If you have bad credit or none at all, here’s how you can still get a credit card.
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Having poor credit can seem like a trap. In order to rebuild your credit, you need to get a new line of credit. Of course, no one is willing to extend you credit when you have poor credit.
If this is the case, you still have an option — a secured credit card. Issuers will give one of these to basically anyone who breathes (unless you have a pending bankruptcy). These require a security deposit, which becomes the basis of your credit limit. Other than that, you’ll make payments just like any other card.
Here’s everything you need to know to make a secured credit card work for you.
What is a secured credit card?
A secured credit card is different from a normal one because you have to make a refundable deposit. The value of your deposit determines your credit limit. So it’s not really a “credit card” at all, more like a debit card, but it gets reported like one.
For example, if you put down a $500 deposit, you’ll have a credit limit of $500. Then you can use your credit to buy things you need, and pay that amount off in full every month. If you carry a balance, you’ll incur interest just like any other card.
If you fail to make a payment, the issuer can take your deposit.
You can increase or decrease your deposit if you want to improve your credit even further. Just don’t go crazy and splurge on things you can’t afford.
How long does it take to build credit with a secured credit card?
The amount of time it takes to improve your credit depends on your situation. If you have years of bad history with credit, it’ll take longer than someone who has no credit.
On average, it takes six months for secured credit cards to start improving your credit, according to credit.com.  However, if you have no credit, you can see an improvement in as little as a month.
Some negative notes on your credit report like bankruptcies and late payments will take longer (7-10) years to improve.
Best secured credit cards
Unfortunately, some secured cards are loaded with fees and other unfavorable terms. To find a card from a reputable provider and one that has a reasonable annual fee – and no monthly fee. There should be a standard grace period, during which you can pay your balance in full to avoid interest charges. Other nice features can include rental car insurance and even some rewards.
Here are some of the best-secured cards to help you build credit:
The perks: Earn 2 percent cash back on gas stations and restaurant purchases, and 1 percent on all other purchases.
Bottom line: This card also doesn’t have an annual or monthly fee. The interest rate is 25.24 percent.
The perks: You place a refundable security deposit of $49, $99, or $200 depending on your creditworthiness. But you receive a credit line of $200.
Bottom line: You can pay your balances in full to avoid interest charges or pay an interest rate of 26.99 percent. There’s also no annual fee.
The perks: Receive a credit line of $300 to $4,900, based on your how much you put down for the security deposit. After a year, you may qualify to have the security deposit returned – while you continue to use the card.
Bottom line: There’s a standard interest rate of 25.24 percent, and no annual fee.
The perks: Your credit line can be between $300 and $5,000 based on your security deposit.
Bottom line: You can pay your balance on time (you choose your payment due date), or pay the 21.24 percent interest rate. There is also a $29 annual fee.
The perks: One of the rare secured cards that offer rewards. You receive one mile in AeroMexico’s Club Premier program for each dollar spent and double miles for gas and groceries. New cardholders earn 5,000 bonus miles and a complimentary companion ticket when they make their first purchase. Other benefits include a 10 percent discount on AeroMexico airfare purchases and a $99 companion ticket each year with renewal.
Bottom line: This card has a $25 annual fee and a 25.25 percent interest rate.
The perks: This card has several things going for it, including points and travel discounts. In addition, you receive 5,000 points after your first use, as well as one additional point per dollar spent. It also offers a single 10 percent discount each year on LATAM Airlines ticket purchases up to $500. The minimum deposit is $300.
Bottom line: This card has a 25.24 percent interest rate. There’s no fee for the first 12 months with the card, but after that you have to pay $25 a year.
The perks: You can put down a security deposit as low as $200, and make your regular purchases. A major perk is the low-interest rate: 19.64 percent.
Bottom line: There is a $35 annual fee.
The perks: Pay an annual fee plus a security deposit that becomes your credit limit. This card has a 19.99 percent APR and reports to all of the major credit bureaus, and no credit check required.
Bottom line: There is a $29 annual fee.
Cameren Boatner contributed to this report.
Published by Debt.com, LLC