Advertiser and Editorial Disclosures

Advertiser Disclosure: Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all account options available. *APY (Annual Percentage Yield).
Rates / Annual Percentage Yield terms are current as of the date indicated. Rates are subject to change without notice and may not be the same at all branches. These quotes are from banks, credit unions, and thrifts, some of which have paid for a link to their website. Bank, thrift, and credit unions are member FDIC or NCUA. Contact the financial institution for the terms and conditions that may apply to you.

Editorial Disclosure: This content is not provided or commissioned by the bank advertiser. Opinions expressed here are the author’s alone, not those of the bank advertiser, and have not been reviewed, approved, or otherwise endorsed by the bank advertiser. This site may be compensated through the bank advertiser Affiliate Program.

Updated: May 23, 2023

Consider a Secured Credit Card

If you are struggling with bad credit, you can do some research on a secured credit card. In order to open a secured credit card, you must make an initial down payment against the card's credit limit.
Contents
Get Rates Near You!
Please enter valid 5-digit zip code

If you are struggling with bad credit, you can do some research on a secured credit card. In order to open a secured credit card, you must make an initial down payment against the card's credit limit.

What does a secured credit card entail?

Your credit limit will usually be a percentage of your security deposit or it may be the same as your deposit. Many banks will place your deposit into an interest-bearing savings account or CD until you close your account, are able to upgrade to an unsecured credit card, or default on your credit card balance.

Secured credit cards are used just like regular credit cards. Purchases reduce your available credit and you're required to make monthly payments on your balance. You can avoid paying finance charges by paying your balance in full each month if your card doesn't have a grace period. Just like regular credit cards, late payments and over-the-limit transactions are penalized with a fee.

Most people with bad credit use this type of credit card to build it back into good standing. Just make sure you pay your bills on time and use the card responsibly.

Ideally, you want to open a secured credit card where the down payment collects interest.

Why secured credit cards may be your only option

Lenders do not like opening new accounts for people who have a history of failing to pay their bills on time. Secured credit cards offer a solution for people who cannot open a credit card elsewhere. A lender feels safe opening a credit card account for you when a down payment is made. If you fail to make payments on your secured credit card, the lender will simply take the money you used as a down payment to pay the balance.

Give me feedback - did you enjoy this article?
Oops! What was wrong? Please let us know.