Secured cards are a great way to build or improve credit. When you open a secured card, you submit a security deposit that typically becomes your credit limit. This deposit acts as collateral if you default on your account, but you can get it back if you close your account after paying off your balance. As long as you use a secured card responsibly â€” for example, make on-time payments and use little of your available credit â€” you may see improvements in your credit score. Unfortunately, in addition to the upfront deposit, this credit-building tool can have extra costs, like an annual fee.
You can avoid that expense with one of these six no annual fee secured cards, which have a variety of uses:
The Discover itÂ® Secured<!–Discover itÂ® Secured–> is a standout secured card that provides cardholders the opportunity to earn cash back while building credit. A cashback program is hard to find with secured cards, and the Discover itÂ® Secured<!–Discover itÂ® Secured–> offers 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases â€“ automatically. In addition, there is a new cardmember offer where Discover will match ALL the cash back earned at the end of your first year, automatically. This is a great way to get a lot of rewards without needing to do any extra work.
In addition to a cashback program, this card provides valuable credit resources such as free access to your FICOÂ® Score and a Credit Resource Center â€” just note these services are available whether youâ€™re a cardholder or not. Discover also takes the guesswork out of wondering when youâ€™re ready for an unsecured card (aka a regular credit card) by performing automatic monthly account reviews, starting at eight months of card membership.
What to look out for: Try not to overspend and make it a goal to pay each statement in full so you avoid interest charges.
The Secured MastercardÂ® from Capital One<!–Capital OneÂ® Secured MastercardÂ®–> offers qualifying cardholders a lower security deposit compared to other secured cards. You will get an initial $200 credit line after making a security deposit of $49, $99, or $200. Typical secured cards require you to deposit an amount equal to your credit limit, so this card could be beneficial for people who qualify for the lower deposits. You can also receive a credit limit increase without making an additional deposit after making your first five monthly payments on time. This is helpful for people who need a higher credit limit and donâ€™t want to (or canâ€™t) tie up their money in a deposit. Also, youâ€™ll have access to CreditWiseÂ® from Capital OneÂ® and Platinum MastercardÂ® benefits that include travel accident insurance and price protection.
What to look out for: The $49 and $99 security deposits are not guaranteed â€” that means you may still have to deposit $200. Also, itâ€™s not a good idea to carry a balance on this card because it has one of the highest APRs at 26.99% (variable)<!–Capital OneÂ® Secured MastercardÂ®–>.
The information related to CitiÂ® Secured MasterCardÂ® has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.
The CitiÂ® Secured MastercardÂ®<!–CitiÂ® Secured MasterCardÂ®–> requires a $200 security deposit, which is typical of secured cards and a good amount to establish your credit line. You can deposit more money if you want to receive a higher credit line, but if you donâ€™t have a lot of money available to deposit, coming up with $200 is manageable. This card doesnâ€™t have any additional card benefits like rewards or insurances, but you can access Citiâ€™s Credit Knowledge Center for financial management tips.
Because MidSouth Community is a federal credit union, you need to be a member to qualify for this card. Membership is limited to people who work, live, worship, or attend school in the following Middle Georgia counties: Bibb, Baldwin, Crawford, Hancock, Houston, Jones, Monroe, Peach, Pulaski, Putnam, Twiggs, Washington, and Wilkinson. If you qualify, you may be able to get a secured card with an APR as low as 8.90% variable<!–VisaÂ® Secured Card from MidSouth Community FCU–>.
What to look out for: This card is very restricted, therefore few people will be able to qualify for this low APR secured card.
The Affinity Secured VisaÂ® Credit Card<!–Affinity Secured VisaÂ® Credit Card–> requires cardholders to join Affinity FCU. You may qualify through participating organizations, but if you donâ€™t, anyone can join the New Jersey Coalition for Financial Education by making a $5 donation when you fill out your online application. This card has a 10.60% variable<!–Affinity Secured VisaÂ® Credit Card–> APR, which is one of the lowest rates available for a no annual fee secured card and is nearly half the amount major issuers charge. This is a good rate if you may carry a balance â€” but try to pay each statement in full.
What to look out for: There may be a membership fee associated with this card if you donâ€™t qualify through participating organizations. The fee you may have to pay is low at $5, but it may be an issue for people who donâ€™t want to pay anything to open a secured card.
The Savings Secured Visa Platinum Card from State Department Federal is open to anyone, regardless of residence. If you arenâ€™t eligible through select methods including employees of the U.S. Department of State or members of select organizations, you can join the American Consumer Council during the application process. There is no fee associated with joining since State Department FCU pays the $8 on your behalf. There is a rewards program with this card where you earn Flexpoints, which can be redeemed for a variety of options like gift cards and travel. The APR can be as low as 11.99% variable, which is reasonable considering many secured cards from major issuers are above 23%.
What to look out for: If you decide to take out this card and become a member of the SDFCU by joining the American Consumer Council, make sure you do not go to the ACCâ€™s website and submit a donation. That fee is waived by the SDFCU when you fill out your credit application. Simply select â€śI do not qualify to join through any of these other methodsâ€ť and select the ACC from the menu to avoid the fee.