Updated: June 1, 2017
There is a difference between “no credit” and “poor credit.” No credit means you’ve never taken out a line of credit. It’s common with recent college graduates who didn’t take out student loans or 18 year olds leaving the nest and entering the workforce. Poor credit is typically the result of a slip up: missing a credit card payment, defaulting on a loan, a medical bill going to collections.
A secured card offers a solution to building credit from scratch. Because you don’t have any credit history, a lender isn’t inclined to trust you. A secured card is a way to prove to a lender you can be responsible while the lender minimizes risk.
[Make sure you understand HOW to use a secured card before you get one.]
In order to open a secured card, you put down a deposit and the lender gives you a line of credit – typically the same as the amount you put down. Not all secured cards operate the same way. Some secured cards charge an annual fee while others require steep deposits.
Before you start applying haphazardly, see if your local bank or credit union offers a competitive secured card. With no credit, you may have an easier time being approved with a financial institution you’ve already established a relationship with. If the fees and deposit required from your local bank or credit union seem to steep, be sure to check out the options below.
Below, we’ve outlined secured cards with a variety of conditions, but all of which tend to approve people with no credit history.
If you’re a current college student looking to build credit, then apply first for a student credit card instead of a secured card.
Discover it® Secured Card – No Annual Fee
Discover has a market leading secured credit card and even if you don’t have any credit history at all, it is still possible to get approved. This card is best for people with no credit, or scores of 670 or less.
There is no annual fee, but you need to make a security deposit of $200 or more to establish your credit line. Our favorite feature is the automatic review process. Discover offers automatic monthly reviews starting at 8 months to see if you can be transitioned to an account with no security deposit.
You also get to earn earn cash back: 2% at restaurants and gas stations (on up to $1,000 in combined purchases each quarter). Plus, you get 1% cash back on all your other purchases. To avoid paying interest, pay your balance in full and on time every month.
State Department Federal Credit Union
SDFCU’s EMV Savings Secured Visa Platinum Card sounds elite, but you can be eligible for as little as $5, as long as you have the $250 for the deposit.
You are eligible to join the SDFCU if you’re an employee of the Department of State or one of the extensive organizations with ties to the credit union (all listed here under “who can join”). If you don’t work for the Department of State, you may also be eligible through the American Consumer Council. You can join the ACC for only $5 if you’ve used any major consumer product or service within the past 12 months – and you probably have.
USAA Secured Card
The USAA Secured Card comes with one big catch, you have to be a USAA member or have military affiliation personally or through family in order to become a member.
USAA’s secured card comes with a $35 annual fee and you must put a deposit of $250 – $5,000 into a CD in order to open the secured card. This deposit will be your credit limit. The APR can range from 9.9% to 19.90%, so never carry a balance on the card.
Navy Federal nRewards Secured Card
Navy Federal Credit Union also requires military affiliation to be eligible for it’s nRewards Secured Card. It also comes with the hefty deposit of $500. There is no annual fee and a variable APR starting at 8.99%.
While there is a rewards aspect of this card, we recommend ignoring it and focusing on building your credit score above 700 so you’re eligible for a truly competitive rewards credit card.
DCU Visa Platinum Secured Card
The Visa Platinum Secured Card comes with a hefty minimum deposit of $500, but doesn’t have an annual fee. However, you will need to pay to join this credit union if you aren’t already a member.
- Cost to join – $5 to join DCU + membership costs to join eligible organization if you aren’t eligible
- Minimum deposit – $500
Just like with USAA and Navy Federal, you must be a member to be eligible. Except with the DCU, it’s easy to become a member. You can be eligible to join DCU if a relative is already member, if your employer offers membership or your community is included within field of membership. If none of these apply, you can join an organization with member privileges. Joining these organizations range in membership cost from $25 to $120. Once you join DCU, you have a lifelong membership, so you could cancel a membership with the other organization after joining.
Capital One Secured Mastercard
If you can’t afford a hefty deposit of $110 – $500, consider the Capital One secured card.
Capital One offers a secured card with a $49 minimum deposit for a $200 line of credit.
Unfortunately, the $49 deposit isn’t a guarantee because it’s based on “creditworthiness.” It is possible Capital One will ask for a deposit of $99 or $200, especially if you have no credit history.
Harley Davidson Visa Secured Card from U.S. Bank
We know it seems a little strange, but the Harley Davidson Visa Secured Card from US Bank offers a good option for those not interested in paying to join a credit union and trying to avoid an annual fee (aren’t we all?).
Here are the details:
- 22.99% APR – so don’t carry a balance
- Minimum deposit – $300
- No annual fee