Secured credit cards: Get beyond these Top 5 myths (2024)

FAQs

What are 2 downsides of getting a secured credit card? ›

Secured cards generally have a lower credit limit than traditional credit cards, which prevents users from taking on more debt and doing more damage to their credit scores. Even if your credit limit is initially low, you can build good habits by making small purchases and paying them off at the end of every month.

The Discover it^® Secured Credit Card is our top pick for easiest credit card to get because it's geared toward those with limited/poor credit. It offers great rewards and charges a $0 annual fee.

If you want (and can afford) a secured card with a high credit limit, consider the Platinum Secured Mastercard® from First Tech Federal Credit Union. This card has no annual fee and offers credit limits as high as $25,000, but you'll need to make a deposit equivalent to the line of credit you want.

A secured credit card is a card that requires a cash security deposit when you open the account. The deposit reduces the risk to the credit card issuer: If you don't pay your bill, the issuer can take the money from your deposit.

While having multiple secured credit cards can provide benefits, opening too many at once may be counterproductive. It's essential to manage the accounts effectively and avoid overextending your credit. Two secured credit cards are often sufficient for most individuals to build credit effectively.

While we can't say for sure how much your credit score might improve, we can tell you that using a secured card can boost your credit score relatively quickly — think “under six months” — especially if you focus on the five factors that make up your credit score: Payment history. Credit utilization.

Whether you're building credit from scratch or rebuilding a poor credit history, there's no minimum amount of time you should hold on to a secured credit card. Instead, focus on how the card is helping you work toward your goal and consider the card's features to determine the right approach.

What is the #1 credit card to have? ›

The best credit card overall is the Wells Fargo Active Cash® Card because it gives 2% cash rewards on all purchases and has a $0 annual fee. For comparison purposes, the average cash rewards card in 2024 gives about 1% back.

First Progress Platinum Elite Secured Mastercard: The First Progress Platinum Elite Secured Mastercard requires no credit history or minimum credit score for approval. Your security deposit is refundable, and the card is accepted nationwide.

Once you pay your security deposit, you can start using your secured credit card, but use it wisely. Avoid maxing out your credit card and keep your balance low to maintain a good credit utilization ratio. Pay your balance on time and in full.

Having multiple secured credit cards is not necessary to build good credit, and there is nothing intimating that you'll achieve a good credit score faster by doing so. However, opening more than one secured credit card can help you in one important way: credit utilization.

If you're just starting out, a good credit limit for your first card might be around $1,000. If you have built up a solid credit history, a steady income and a good credit score, your credit limit may increase to $5,000 or $10,000 or more — plenty of credit to ensure you can purchase big ticket items.

The pros of secured credit cards are that they can help you build credit, get approved easier, earn rewards and have a refundable deposit. Cons of secured credit cards are that they require a safety deposit, may charge high credit card fees and interest rates and have a low credit limit.

Depending on the card, applying for a secured credit card could result in a hard inquiry, which will temporarily lower your credit score. But by maintaining a solid credit history and making on-time payments, you could gradually improve your score in the long run.