For people with bad credit, secured credit cards can be a helpful way to rebuild credit while also offering them a secure and convenient method of payment. Secured cards differ from other credit cards because they require the cardholder to pay a refundable security deposit, which typically becomes the amount of the card’s credit limit. Other than the security deposit and credit limit, secured credit cards work essentially the same way as any other credit card.
Secured card users receive a statement every month and must make a monthly payment. Also, the physical card is indistinguishable from other cards, so when you use your card to make a payment, no one will know that you aren’t using a standard credit card. Secured cards are often less expensive than the unsecured credit cards that are available to people with bad credit, which invariably have very high, nonrefundable fees. Another benefit of most secured cards is that the issuers report your balance and payment history to the three major consumer credit bureaus: Equifax, Experian, and TransUnion.
So if you’re using your card responsibly, it may help build your credit. Once your credit improves, your card issuer may allow you to move from a secured card to an unsecured card without closing your original line of credit. In fact, many secured card users find that after just a year of responsible use, they’re able to qualify for a standard, unsecured card. When that happens, they can close their secured card account and receive a refund of their deposit. Beyond building credit, there are other features for the top secured credit cards that may hold different value for different people. Whether you want to pay a smaller deposit, earn cash back or potentially get a high credit limit, there’s a secured card out there for you.
How we chose the top secured credit cards
To find the top secured credit cards, we first divided the market into the following six categories:
- Top secured cards requiring a smaller deposit
- Top secured cards earning flat rate cash back
- Small business secured cards
- Top secured cards for first year rewards
- High potential credit limit secured cards
- Simple secured cards
Then, we looked at more than a dozen major card issuers and credit unions to find the top cards in each of these subcategories. We included only cards that are available to all applicants, leaving out products offered by credit unions that not everyone can join. Since secured credit cards tend to be most appealing to applicants with poor or limited credit, the top secured cards don’t have an annual fee. And for each category, we looked at the most relevant factors. For example, the top secured small business card needs to have a large credit limit for business purchases, while the top secured cards for rewards must offer the most value for your spending. While credit card terms may change from time to time, the following rankings reflect information that was accurate in September 2021.
Top secured cards requiring a smaller deposit
Most secured cards require a security deposit of at least $200. But if you don’t have enough spare cash for that, a secured card with a smaller deposit minimum may be right for you. When we were looking at top secured cards requiring a smaller deposit, the amount of the deposit was obviously the most important factor, but we also wanted a full featured card from a reputable card issuer.
If you want a secured card requiring a smaller deposit: Capital One Mastercard
If you don’t have a lot of extra cash, putting down a smaller than average deposit on a secured card may be helpful. With the Capital One Mastercard, you may be able to put down a refundable security deposit starting at only $49 or $99 and still get a $200 initial credit line. (However, depending on your credit score, you might still have to make a $200 deposit.) After making on-time payments, cardholders may be able to earn back their security deposit as a statement credit. Cardholders will also be automatically considered for a higher credit line in as little as six months with no additional deposit needed. The variable APR for this card is 26.99% and there’s no balance transfer option. The card is open to applicants with limited or bad credit, and there’s no annual fee for this card.
Top secured cards earning flat rate cash back
Applicants used to have to forgo cash back rewards with a secured card, but now there are a few secured credit cards that do earn cash back. When choosing the top secured cards for earning cash back, we looked for a simple but effective earning structure, while balancing the other features that a cardholder would want from a secured card.
If you want a secured card for earning flat rate cash back: Bank of America Unlimited Cash Rewards Secured
The Bank of America Unlimited Cash Rewards Secured card has one of the most generous earning rates for a secured card. Cardholders earn an unlimited 1.5% cash back on all purchases. A minimum refundable security deposit of $300 (up to a maximum of $4,900) is required to open the account. The maximum credit limit will be determined by the amount of the security deposit, income, and ability to pay the credit line established. As a cardholder, your account will be reviewed periodically to determine if you qualify to have your security deposit returned. Qualification for that is based on your overall credit history, including your account and overall relationship with Bank of America, as well as other credit cards and loans. Not all customers will qualify to have their security deposits returned. There’s a 23.99% APR with this card, and balance transfers are allowed with a fee of 3% of each transaction and a minimum of $10. There’s no annual fee for this card.
Top secured cards for small business use
Individuals aren’t the only ones who could benefit from a secured card. Small business owners may want to take advantage of these offers as well. While there aren’t too many secured credit cards available specifically for small businesses owners, we looked through for one with a large credit line for business purchases as well as bonus features for small businesses.
