Best Secured Credit Cards for Students Review
The Discover it® Secured Credit Card and Capital One Platinum Secured Card are top choices for students. Both offer rewards and build credit.
Secured credit cards provide a great opportunity for students to build their credit history responsibly. These cards require a security deposit, which acts as your credit limit, making them accessible for those with limited or no credit history. The Discover it® Secured Credit Card stands out with its cashback rewards and free FICO score monitoring.
Similarly, the Capital One Platinum Secured Card is notable for its flexible deposit requirements and potential credit line increases. Both cards report to all three major credit bureaus, helping students establish and improve their credit scores over time.
Introduction To Secured Credit Cards
Secured credit cards are excellent tools for students. These cards help build credit history. They are easy to get approved for. This is because they require a security deposit. Let’s explore what secured credit cards are and why students need them.
What Are Secured Credit Cards?
Secured credit cards require a cash deposit. This deposit acts as collateral. The deposit amount usually equals the credit limit. For example, a $200 deposit means a $200 credit limit. These cards work like regular credit cards. You can use them for purchases. You must repay the balance each month.
If you don’t pay, the bank uses your deposit. This reduces the bank’s risk. Over time, responsible use helps build your credit score. This is important for future financial needs. Examples include loans or renting an apartment.
Why Students Need Them
Students often have no credit history. This makes it hard to get approved for regular credit cards. Secured credit cards are easier to get. They help students start building credit. Good credit is vital for many future opportunities.
Here are a few reasons why students need secured credit cards:
- Build Credit: Responsible use builds a positive credit history.
- Learn Financial Responsibility: Using credit wisely teaches good habits.
- Prepare for the Future: Good credit helps with loans, jobs, and renting homes.
Secured credit cards offer a path to financial independence. They teach important money management skills. Students can benefit greatly from these cards.
Top Secured Credit Cards For Students
Secured credit cards are a great way for students to build credit. These cards require a security deposit, which acts as your credit limit. If you pay on time, you can improve your credit score. Here are the top secured credit cards for students.
Card 1: Features And Benefits
Card 1 offers several features perfect for students. The annual fee is $0, making it affordable. The security deposit ranges from $200 to $2,500. This card reports to all three major credit bureaus. You can earn 1% cash back on all purchases. There’s also a 24/7 customer service team available.
- No annual fee
- Low security deposit
- 1% cash back
- 24/7 customer service
Card 2: Features And Benefits
Card 2 is another excellent choice for students. This card has a $25 annual fee. The security deposit is between $300 and $2,000. You earn 2% cash back on groceries and gas. You also get 1% cash back on other purchases. Card 2 offers free access to your credit score.
- $25 annual fee
- 2% cash back on groceries and gas
- Free credit score access
Card 3: Features And Benefits
Card 3 stands out with its unique benefits. The annual fee is $35, which is reasonable. The security deposit ranges from $250 to $3,000. This card offers 3% cash back on dining and entertainment. You get 1% cash back on other purchases. Card 3 includes fraud protection features.
- $35 annual fee
- 3% cash back on dining and entertainment
- Fraud protection
How To Choose The Right Card
Finding the right secured credit card for students can be challenging. It’s important to know what to look for. This guide will help you make an informed decision.
Factors To Consider
Several factors can influence your choice of a secured credit card. Consider these points:
- Annual Fees: Some cards have no annual fees. Others may charge a yearly fee.
- Interest Rates: Look for a card with a low APR. It will save you money.
- Credit Limit: Ensure the card offers a suitable credit limit. This is based on your deposit.
- Rewards Program: Some cards offer rewards. These can be cashback or points.
- Reporting to Credit Bureaus: Choose a card that reports to all three major credit bureaus. This helps build your credit score.
Comparing Different Options
Compare various secured credit cards to find the best one. Here’s a table to help you:
| Card Name | Annual Fee | APR | Credit Limit | Rewards |
|---|---|---|---|---|
| Discover it® Secured | $0 | 22.99% | $200 – $2,500 | Cashback |
| Capital One® Secured | $0 | 26.99% | $200 – $1,000 | None |
| OpenSky® Secured | $35 | 17.39% | $200 – $3,000 | None |
Each card has its own benefits. Consider what features are most important to you.
