Maybe you’re recovering from some poor decisions. Or maybe you don’t have much of a credit history at all. Either way, don’t despair — the only way to get more credit is to use what you’ve got. And you do want to improve your credit score, because a low one will haunt you when you try to get a loan, mortgage, etc. The Capital One Secured card is a CWD favorite for folks with low credit scores because it doesn’t charge outrageous fees and rates.
For someone trying to get back on track, that’s probably the last thing you need. This card comes with no application or processing fees, so feel free. Plus it’s easy to get approved, though your income does have to exceed your rent/mortgage payments. We sure hope it does. This is all great news for the credit-seeker, because getting denied only serves to hurt your score even more. And if you improve your credit score you will eventually be able to apply for rewards cards with great sign-up bonuses like the Barclaycard Arrival PlusTM World Elite MasterCard® which comes with $400 bonus.
What do you mean, “secured”?
A secured card is one that is backed up by a security deposit. In order to use this card, you have to pay a certain minimum deposit of $49, $99, or $200, depending on your score. “Hey, I thought you said it was free to sign up!” We sure did and we weren’t lying. The security deposit that you pay is fully refundable once you close out the account down the road. In that way it’s very similar to a security deposit for a home lease. The bank simply needs it for collateral. Unfortunately, that deposit doesn’t earn any interest during that time, but you can’t win ‘em all.
Once you make the minimum security deposit, you receive a credit line of $200. If this isn’t enough for your needs, you can add to your deposit and get more credit. Each additional dollar deposited adds one dollar to your credit line, up to your maximum approved amount. (The highest this card will go is $3000.) There is some nice flexibility around making the security deposit, too. You can pay by phone or online, and you can even pay it in installments of $20 or more, provided you pay off the whole minimum deposit within 80 days of getting approved.
Don’t be fooled — this might sound like a prepaid card, but it’s not. Unlike a prepaid card, the Capital One Secured card builds your credit. The deposit is totally separate from anything else — you still need to pay off every penny of your balance on time.
What you get
This card is throwing you a bone with its annual fee of $29. Having to pay to keep this card might seem like a bummer, but that fee is actually quite low compared to most other secured cards. But hey, that’s why you’re trying to build your credit — to get access to better options. The Capital One Secured card knows that, so it offers tasty options for doing so. They report your activity to all 3 major credit bureaus regularly, and after you’ve been showing off your responsibility for a while, you can qualify for an increase in the credit line with no additional deposit! Plus, you’ll never feel overwhelmed again with the free membership to CreditInform, a special program that gives you access to a credit score plus tools and information to help you understand credit.
Another place where we happily see a lack of fees is in balance transfers. Transferring a balance will not cost you an extra fee, but be aware that transferred balances are still subject to the APR. Speaking of, the APR for this card is a little high at a variable 22.9%, but that’s to be expected given its category. You will be the only one to know that you have a secured credit card — it doesn’t say it anywhere on the actual card. In fact, you can make it pretty, as Capital One lets you customize it with an image of your choice. Snazzy.
For those in a credit pickle, the Capital One Secured credit card is a lifesaver. With no application, processing, or transfer fees, you’re good to go from the very beginning. It even affords you a bit of time to make that security deposit. You can breathe a sigh of relief. Everyone makes mistakes — who doesn’t believe in second chances?