Whether you’re building credit for the first time or rebuilding it, a secured credit card can help if used responsibly. Secured cards come with their own limitations, though, including lower credit limits, low or no rewards and limited perks.
Thankfully, there are secured cards that help you automatically transition to an unsecured card. Here are four options that offer a direct upgrade path, plus additional tools that can help you jumpstart your credit building.
4 secured cards that offer upgrades
What is a secured vs. unsecured card?
Unsecured cards don’t require a security deposit and typically offer perks like rewards on your purchases. That being said, they also usually require a higher credit score for approval, which can be a roadblock if you have a lower score. That’s where a secured card can help.
A secured card requires an upfront deposit, generally around $200, which doubles as your credit limit. The deposit acts as collateral if you don’t pay your bill, removing some of the risk for the issuer.
Many large banks offer secured credit cards for those with nonexistent or poor-to-fair credit scores, but not all provide a clear path toward an unsecured card.
Secured cards that offer upgrades
Secured cards can be great stepping stones, but unsecured cards provide more flexibility and typically earn better rewards. Here are four secured options that offer a path toward upgrading:
U.S. Bank Cash+® Secured Visa® Card
If you’re looking for a secured card that offers customizable rewards, the U.S. Bank Cash+® Secured Visa® Card earns 5% cash back on the first $2,000 in combined eligible purchases each quarter in two categories you choose. There are 12 categories to choose from, including categories like TV, internet and streaming or electronic stores. On top of this, you also earn 2% back on one of three category options: Gas stations, grocery stores and restaurants.
Security deposit: $300 to $5,000
Upgrade potential: As you practice good financial habits like staying within your credit limit and paying your bill on time, you could be automatically upgraded to the U.S. Bank Cash+® Visa Signature® Card and have your initial deposit returned.
Capital One Quicksilver Secured Credit Card
One of the most accessible secured cards on the market is the Capital One Quicksilver Secured Credit Card. There’s no annual fee and no impact to your credit score when you check your eligibility. You’ll earn an unlimited 1.5% cash back on all purchases and can access CreditWise from Capital One, which lets you check your FICO® Score 8 and TransUnion® credit report and get alerts for important changes.
Security deposit: $200 minimum deposit
Upgrade potential: The Capital One Quicksilver doesn’t list an exact timeline, but with “responsible card use,” you could be upgraded to a Capital One Quicksilver Cash Rewards and have your deposit returned. For secured cards in general, you should typically have at least six months of use before you consider requesting any upgrades.
The Capital One Quicksilver Secured Credit Card is an unusually rewarding card because you earn 1.5% cash back on every purchase.
- Simple rewards structure with no caps or categories to track
- Available if you have fair credit
- High APR
- Has an annual fee
Rewards
- Earn unlimited 5% cash back on hotels, vacation rentals and rental cars booked through Capital One Travel
- Earn unlimited 1.5% cash back on every purchase, every day
Balance transfer fee
- $0at the Transfer APR, 4% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you
Bank of America® Customized Cash Rewards Secured Credit Card
The Bank of America® Customized Cash Rewards Secured Credit Card offers one of the highest rewards rates for a secured card, earning 6% cash back on a category of your choice for the first year, then down to 3%. The card also earns 2% back at grocery stores and wholesale clubs. The 6% and 2% rewards categories are capped at the first $2,500 in combined purchases each quarter, then 1%.
The six bonus categories you can select from include: online shopping (including cable, internet, phone plans and streaming), dining, travel, drug stores and pharmacies or home improvement and furnishings.
Security deposit: $200 to $5,000
Upgrade potential: Bank of America will periodically review your account, and one of two things could happen if you’re in good standing: You could have your security deposit returned, or you could be considered for an automatic upgrade to a higher-tier card, subject to Bank of America’s discretion.
- Flexible bonus cash-back categories
- Qualifies for Preferred Rewards, which can boost your rewards
- 3% foreign transaction fee
Information about Bank of America cards has been collected independently by CNBC Select and has not been reviewed or provided by the issuer prior to publication.
Citi® Secured Mastercard®
The Citi® Secured Mastercard® is a good option for those who aren’t concerned with earning rewards. Your credit limit will be equal to your initial deposit, and the card reports to all three major credit bureaus, helping you boost your score with good habits.
Security deposit: $200 to $2,500
Upgrade potential: Customers are reviewed for graduation to an unsecured card within nine months, and then every 12 months after. Provided you qualify, you’ll be upgraded to the Citi® Diamond Preferred® Credit Card.
The Citi® Secured Mastercard® can help you establish a credit history, but if you’re looking for rewards this isn’t the card for you.
- No credit history requirement
- Minimum opening deposit of $200
- No rewards
- No welcome offer
Honorable mention: Chase Freedom Rise®
While the Chase Freedom Rise® (see rates and fees) is technically an unsecured card, but it has lower credit requirements and still provides a direct path to an upgraded card.
