Are you trying to establish or rebuild your credit score? Do you need a credit card but your credit report is less than stellar?
Many cards and personal loans have high minimum score requirements. Some require hefty security deposits, which makes them an impossible option.
But rebuilding your credit score may be easier than you think. Likewise, establishing your credit for the first time doesn’t have to be overwhelming.
The Capital One Secured Card is designed for those looking for a fresh start. There’s no annual fee and you’ll receive many of the same benefits as any MasterCard holder.
Here’s our review to help you decide if this card can help you reach your financial goals.
The Basics
Before you start shopping around, it’s important to know what you should be looking for. A secured credit card is one way to build or rebuild your credit and is often a viable option for those with poor credit. A secured credit card requires a security deposit, to be refunded with responsible use of the card.
The security deposit will be used as collateral on your new secured credit card in the event that you default on your payments. Of course, the idea is not to allow this to happen, so it’s important that you only request this type of card when you’re ready.
Many cards require you to pay a security deposit equal to the amount of your credit limit. These same cards might charge an annual fee and their interest rates are sky high.
The Capital One Secured Card works a little differently.
While this is a secured credit card, it’s intended to help you earn a successful track record with the three major credit bureaus. Capital One has done their best to make this card simple to request, and simple to use. Read on to understand more about how this card works.
The Pros
As with many secured credit cards, you won’t need a minimum credit score to qualify for the Capital One Secured Card. This card is recommended for anybody with a credit score rated between 50 and 629. That means, all you have to do is request the card and if approved, wait for your new card in the mail.
Your initial credit line will be based on your credit score and will depend on your initial security deposit. You’ll also be eligible for a credit limit increase after 5 monthly on-time payments. There is no security deposit required for the credit limit increase.
There are many benefits of being a Mastercard holder. And, your Capital One Secured Card is accepted anywhere Mastercard is taken.
Enjoy extended warranty protection on items that you buy with your card. This service is free. You’ll also enjoy auto rental insurance, travel accident insurance, 24-hour roadside assistance, price protection and more.
Auto rental insurance covers damages from collision or theft. Travel insurance covers loss of life or limb if you use your card to purchase your fare and something happens on your getaway. Price protection is a nice feature that reimburses you a difference in price if you find it lower within 60 days of purchase.
These features alone are worth carrying this card in your wallet.
If you’re approved, you will receive a notification indicating the security deposit amount required to open your card. You can fund your card with up to $3000.
Payments are made easy online or via a mobile app so you can keep track of your monthly spend. CreditWise monitoring also helps you maintain your credit and watch your score improve as you make good financial decisions.
The Cons
The security deposit for the Capital One Secured Card ranges depending on your credit score. The lowest tier is $49 to get started with a $200 initial credit limit. You might pay $99 or $200 for this initial credit line if your credit history is significantly impaired.
The security deposit may be paid in installments before you receive your card. Or, if you pay the entire deposit at once, you can expect your card in the mail within 2-3 weeks.
Your security deposit will be refunded once you show responsible use with your card. Don’t miss a payment.
The Capital One Secured Card offers a variable APR of 24.99% on all purchases and cash advances. You’ll need a bank account to get started. If you don’t have one, you’ll be denied.
The Verdict
The Capital One Secured Card carries an overall rating of 4.3 out of 5. It requires a minimum security deposit that is less than most other cards available for this credit tier. However, the interest rate is on the higher end.
There are no rewards available with this card. But, there is also no annual fee attached. Therefore, once you pay the security deposit and make your monthly payments, you’re a verified card holder.
Reviews from consumers on this card generally fall into the positive category. Consumers are enthused to have an option that allows them to carry a credit card and work toward better and more credit.
If you’re trying to establish or rebuild your credit, this could be the right fit for you. You can request this card just as you would a traditional credit card. And, you could see approval results immediately.
Don’t hesitate to rebuild your credit if you haven’t already started. If you’re just starting out with credit for the first time, this is a great card to help you learn the ropes. Good credit is about self-discipline and control and the moderate security deposit can be a helpful reminder.
Remember, you need a healthy credit score if you ever want to buy a car or a house. The Capital One Secured Card is a step in the right direction.
For more tips and information to help you get a fresh start and manage your personal finances, check out our Learning Center today!