Which secured credit card is best for you?
When selecting a secured credit card, there are a few factors to consider: how much of a deposit is necessary, how can you transfer to an unsecured card (more on that below), and can you earn rewards?
The Discover it® Secured Credit Card is a solid secured card choice that requires a $200 deposit but comes with some nice features. There are no international transaction fees or yearly fees, and you can earn rewards (2 percent cash back at petrol stations and restaurants on up to $1,000 in combined purchases each quarter, then 1 percent, and unlimited 1 percent cash back on all other transactions automatically).
If you’re looking for a card with a lower deposit requirement, try the Capital One Platinum Secured Credit Card. You’ll still get a $200 credit limit if you qualify for the low $49 or $99 deposits.
How to Switch from a Secured to an Unsecured Credit Card
While a secured card is an excellent way to develop credit, it is not a long-term solution because you must deposit money to acquire a credit limit. You’ll eventually require an unsecured card with a higher credit limit and no deposit.
The transition from secured to unsecured card differs depending on the card issuer. Some card companies may conduct periodic account reviews to determine whether you are eligible for an unsecured card. Beginning seven months after account opening, Discover will automatically assess your credit card account to see whether they can transition you to an unsecured line of credit and repay your deposit.
If your card issuer does not provide an automatic upgrade option, you can simply phone the number on the back of your card and request that it be converted to an unsecured card. They may switch you to a card that does not demand a security deposit. You should be informed that a credit check may be conducted.
Because some card issuers do not provide a transfer process, you will have to apply for an unsecured card and close your secured card account. Experts normally do not advise shutting credit cards, but secured cards are different since you must put up collateral.
Before you close a secured card, make sure you apply for and are authorized for a new one. It may be more difficult to be accepted if you close your card before opening a new one.