You’ll earn 3% cash back on dining at restaurants (including takeout and eligible delivery services) on up to $6,000 spent in the first six months, then 1.5% back on all purchases. To encourage positive financial habits, you can also get a $25 statement credit when you sign up for automatic payments within the first three months (you’ll need to remain enrolled for at least 90 days to receive the credit).
After at least 12 months, if you’ve made all payments on time and none of your Chase accounts are suspended, you could be upgraded to the Chase Freedom Unlimited® (see rates and fees).
The Chase Freedom Rise® is one of the most rewarding cards that’s available if you’re new to credit.
- No credit history required
- Above average flat-rate rewards
- No annual fee
- Small welcome offer
- Has a foreign transaction fee
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Limited Time Offer – Earn 3% cash back on dining at restaurants, including takeouts and eligible delivery services, on up to $6,000 spent in the first 6 months from account opening.
- Increase your approval chances – Having a Chase checking or savings account with a balance of at least $250 will increase your chances of getting approved for Chase Freedom Rise®
- Earn Cash Back – With Chase Freedom Rise®, you can establish credit while earning 1.5% cash back on all purchases. Cash Back rewards do not expire as long as your account is open and there is no minimum to redeem for cash back.
- Earn a $25 statement credit after signing up for automatic payments within the first three months of opening your account. With automatic payments, just pick a date and dollar amount to make sure your Credit Card gets paid on time.
- Credit Limit Increase – As a Freedom Rise®cardmember, you’ll be evaluated for a credit line increase in as soon as 6 months. Your credit line is the maximum amount of money you can spend on your Freedom Rise®Card
- Free Credit Score – Track your credit score and learn how to build it with Chase Credit Journey.
- No Annual Fee – You won’t have to pay an annual fee for all the great features that come with your Freedom Rise®Card.
- Member FDIC
Balance transfer fee
5% or $5 of each transfer, whichever is greater
Foreign transaction fee
3% of the amount of each transaction in U.S. dollars.
Additional ways to build credit
Using a credit card responsibly is one of the best ways to build credit. Your payment history and credit utilization rate make up 65% of your credit score, meaning how you use your card is very important.
If you’re not quite ready to open your own card, you could become an authorized user on a friend or family member’s account. Card usage by you and the primary cardholder will be reflected in your credit score and report, so just make sure the person you’re asking is both trustworthy and financially responsible. An additional bonus of being added as an authorized user is that there are typically lower age requirements, so you can start building credit even if you’re a bit younger.
You could also consider a credit-building loan like Self. With Self, the loan amount you select (ranging from $600 to $3,600) is deposited into a certificate of deposit (CD) account, and you make fixed monthly payments toward the loan. Once you’ve paid off the entire balance, you get access to your initial amount, minus any interest or fees. All of your payments are reported to the main credit bureaus, giving your credit history a boost.
Self Credit Builder Account
-
Annual Percentage Rate (APR)
-
Loan purpose
-
Loan amounts
Payment options ranging from 25$ to 150$ a month.
-
Terms
-
Credit needed
-
Origination fee
-
Early payoff penalty
Early withdrawal fee of less than $1, depending on the size of your Credit Builder Account, if your account closes early without being paid off in full
-
Late fee
Late fee of up to 5% of the monthly payment amount if you don’t make the full monthly payment on your Credit Builder Account within 15 days of the payment due date
Lastly, if you’re already paying for home utilities or internet, there’s a chance you could be getting credit for paying those types of bills as well. With *Experian Boost®, you can connect your bank or credit card account, and Experian will go through two years of qualifying bills. Once you verify the collected information is correct, it will be added to your Experian credit file.
Experian Boost®
-
Cost
-
Average credit score increase
13 points, though results vary
-
Credit report affected
-
Credit scoring model used
Results will vary. See website for details.
FAQs
Is it better to have a secured or unsecured credit card?
It depends on what state your finances are in. Secured cards are great for those who are new to or building credit, while unsecured cards often require higher credit scores and feature higher credit limits and better rewards.
What are the downsides of a secured credit card?
Some downsides of secured credit cards are that they require an upfront deposit, don’t offer the strongest rewards and perks and typically charge a higher APR if you miss a payment.
How much of a deposit is needed for a secured card?
The exact deposit amount will range depending on the secured card in question, but $200 is often a minimum requirement.
Subscribe to the CNBC Select Newsletter!
The CNBC Select Recommends newsletter delivers practical money tips each week along with expert-picked financial product recommendations. Sign up here.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every credit card article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Catch up on CNBC Select’s in-depth coverage ofcredit cards,bankingandmoney, and follow us onTikTok,Facebook,InstagramandXto stay up to date.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
About The Author
