The Capital One® Secured Mastercard® is a secured credit card, meaning it requires a cash security deposit in order to open the account. It’s a practical tool recommended for those who need to build credit for the first time, or those who had bad credit in the past.
The idea behind “secured cards” is that card users prove over time they can use credit responsibly. The security deposit is collateral – it reduces risk to the issuer. The initial deposit you have to make is refundable when you close the account.
With the required security deposit you get an initial $200 credit line. You’ll be able to access a higher credit line after making 5 monthly payments on time. You have the option to deposit more money before your account opens to get a higher credit line.
The issuer, Capital One, is the United States’ fifth-largest consumer bank.
The Essentials of the Capital One® Secured Mastercard®
- APR: A flat 26.74% variable APR if you don’t pay the balance in full each month. This may vary with the market, based on the prime rate.
- Annual fee: $0
- Primary feature: Card owners can build or rebuild credit history. A minimum deposit of $49, $99 or $200 depending on your financial situation is required. This provides a $200 credit line which can be increased when your payment history is good.
- Introductory bonus offer: None
What’s Interesting about the Capital One® Secured Mastercard®
If you’re new to buying on credit, or you need a reboot of past credit history, the additional benefits of the Capital One® Secured Mastercard® help you manage your finances and avoid credit problems.
- Account alerts let you set up personalized prompts by text or e-mail to help you keep on top of what’s happening with your account.
- Autopay lets you set up payments automatically so you never miss a deadline.
- Pick your own monthly due date and payment method.
- Easily view monthly recurring transactions such as bills or subscriptions.
- Add an authorized user to your account and track expenditures by user.
- If you have existing balances (with other lenders) that have higher interest rates, you may be able to transfer the balance to your Capital One card.
- Customer Service representatives are available to assist you 24 hours a day.
- You may be eligible for other benefits like no foreign transaction fees, travel accident insurance, 24-hour travel assistance services, emergency replacement card or cash advances, or extended warranties on items purchased with your card.
Things to Consider
If you already have good credit, there’s no need to use this type of credit card. You’d be better off getting a card with cash, mileage, or other rewards built in.
You must have the cash available to make a security deposit. When approved for the Capital One® Secured Mastercard®, you’ll be notified of the security deposit amount required for your account. It’s a sliding scale that depends on your financial/credit situation.
For those who aren’t able to get other types of credit cards, though, you can view this as a great option with a specific goal. It’s going to take some time to prove your creditworthiness, but once you do that, you’ll be on your way to a credit history that can open doors for you.
How to Get the Most from the Capital One® Secured Mastercard®
Just out of school, with no credit history? Didn’t do a good job with credit in the past? Dealing with no credit history is easier than fixing a bad credit history, but no credit at all can make it difficult to get a lease or be approved for a loan.
If you fit any of the above categories, you’re an excellent candidate for this card. With thoughtful use, you can get your credit history off to a fresh start. Consider how much you can afford to put up as a security deposit, and then take advantage of the planning and scheduling tools, alerts, and notifications that come with the Capital One® Secured Mastercard® so you never miss a payment.
After making your first five monthly payments on time, you can request a higher credit line. You can gradually improve your credit rating as you continue to build a good history. If you’re able to, deposit more money than the required security deposit before your account opens in order to get a higher credit line.
The interest rates on this card are high, which is not surprising since the issuer is taking a risk on you. Be sure to pay off the balance each month so you don’t end up with steep additional costs.
Other Card Options That Might Interest You
Capital One doesn’t offer any other secured cards, but there are other issuers who do. These cards are specifically for the purpose of building credit for customers with little or no credit history, or a bad credit rating in the past.
The Citi® Secured Mastercard® has no annual fee. Unlike using a debit card, this one helps build or rebuild your credit history, because it includes monthly reporting to all three major credit bureaus.
A security deposit will be required to open the Citi® Secured Mastercard® account. The amount of your security deposit is the same as your credit limit, between $200 and $2,500. The APR and balance transfer rates are quite high for any of these cards. This one in particular carries a variable rate of 23.99%, so make sure you’re able to keep up with the payments.
Another secured credit card is the OpenSky® Secured Visa® Credit Card. Its APR is lower at 18.89%, but it also requires paying an annual fee of $35. The deposit you provide as security becomes your credit line limit. You can choose the amount, from as little as $200.
OpenSky® notes that “99% of our customers who started without a credit score earned a credit score record with the credit bureaus in as little as 6 months.” They also have a Facebook community with a forum to share experiences and insights.
The Final Word
If a major credit card has simply been out of reach for you, a good place to begin the credit journey is with the Capital One® Secured Mastercard®. The required deposit is a relatively low-cost investment that you’ll eventually get back.
Taking this first step can move you closer to a positive credit history. Prove your ability to make consistent payments, and don’t forget to take full advantage of the account alerts, auto-pay and other tools to help ensure that you stay on track.