Consumer Payment Card News

Best Credit Builder Cards

IT CAN HAPPEN TO ANYONE — You had a healthy credit score but you screwed up with bad personal finance management or unforeseen things happened like humongous medical bills, a business that fizzled after you worked your butt off or you got hammered in a bad divorce . . . blah, blah, blah. Maybe you are just trying to build a credit history without the high costs of some rip-off credit card programs that show up in the mail.

Building or re-building a good credit history is not rocket science.

Here are the common sense basics (that some dub “secrets”).

If you want to establish a credit record that will provide a banker type with some comfort to advance you a large loan for bigger stuff like a car or house, then open a checking account and a savings account. It is vital to keep both of these accounts in impeccable order – no bounced checks, no overdrawing or bad deposits. You do not need to keep a big balance in the savings account – but make regular deposits, even as low as $10 a month. If possible, keep the checking account balance at a level that will avoid monthly service charges. Also avoid making unflattering charges with the debit card linked to your checking account, such as liquor purchases, high end stores, or any regrettable impulse purchases. Make sure the money going into and out of your bank accounts makes sense with your income. All of this may haunt you if you apply for a large loan that requires prior banking statements.

The next step is applying for a secured bank credit card that is reported to all three major credit bureaus (Experian, Trans Union and Equifax). Stay away from any credit cards that offer you an unsecured small credit line with big fees. (For example review this CardTrak article published this year regarding the worst bank credit card: WORST CREDIT CARD 2013 – FEBRUARY 19, 2014. (https://cardtrak.com/data/94713/worst-credit-card-2013/)

The drawback for a secured bank credit card is you have to cough up a security deposit to guarantee the account. The minimum is usually $200 to $300 to get the account going. However, a low credit limit will not impress a future potential creditor. The two suggestions are to raise your credit limit by depositing more security funds, usually up to a maximum of $3,000 to $5,000, and to keep the outstanding balance on the account to less than 50% of the credit line.

Future creditors look to your credit score as a measure of your character and reliability to handle debt. A $300 credit limit on bank credit card that is always maxed out is, for the most part worthless to building or rehabbing credit. Same goes for most store credit cards with low limits. On the other hand, a $3,000 credit line on a major credit card with a $1,500 outstanding balance and no late payments will greatly boost your credit score.

Next “secret” is to obtain at least two secured bank credit cards and perhaps a good automobile loan that is reported to all three credit bureaus.

If you have three solid credit accounts, a checking account and a savings account, a job, a phone, and hopefully a heart beat, then the credit world will warmly open to you.

This common sense strategy can be applied to consumers who have filed bankruptcy or have nasty stuff in their credit files like repossessions, charged-off loans, court judgements, tax liens, etc.

The best secured bank credit cards offer a reasonable interest rate and annual fee. The very best is the secured MasterCard or American Express cards from USAA, which pay interest on your security deposit while offering very attractive pricing.

CardTrak has assembled a short list of the best secured bank credit cards in the U.S., ranked by overall desirability.

#1. USAA PLATINUM SECURED MASTERCARDBest Credit Builder Cards
APR: 9.90% (VARIABLE)
ANNUAL FEE: $35.00
APPLICATION/ACTIVATION FEE: NONE
MINIMUM SECURITY DEPOSIT: $250
MAXIMUM SECURITY DEPOSIT: $5000
SECURITY DEPOSIT INTEREST: YES
CREDIT BUREAU REPORTING: ALL 3

#2. USAA SECURED AMERICAN EXPRESS CARD
APR: 9.90% (VARIABLE)
ANNUAL FEE: $35.00
APPLICATION/ACTIVATION FEE: NONE
MINIMUM SECURITY DEPOSIT: $250
MAXIMUM SECURITY DEPOSIT: $5000
SECURITY DEPOSIT INTEREST: YES – 2YR CD
CREDIT BUREAU REPORTING: ALL 3

#3. FIRST PROGRESS PLATINUM SECURED MASTERCARD
APR: 14.99% (VARIABLE)
ANNUAL FEE: $39.00
APPLICATION/ACTIVATION FEE: NONE
MINIMUM SECURITY DEPOSIT: $300
MAXIMUM SECURITY DEPOSIT: $2000 INITIALLY; $5,000 AFTERWARD
SECURITY DEPOSIT INTEREST: NONE
CREDIT BUREAU REPORTING: ALL 3

#4. CAPITAL ONE OPEN SKY SECURED VISA
APR: 17.50% (VARIABLE)
ANNUAL FEE: $29.00
APPLICATION/ACTIVATION FEE: NONE
MINIMUM SECURITY DEPOSIT: $200
MAXIMUM SECURITY DEPOSIT: $3,000 (AFTER 120 DAYS $5,000)
SECURITY DEPOSIT INTEREST: NONE
CREDIT BUREAU REPORTING: ALL 3

#5. BANKAMERICARD SECURED VISA
APR: 20.24% (VARIABLE)
ANNUAL FEE: $39.00
APPLICATION/ACTIVATION FEE: NONE
MINIMUM SECURITY DEPOSIT: $300
MAXIMUM SECURITY DEPOSIT: $4,999
SECURITY DEPOSIT INTEREST: NONE
CREDIT BUREAU REPORTING: ALL 3
SPECIAL PERKS: AFTER 12 MONTHS, YOU MAY QUALIFY TO HAVE YOUR SECURITY DEPOSIT RETURNED WHILE YOU CONTINUETO USE THE CARD.w

Leave A Reply