If you want a secured card for small business use: Wells Fargo Business Secured Card
The Wells Fargo Business Secured Credit Card is a top choice for businesses with little to no business credit history or with past credit challenges. The card offers small business owners a credit line between $500 and $25,000, based on the amount of the security deposit. Small business owners who use the card responsibly over a period of time may be eligible to upgrade to an unsecured business credit card. Small business owners can choose to earn either cash back or points with this card. If you opt for cash back, the card will earn an unlimited 1.5% cash back on new purchases. Cash back will be credited to your account or to your eligible checking or savings account each quarter. With points, the card will earn 1 point on every $1 spent, plus 1,000 bonus points every billing cycle when you spend at least $1,000 on qualifying purchases. Points can be redeemed for things like gift cards, merchandise, and airline tickets, plus get a 10% points credit when you redeem your points online. Small business owners can add up to 10 employee cards, and there’s no annual fee for this card.
Top secured cards for first year rewards
Since secured cards are most useful for building, restoring, or establishing credit, it may not be necessary to hold them for a long period of time. That’s one reason that a top secured card that maximizes your first year rewards may be important to you. When we were looking at top secured cards for first year rewards, the first year rewards had to be much better than normal offerings on other cards, but it was also important that the card have valuable features and benefits and that it was issued by a reputable card issuer.
If you want a secured card for first year rewards: Discover it Secured Card
The Discover it Secured card is a top card for first year rewards, and it has a solid earning rate as well. The card has a refundable security deposit starting at $200. After eight months, you may automatically qualify to convert to an unsecured card and get your deposit back. The card also earns 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, and an unlimited 1% cash back on all other purchases. With the card’s Cashback Match feature, you get an automatic unlimited dollar-for-dollar match for all the cash back you’ve earned at the end of your first year, making it easy to earn substantial rewards during your account’s first year. This card has a 22.99% standard APR, but a 10.99% introductory APR offer for 6 months for balance transfers that post to your account by December 10, 2021. There’s no annual fee for this card.
Top secured cards with a high potential credit limit
Most secured cards have a small potential credit limit. But if you tend to make large purchases, then you may want to look for a secured card with high potential credit limits. Just keep in mind that to utilize a secured card’s high potential credit limits, you also probably have to make an equally high security deposit. When we were looking for the top secured cards with high potential credit limits, the credit limit was obviously the most important factor, but we also considered extra features.
If you want a secured card with a high potential credit limit: US Bank Secured Visa Card
With the U.S. Bank Secured Visa Card, your credit line is the same amount as your deposit, which can be up to $5,000. The deposit must be at least $300 and must be in hundred-dollar increments. Otherwise, this is a very simple card that doesn’t offer rewards for spending. It has a 23.99% standard APR and a 3% or $5 minimum balance transfer fee, whichever is greater. There’s no annual fee for this card.
Top simple secured cards
If you’re looking for a secured credit card, you may not need any bells or whistles. Sometimes, you just want a basic secured card without rewards that can encourage you to overspend or incur debt. For the top simple secured cards, we looked for cards with a credit limit that matched the security deposit for ease of use. Keep in mind that simplicity also means that these cards don’t offer rewards and may not include other benefits that similar cards might offer.
If you want a simple secured card: BankAmericard Secured Credit Card
The BankAmericard Secured Credit Card is a straightforward secured card from a major bank that doesn’t offer any rewards or special features. A minimum refundable security deposit of $300 (maximum of $4,900) is required to open this account. Your maximum credit limit will be determined by the amount of the security deposit you provide, your income, and your ability to pay the credit line established. Your account will be reviewed periodically to see if you qualify to have your security deposit returned. This card has a 22.99% APR and a balance transfer fee of 3% of each transaction, with a $10 minimum. There’s no annual fee for this card.
The takeaway
Building credit through secured credit cards can help you build up a positive credit history for when you’re trying to apply for a mortgage, car loan, apartment, or any other type of credit. By making timely payments and avoiding debt, you may be able to build or rebuild your credit more quickly and easily than you might have thought.
This article originally appeared on lanterncredit.com and was syndicated by MediaFeed.org.
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25 smart ways to split household expenses
Having roommates can be a great way to reduce your monthly living expenses. It can also mean living in a bigger apartment or a nicer area than you could otherwise afford.
But negotiating finances with friends (or strangers) also comes with potential pitfalls, especially if you have roommates who don’t always pay what they owe, when they owe it.
Luckily, whether you already won the roommate lottery or are just trying to make the best of living with someone you barely know, figuring out how to share roommate expenses doesn’t have to be hard.
What follows are tips for splitting expenses with roommates so that everyone feels like things are fair in your household.
These 25 strategies can help ensure that monthly expenses get divvied up fairly–and everyone is on the same page from the moment you first move in together.
Related: How to split bills with roommates
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Whether you and a friend are moving in together for the first time or you already live together and you’re bringing in someone new, it can be very helpful if you decide as a group how you’re going to handle finances. You might consider having a meeting right away to establish how you’ll be splitting costs.
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Before moving in together, you and your roommates could make a list of what you both already own and can bring to the apartment for communal use. For example, if your roommate has a stand mixer and you have a nice collection of baking pans, that can be a useful combination. If you can contribute a couch, your roommate might be able to find a kitchen table.
