How to Get a Secured Credit Card

If your credit is damaged, or if you never established credit at all, a secured credit card might be the thing for you. With a secured card, you put down a deposit, usually $200 to $500, which becomes your collateral. Manage the card responsibly and you’ll get the deposit back.

First: Learn Your Options

Before you shop for a secured card, find out your credit score to learn what you qualify for. Why? Well, rejection stings, for one thing.

But more importantly, knowing your credit score helps you determine which cards you’re more likely to qualify for. The better your credit, the more options you’ll have, including money-saving choices not available to those with credit scores lower than yours.

Not sure if your credit is good, bad or fair? That’s not unusual. Here are some tools to help you find out:

• Subscribe. Numerous banks and other companies sell credit scores as part of a subscription to a monitoring service sold to help guard against identity theft. Or you can shop for a credit monitoring service. This may be helpful if you want to monitor your progress with more than one credit reporting agency.

Compare Secured Cards

Just as if you’re buying a car, compare the features and costs of each card. Look at the fine print on each card, including:

• Credit reporting. Get a card that builds your credit by reporting to not one or two but all three of the major credit reporting agencies – Experian, Equifax and TransUnion.
• Graduation features. Will the card let you raise your credit limit over time, either by increasing the size of your down payment or by earning a higher limit through responsible use of the card?
• Annual fees. Unfortunately, you may not be able to avoid annual fees. Make sure you do your research and compare annual fees across cards to find the best deal.
• APR. The annual percentage rate shows the card’s interest rate on your unpaid balance. APR can vary for different services – cash vs. purchases, for example. It may change, too. You might, say, get a low introductory rate that bumps up after six months. Be aware of any potential changes so they don’t take you by surprise.
• Other fees. Avoid application fees, if possible. Some cards have them, others don’t. Watch for and compare the host of other possible fees, including fees for balance transfers, over-limit charges, late payments, cash advances and other costs.
• Rules. Do the tedious but important due diligence: Read and compare the detailed rules accompanying each card so you don’t get tripped up by incurring surprise fees and possibly further damaging your credit.