank or credit union and asking for an application, or by applying for a secured card online. Not all banks and credit unions offer secured credit cards, so it's best to take a look at the secured card offerings that are available online. That way, you can compare cards and apply for one that's right for your situation. Annual fees, deposit amounts, rewards and interest rates vary from card to card, so it's important to shop around to get the best deal.

Here's how to get a secured credit card:

1. Compare secured credit cards to find the right card for you. Lots of people focus on the minimum deposit amount when it comes to secured cards, but the deposit is refundable. It's smart to consider annual fees, which aren't refundable. Look for the handful of secured cards that have no annual fee.
2. Fill out an application. You need to be at least 18 years old and have a Social Security number, an ITIN or a passport, along with a non-P.O. Box U.S. address. In addition, most secured credit card applications require you to choose your deposit amount, which will usually become your credit line. How and when you pay your deposit will depend on the card issuer. When you apply, you should be prepared to provide your bank account information or open a savings account with the card issuer to pay the deposit, but some card issuers let you pay the deposit later.
3. Wait for a decision. Credit card applications are often processed instantly. But if not, many card issuers have a website or phone number to check your application status.
4. Wait for your credit card in the mail. After you pay your deposit, your card will be mailed to you. This could take anywhere from a few days to a few weeks.

When applying for any credit card, there can be some worry that your application will be denied. Because secured credit cards are designed for people with bad or no credit history, secured card applicants have the least to worry about in this regard. That doesn't mean there are no requirements, however.

In addition to placing a security deposit of $49-$300, secured credit card applicants are required by law to submit certain information for identity and income verification purposes. Many individual issuers have instituted their own secured credit card requirements as well.

Altogether, three types of information may be evaluated after you apply:

• Basic Information: All issuers require applicants to provide their name, contact info (including a non-P.O. Box U.S. address), Social Security number, and all other basic information requested on the account application.
• Income Information: All issuers require applicants to list their income in order to determine whether or not they can afford minimum payments on a new credit card.
• Credit Data: Certain issuers will not approve applicants who are delinquent on other credit card and loan accounts and/or applicants who have recent bankruptcies on their credit reports.

Overall, it's much easier to get a secured credit card than an unsecured one. Due to the required security deposit, the card issuer's risk is little to none, so many people with damaged or no credit can get a secured card. And they report to credit bureaus just like an unsecured card does, so you build credit in the process. If you use the card responsibly by paying your bill on time and maintaining low credit utilization, your credit standing will gradually go up, along with your chances of getting approved for an unsecured credit card.