Stock investing for dummies
When you’re just starting, building credit can be difficult. Using a secured credit card can get around this problem. They’re a great first step to building your credit history and a popular choice. Creditcards.com reported that in 2015, 57% of college students owned a secured credit card.
We’ve looked at the best credit cards for college students, so today we’re going to focus on secured credit cards in general. Not all secured credit cards are created the same. Among the various factors to consider are:
In this article, we’ll highlight the key features of a few secured credit cards that are great for building credit.
Capital One® Secured Mastercard®
Mastercard is accepted virtually everywhere. You almost can’t go wrong with them. This card is also an Editor’s Top Pick and 5 star secured rating on Cardratings.com.
This secured credit card doesn’t have any monthly fee. The security deposit ranges from $49 to $200. How much you’ll need to put up for the deposit will depend on your credit worthiness.
Keep in mind that just because you don’t have a credit history doesn’t mean you have a terrible credit. Someone that has done a lot of damage to their credit can have a lower credit score than someone with no credit.
Bev O’Shea, a writer for Nerd Wallet, had this to say about new credit vs bad credit, “…just as being new to credit doesn’t mean you start at zero, it also doesn’t mean you begin in the basement at 300.”
APR is 24.99% variable, which is fairly common. As long as you can pay off your bill every month in full, APR really isn’t a factor.
After only 5 months of on time payments, you’ll get a credit increase. Your security deposit will remain with Capital One since this is a secured card. But you’ll receive more buying power with an increased credit line.
One approved, you’ll need to make the security deposit before the card can be used. This is generally the first step for activating a secured credit card. Learn more about the card here.
OpenSky® Secured Visa® Credit Card
OpenSky’s secured credit card offering doesn’t require a credit check. Instead, the amount of your security deposit is your credit line. This also means that the more you deposit, the higher your credit line. There’s a minimum $200 deposit but you can add as much as $3000 if you want a higher credit limit. The deposit is refundable. Learn more about it here.
OpenSky reports to all 3 major credit bureaus on a monthly basis, which helps you build credit fast. In fact, they say 99% of their customers start earning a credit score beginning at 6 months of use.
With this card, there is a $35 annual fee. The APR is 18.39%.
Discover it® Secured Card
Next on the list is an offering from Discover. While there are limitations on where you can use a Discover credit card, this card does offer a rewards program, has no annual fee and includes a few cybersecurity features that other cards don’t have.
If you shop at the same locations and they do accept Discover credit cards, this card can be a great option.
The rewards program provides 2% cash back at select locations and 1% at all others. Going back to the previous statement, if you have specific places you shop regularly and their on the 2% cash back list, you’ll start making money just by using the card.
There is a $1,000 limit per quarter on cash back rewards.
Another great feature of the rewards program is that Discover will match your rewards at the 12 month mark, which is only available to new customers.
The security deposit starts at $200 and is refundable. A refundable deposit means if you close the account, your deposit is returned. Learn more about this here.
Starting at eight months, Discover will review your payment history. Depending on their review results, they may return your deposit and allow you to use the card unsecured. Basically, this means you’ve built enough credit that Discover believes you will continue making regular on time payments with an unsecured credit card.
Cybersecurity threats are something that every card carrying customer needs to be aware of. According to a 2017 Identity Fraud Study by Javelin Strategy & Research, they found that in 2016, there were 15.4 million identity fraud victims in the U.S.
When you’re just starting to build your credit, the last thing you want to happen is some cybersecurity event that damages your credit. You can head off disaster by using a monitoring service that can watch if your social security number is being posted to some risky website or if new accounts are being opened in your name.
Such monitoring services can be expensive but this card includes one for free. The Discover Secured Credit Card offers both social security and new account opening cybersecurity monitoring services at no cost to you.
The Discover APR is 23.99%. Just keep paying your bill in full every month and you’ll never have to deal with an ARP.
The above 3 secured credit cards are a great place to start when establishing credit on your own. In less than a year, you can have a credit score established and be on your way to building a long-term credit history.
If you’re looking to get started, now’s the time!
stock investing for dummies