Secured Card Choice

Best Secured Credit Cards with Rewards

Credit card rewards have been extremely competitive for years. Cardholders have developed certain expectations – lucrative cash back options, free flights and hotel stays, exclusive discounts, lounge access, and much more. While these rewards are available for certain credit cards, they aren't available on many secured cards. Let's explore the best secured cards with rewards, along with tips to help you get the most from your secured card.

Best Secured Credit Cards with Rewards

Think about It: Building Credit Is the Reward!

Secured credit cards are made for building credit. That is their reward. If you're looking for a secured card, chances are your credit isn't in a place to qualify for traditional rewards cards. You can still get perks from your card, such as low interest rates or your on-time payments being reported to the credit bureaus. But cash back rewards, travel points and loyalty programs aren't necessarily available with secured credit cards.

Once you boost your credit score with a secured card, you may be able to qualify for an unsecured rewards card.

Best Secured Cards with Rewards

These secured credit cards may not specifically have rewards programs, but they have unique perks that set them apart. Check out these secured credit cards with special features:

Assent Platinum 0% Intro Rate Mastercard® Secured Credit Card

The Assent Platinum 0% Intro Rate Mastercard® Secured Credit Card® is one of the only secured cards available with 0% APR for the first six months. This intro period is followed by 12.99% variable APR, which is still low compared to other options. Credit lines can be as high as $2,000 with corresponding security deposit, and payments report to all three credit bureaus.

OakStone Platinum Secured Mastercard®

The OakStone Platinum Secured Mastercard® offers credit lines up to $5,000, and there is no minimum credit score required for approval. Cardholders are eligible to open a personal savings account in addition to the secured card. The APR for the card is just 9.99%. The card reports to all three credit bureaus.

OpenSky® Secured Visa® Credit Card

The OpenSky® Secured Visa® Credit Card has a strong community of followers on Facebook. Cardholders share their credit building tips with one another and support each other in a free online forum. The annual fee is just $35, and the card reports to all three credit bureaus.

How to Get the Most from Your Secured Credit Card

Even if you can't get actual 'rewards' from your secured card, you can increase your secured card benefits. By using your card strategically, you can maximize the card's effect on your credit score while lowering your carrying expenses. Check out these tips for getting the most out of your secured credit card.

Treat Your Secured Card Like a Credit Card

One of the biggest mistakes you can make with a secured card is treating it like a debit card or prepaid card. At the end of the day, your card payments are going to be reported to the credit bureau, whether you make them on time or not. Yes, you fund the line of credit, but you still have to pay off your transactions while the account is open. Don't get in the mindset that you can miss a payment without penalty. That is a recipe for disaster.

Respect the fact that your secured card is a credit card. Payments are due by the due date. Interest will be applied to any balance you carry from one month to the next. The card can have annual fees, cash withdrawal fees, late payment fees, and other costs you need to be aware of while you are a cardholder. Using your card correctly is the first step toward building your credit.

Diligently Make Your Payments on Time

Payment history makes up a third of your credit score. By making your payments on time each month, you have the best chance at boosting your credit score quickly. Set a calendar reminder on your phone or arrange for automatic payments if possible. Do whatever it takes to make sure you make your payments by the due date each month. If you can pay off the whole balance at that time, that's great! If not, at least make the minimum payment by the due date.

If you are going to be late on a payment, contact your credit card issuer right away. Ask if you can have a payment extension or make a partial payment to keep the account in good standing. The goal is to avoid having a late payment on your credit report, and to show your card issuer that you are actively managing your account. Ignoring the payment altogether can do significant damage to your credit score.

Use Your Card for Daily Purchases – Then Pay off the Balance

Paying off your balance each month doesn't have to be a daunting task. Use your secured card instead of cash or your debit card. Hold on to the money you would have spent, and then use it to pay off your card balance when the time comes. Once you make this a habit, you can show consistent card activity, including complete payments. This also avoids interest, which will save you money in the long run.

Increase Your Credit Limit If You Can

With a secured credit card, you are somewhat in control of how high the credit limit is. If you are successfully managing your $500 limit and have an additional $500 to put onto the card, increase your credit limit. This will help in several ways:

  • A higher credit limit means a lower credit utilization rate. This is the ratio of used credit vs. total credit available. If you carry a balance of $500 and only have $500 available, you're utilizing 100% of your credit. If you carry that same $500 balance on a $1,000 credit line, you're only utilizing 50%. Your goal is to keep that number under 30% if possible.
  • Successfully handling a higher credit limit will show card issuers that you can be trusted with a higher line of credit when you apply for a different credit card.
  • The higher limit also gives you more money to use in the event of an emergency. Just remember that you have to pay it back like you would with a traditional credit card.

Of course, if you're struggling to manage the credit limit you already have, do not increase it. Also do not increase your limit if doing so would put you in a bad place financially. This will only benefit you if you can still make your payments on time and cover all your bills.

Don't Make a Purchase You Can't Repay Quickly

Think carefully about the purchases you make on your secured card. Once again, this is a credit card. If you cannot pay off your balance in a timely manner, you will incur a significant amount of interest. That adds up every month. Before you make a big purchase, think about how long it will take to realistically pay it back. You may need to wait a few more months before making the commitment.

Be Patient – Credit Building Takes Time

Your credit score isn't going to transform right away. It will take months for your efforts to make a difference on your credit reports, but do not get discouraged! You will see positive changes if you make your payments on time and manage your credit card wisely. Trust that your hard work will pay off.

Can I Upgrade to an Unsecured Credit Card with Rewards?

Your secured credit card could lead to a rewards credit card. This may take months or even years, depending on your credit history, but it can certainly be done. Here are some quick tips to consider in making that transition to an unsecured credit card:

  • Wait 6-12 months before switching to a new credit card. This is a good rule of thumb whether you're graduating to an unsecured card or just switching cards in general. You want to have several months of on-time payments on your credit before you pursue a new credit card.
  • Consider keeping your old card account open. This is not always ideal if your card has a high annual fee, but it does have certain benefits to take into account. The length of your credit history contributes to your credit score, and having an open, unused card can also lower your credit utilization rate.
  • Be aware of the fees on your rewards card. Many rewards cards come at a cost, such as a high annual fee or a high interest rate. Before you apply for a new card, make sure you understand the fee structure.
  • Learn how the rewards actually work. Does the card offer consistent rewards throughout the year, or changing rewards every quarter? If there are revolving categories, you'll need to see if those categories match your spending habits. Otherwise, you may end up with rewards you can't naturally earn.
  • Find a rewards program that matches your lifestyle. Cash back cards work for most people, but travel cards are more selective. If you're in a position to transition, make sure you choose the right type of rewards program.
  • If you don't qualify at first, continue to work on building your credit. Maybe you applied too early and your credit score just isn't where it needs to be yet. Don't fret. You can keep building your score with smart money habits.

All of the cards featured here on Secured Card Choice report payments to Experian, Equifax and TransUnion. They all provide excellent credit building opportunities, which could lead to the rewards card that you desire. Apply for a card today to start building your credit.