Choosing the right secured credit card requires careful consideration. Use this guide to make the best choice for your needs.
Benefits Of Using Secured Credit Cards
Secured credit cards offer various benefits for students. These cards help build credit history and manage finances. Let’s explore the key benefits.
Building Credit History
Using a secured credit card helps students build their credit history. Credit bureaus receive regular reports on card usage. Paying bills on time boosts your credit score. A good credit score is essential for future loans.
Here are some ways secured credit cards help build credit:
- Reports to major credit bureaus
- Teaches responsible credit usage
- Helps establish a credit score early
Managing Finances
Secured credit cards assist students in managing their finances. They provide a controlled spending limit based on the deposit. This prevents overspending and encourages budgeting.
Key benefits of using secured credit cards for managing finances:
- Controlled spending limits
- Helps track expenses
- Encourages saving habits
Secured credit cards are a great learning tool. They teach students how to handle credit responsibly. This financial education is invaluable for their future.
Potential Drawbacks
Secured credit cards offer several benefits to students. Yet, it’s important to understand their potential drawbacks. This section highlights some key issues students may face.
High Fees
Many secured credit cards come with high fees. These fees can include:
- Annual fees
- Application fees
- Monthly maintenance fees
High fees can make it hard to manage expenses. Always check the fee structure before applying.
Limited Rewards
Secured credit cards often offer limited rewards. Unlike regular cards, they may not provide:
- Cashback
- Travel points
- Shopping discounts
This can be a downside for students looking to get more from their spending. Make sure to weigh the benefits against the limitations.
Tips For Maximizing Benefits
Secured credit cards are excellent tools for students. They help build credit history and teach financial responsibility. To get the most benefits, students must use these cards wisely. Here are some tips for maximizing benefits.
Responsible Spending
Responsible spending is crucial for maximizing the benefits of secured credit cards. Set a budget and stick to it. Avoid impulse purchases and plan your spending. Track every expense to ensure you stay within your limits. This practice helps you avoid debt and manage money better.
Use the card for small, regular expenses like groceries or gas. Pay off the balance each month. This shows you can handle credit and builds a positive credit history. Keep the credit utilization low. Ideally, use less than 30% of your available credit.
Paying On Time
Paying on time is vital for a good credit score. Late payments can hurt your credit score and incur fees. Set up reminders or automatic payments to ensure you never miss a due date.
Always pay at least the minimum amount due. Paying the full balance is better. This avoids interest charges and keeps your debt in check. Consistent, on-time payments show lenders that you are responsible.
Common Myths
Many students avoid secured credit cards due to misconceptions. These myths often prevent them from taking advantage of these useful financial tools. Let’s debunk some of the most common myths.
Myth 1: Secured Cards Are Only For Bad Credit
It’s a common belief that secured cards are only for those with bad credit. This is far from the truth. Secured cards are also ideal for students with no credit history. They help in building a credit score from scratch.
Secured cards work similarly to regular credit cards. The difference is the security deposit. This deposit acts as collateral. It helps the bank reduce risk. Therefore, they are a great option for students new to credit.
Myth 2: They Don’t Offer Rewards
Another myth is that secured cards don’t offer rewards. In reality, many secured cards provide rewards. These rewards can be in the form of cashback, points, or travel miles.
For example, some cards offer 1% cashback on all purchases. Others provide higher rewards on specific categories like groceries or gas. Students can benefit from these rewards while building their credit.
Frequently Asked Questions
What Is A Secured Credit Card?
A secured credit card requires a cash deposit as collateral. This deposit acts as your credit limit.
How Do Secured Credit Cards Help Students?
Secured credit cards help students build credit history. They offer a manageable way to learn financial responsibility.
Are Secured Credit Cards Easy To Get?
Yes, secured credit cards are easier to get than traditional ones. They require a cash deposit, reducing lender risk.
Do Secured Credit Cards Have Rewards?
Some secured credit cards offer rewards. However, rewards are usually less generous compared to unsecured credit cards.
Conclusion
Choosing the right secured credit card helps build a strong credit history. Students should consider options with low fees. Benefits like cashback and rewards add value. Compare features and read reviews to make an informed decision. A good secured credit card can set the foundation for future financial success.
