With a secured credit card, you’re going to pay a security deposit one way or another. And the bigger the deposit you can afford to plunk down, the more options available to you. Here’s a look at two popular secured cards — one that offers an unusual degree of flexibility with deposits, and one that requires the whole deposit in one lump sum but offers really great perks.
» MORE: NerdWallet’s best secured credit cards
Lower deposits are more accessible
The Capital One® Secured MasterCard® allows you to put down a security deposit of $49, $99 or $200 for a beginning credit limit of $200, depending on your qualifications. Most secured cards require a deposit equal to your credit limit in all cases, so the opportunity to put down only $49 or $99 for a $200 limit is noteworthy. In addition, you can pay your deposit in installments of $20 or more before the card is activated, allowing you to spread it across multiple paychecks. That’s especially helpful if you want a credit limit higher than $200, which will require a higher security deposit.
Other details:
- An annual fee of $0.
- No foreign transaction fees.
- The ongoing APR is 24.99% (Variable).
» MORE: Our full review of the Capital One® Secured MasterCard®
A higher deposit can be rewarding
The Discover it® Secured Credit Card – No Annual Fee offers a credit line of $200 to $2,500. But unlike the Capital One® Secured MasterCard®, the Discover it® Secured Credit Card – No Annual Fee requires a deposit equal to your credit line, and you must pay it all at once. However, the Discover it® Secured Credit Card – No Annual Fee has a major feature that sets it apart from nearly every other secured credit card: a generous rewards structure. You’ll earn 2% back on up to $1,000 spent at restaurants and gas stations each quarter, and 1% back on all other purchases.
Other details:
- An annual fee of $0.
- No foreign transaction fees.
- Introductory APR of 10.99% on balance transfers for 6 months, and then the ongoing APR of 23.24% Variable.
» MORE: Our full review of the Discover it® Secured Credit Card – No Annual Fee
The Discover it® Secured Credit Card – No Annual Fee vs. the Capital One® Secured MasterCard®
The cards are about the same in terms of fees, and both report your activity to all three credit bureaus. Neither card charges a foreign transaction fee, although Discover’s acceptance abroad is limited.
But Discover won our Nerdy hearts with this card because of a few other details.
Free FICO score access. Watching your score climb can help you stay motivated to keep improving your credit history, and Discover gives you free access on your monthly statements and on its website. While Capital One does provide access to the VantageScore 3.0 through its CreditWise tool, the FICO score remains by far the most widely used among lenders.
It’s easy to upgrade. After you’ve had the Discover it® Secured Credit Card – No Annual Fee for a year, Discover will initiate monthly reviews on your account to see whether you’re ready to graduate to an unsecured card. You’ll be able to keep the same account, which is better for your credit score than opening a new account, as you would have to do with Capital One. When you upgrade, you’ll be able to keep the rewards you’ve already earned.
Balance transfer offer. Both cards charge fairly high interest, but the Discover it® Secured Credit Card – No Annual Fee has an introductory period offering lower interest on balance transfers. Keep in mind that you’ll pay a 3% fee to move your balance.
Waived late fee. The first time you pay your bill late, Discover will waive the fee.
» MORE: What to look for in a secured credit card
Where the Capital One® Secured MasterCard® wins
The possibility of a lower security deposit is a valuable feature. If tying up less cash is important to you, or if you need the option of building up your deposit over time, it may be worth applying for the Capital One® Secured MasterCard®. Be aware, though, that not all applicants will be approved for the lower deposit.
If you can come up with the higher deposit, the Discover it® Secured Credit Card – No Annual Fee offers the chance to earn rewards while you’re rebuilding your credit, along with a clear path to an unsecured card in the future. That’s a pretty compelling combination.
Virginia C. McGuire is a staff writer at NerdWallet, a personal finance website. Email: virginia@nerdwallet.com. Twitter: @vcmcguire.
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