For those of you who have never established credit (or have poor credit) and you want a credit card, you may need to start out with a secured credit card and work your way up to an unsecured one.
A secured card is a card that requires you to make a cash collateral deposit that becomes the credit line for that account. The bank holds this security deposit just in case you don’t pay your bill. You can charge up to the amount of that deposit. Cards usually require a deposit amount from about $300-$500.
Despite the fact that you need to put down a deposit, you are building up your credit history as you use the card and pay it off. You can usually qualify for an unsecured card (with good behavior) after about a year.
Many banks offer secured credit cards. Here are some that are available…
The Citi Secured Credit Card has no annual fee. To get approved for this card, you must meet Citi’s credit qualification criteria, which includes a review of your income and your debt. In addition, to be approved, you must not have any bankruptcy history within the last two years.
If you are approved for the card, provide a security deposit for the amount of your credit limit, between $200-$2,500. Your security deposit must be equal to the amount of your credit limit. Your security deposit will be held in a Collateral Holding Account for an initial term of up to 18 months and will not earn interest. Unless Citi determines your account is eligible to have your deposit returned, you must keep your CHA open for the full 18 months. Note, if you are in default, you risk losing your security deposit in the amount of the outstanding credit card balance and having your account closed.
The Discover it Secured Credit Card has no annual fee. The card requires a refundable security deposit up to the amount you are approved for of at least $200 which will establish your credit line. You will need to provide your bank information when submitting your security deposit. Discover will automatically begin reviewing your account starting at 8 months to see if you can be transitioned to an unsecured line of credit.
With this card, there are spending bonuses too. You earn cash back on every purchase. You earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus, you earn unlimited 1% cash back on all other purchases.
Currently there is an INTRO OFFER where Discover will match ALL the cash back you’ve earned at the end of your first year, automatically.