Do You Need to Build Your Credit? The Capital One Secured Card Can Help
Secured credit cards require an upfront cash deposit that becomes your line of credit. If approved for a $200 deposit, you would have access to a $200 credit limit. The deposit shows the issuer you have funds to draw from if payments are ever missed.
As you show good use and payments over time, the issuer may upgrade your account to an unsecured card and refund your deposit. Building positive history can also help boost your credit scores.
Secured cards offer the card network benefits (i.e. Visa, Mastercard, etc) and protections of traditional unsecured cards. The key difference is the need for a deposit to initiate credit privileges.
Capital One Secured Credit Card Key Features and Benefits
The Capital One Secured Credit Card provides these features tailored for establishing and building credit:
- No minimum-security deposit required. Capital One approves limits from $200 to $1,000 based on your qualifications.
- Reports your monthly payment history to all three major credit bureaus to help build your credit profiles.
- After 5 months of consecutive on-time payments, you may qualify for a higher credit limit without needing to add to your original deposit amount.
- Access your monthly TransUnion credit report through your account. Watch your credit evolve.
- Online and mobile tools to manage your payments, track spending, set customized alerts and more.
- U.S.-based customer service available to assist with any account needs.
- No foreign transaction fees on purchases made outside the U.S.
For those new to credit, the Capital One Secured Card aims to provide a gradually expanding line as you demonstrate responsible usage. And the lack of an annual fee prevents your costs from creeping up as your credit access expands.
Fees to Keep in Mind
Like a traditional credit card, you’ll want to be aware of certain fees when using a secured card to avoid unnecessary costs. The fees associated with the Capital One Secured Credit Card include:
- Annual Fee: $0
- Monthly Fee: $0
- Late Payment Fee: Up to $38
- Returned Payment Fee: Up to $38
As long as you pay your monthly bill on time and avoid returned payments due to low account balances, using the Capital One Secured Card does not cost anything beyond your purchases and deposit amount. There are also no cash advance fees, which some secured cards carry.
The big factor that determines your overall cost is the annual percentage rate (APR), which is 26.99% variable for the Capital One Secured Card. This rate is at the higher end but typical for secured cards catering to applicants establishing credit for the first time. Paying your monthly bill on time and in full prevents this rate from applying beyond the deposit funds you’ve provided access to.
Who is Eligible to Apply?
The Capital One Secured Card is designed for consumers with limited credit history who want to build credit from the ground up. Approval requirements include:
- No credit history, limited history, or damaged credit
- No recent bankruptcies or accounts in collections
- At least 18 years of age
- Valid Social Security Number
- U.S. residential address
The secured card is intended for those with little to no existing credit profile. If you have no FICO score or a score below 600, you meet the target eligibility.
Your applications are evaluated based on income, employment, and other details indicating you can manage moderate monthly payments.
How to Apply for the Capital One Secured Card
Applying online for the Capital One Secured Card is very easy and takes just a few minutes:
- Visit CapitalOne.com and navigate to the Secured Card page. Click “Apply Now”.
- Provide personal identification information including SSN and date of birth.
- Enter your employment details including income and housing payment amounts.
- Review the disclosures and terms and electronically accept them to proceed.
- Verify your details and submit your application for processing.
- Receive an instant decision, typically in under 1 minute after submission.
Once approved, you can immediately move forward with securing your deposit and accessing your new line of credit. It’s the first step to building up your established credit history and FICO score.
Guide to Make Payments
Once your Capital One Secured Card is activated, you can login online or via the mobile app to manage your account and make payments:
- Visit CapitalOne.com or open the Capital One mobile app
- Enter your account username and password
- Select “Make a Payment” from the account menu
- Choose whether to pay your total balance, minimum amount due, or a custom amount
- Enter your debit card details or bank account information
- Review payment details and submit
- Your payment will process immediately
Setting up recurring automatic payments through your online account is also an option to help ensure on-time payments.
How Does the Capital One Secured Card Compare to Other Options?
The Capital One Secured Mastercard is an excellent choice but not the only secured card worthy of consideration. Some alternatives to compare include:
- Discover it® Secured Card – Rewards program offers cash back match after first year. Requires security deposit.
- Bank of America® Secure Credit Card – Reports to all three credit bureaus. Monthly maintenance fee.
- OpenSky® Secured Visa® Credit Card – No credit check required but higher fees than other options.
- Chime Credit Builder Secured Visa – Requires security deposit and direct deposit account with Chime. No rewards.
The Capital One Secured Card stands out with no monthly fees, rewards potential after graduating to an unsecured card, and tools to monitor your credit progress. Compare options thoroughly as you select the optimal secured card for building credit.
Should You Consider a Secured Credit Card?
As you look to establish credit history and lift your credit score, a secured credit card can provide a key starting point if used diligently. Make sure you understand the costs, terms, and responsible usage requirements before committing to any card.
Having a plan to graduate from the secured card over 6-12 months prevents long-term costs from accruing as your credit profile expands. Used properly alongside checking your credit reports and scores regularly, a secured card puts you on the path to unlocking other financial opportunities.