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Many roommates find that part of sharing a household might mean sharing more than just rent and utility bills. You may want to consider sitting down with your roomies to figure out what monthly expenses beyond rent and utilities will be shared and how you will split up these costs. This may include cable, wifi, and any subscription services like video streaming.
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Since it can be difficult to determine who used a certain amount of electricity or watched the most Netflix, it could make sense to simply split costs down the middle (or evenly among roommates). That can save a lot of time and energy and could be the most fair arrangement.
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If you or your roommate uses certain utilities or services significantly more than other members of the household, you might want to consider splitting by percentage of use. For instance, perhaps your roommate is a photographer and is always plugging in lights to take photos, and maybe you’re only home four days a week. A percentage is more complicated, but could be more fair.
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To streamline bill paying (and make sure no bills end up falling through the cracks), it can be wise to put one person in charge of actually paying the bills. You may want to designate that person from the get-go, and then everyone else can send this person the money before the bills are due every month.
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Whether you split each cost evenly, or by a percentage of use, it can make sense to write down each person’s share of expenses and what they can roughly expect to pay each month—so no one is blindsided when it comes time to pay the bills.
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Once you have the details of the non-negotiable bills nailed down, you may want to next look at how you want to manage the cost of household supplies.
For example, while some roommates don’t mind toting their own roll of toilet paper into the bathroom, many find that it is easier and more economical to split the cost of a bulk package.
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Even if you have different tastes in food and purchase the most of your groceries separately, you may find that sharing basics, like gallons of milk, coffee, and juice, even bags of rice or quinoa, may be more economical. If you cook meals together, you may want to go in on even more weekly groceries to help save money on food.
Just because you plan to share a couch doesn’t mean you need to share the bill. While it may seem sensible to split the cost of furnishings and electronics for your rental, you may also want to consider what will happen when your lease is up.
Unless you and your roommates plan on selling everything when the time comes to move out (and splitting the proceeds), paying for things separately can make things simpler in the end.
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If you and your roommate have agreed to buy groceries or other items together, you may also want to discuss a monthly budget before you start making household purchases.
You might be fine with generic toilet paper, while your roommate wants to spring for the expensive name-brand stuff. Getting on the same page about how much you’ll spend each month on communal items can help avoid money squabbles later.
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You might give one roommate the responsibility for keeping track of your expenses and how much each roommate owes, as well as logging who paid what and when. They could do this on a spreadsheet or through an app. That way, each person will know exactly how much they owe, as well as what they’ve already paid.
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Gone are the days of writing checks or going to the ATM to reimburse roommates for rent and other expenses. With all the peer-to-peer money transfer options now available, you can quickly and easily pay each other without cash.
You may want to sit down with your roommates and decide which app you’re going to utilize, make sure everyone has it downloaded to their phones, and then use it to reimburse each other.
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When you first move in with a roommate, or when another roommate is moving in, you might want to create a roommate agreement that is separate from the rental contract you have with your landlord.
The agreement could spell all the financials, such as how you will split costs, as well as some basic ground rules, such as parking and having guests over.
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Nobody wants to be the bad guy, but if a roommate isn’t paying their share of expenses, you may want to make sure that there are some consequences.
For instance, you could agree (and even include this in your “roommate agreement”) that if a roommate doesn’t pay the bills on time once, they would take on all the household chores until they can pay, and if they fail to pay a second time, they would need to to leave the rental.
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You may want to make it clear that If one roommate is late with their payment and, as a result, triggers a late fee or penalty, then that person would be responsible for paying those additional charges. (You may also want to make this rule clear in your “roommate agreement.”)
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It can be a good idea to also discuss who will be responsible for covering the cost of any unexpected expenses, such as damage to your rental.
You might agree (and put in your agreement), for example, that whoever is responsible for any damages must pay for them. That way, if your roommate’s dog chews up the door frame, it would be up to them to pay for the repairs.
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It often makes sense to have all the roommates contribute to the security deposit. That way, they will all be equally invested in keeping the place nice so that they get their portion of it back upon moving out.
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Get-togethers like BBQs and Super Bowl parties can be great bonding experiences for roommates and their friends. When having one of these events, all the roommates can chip in so that the celebration is fun, as well as affordable.
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Roommates that don’t communicate effectively can become resentful and end up disliking each other. By having monthly meetings to discuss finances and other issues, everyone has a chance to air their grievances and figure out solutions for problems going forward.
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It can be tough to live with roommates and deal with all their quirks, especially when it comes to money. But even if someone is late paying a bill or otherwise not doing their fair share, posting notes can end up creating hostility.
You may be able to resolve the situation more effectively by being direct and honest with each other either in a one-on-one or monthly roommate meeting.
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If you are responsible for paying the bills, you may find that it’s easier to pay them with your money and then collect from your roommates later. However, this can put you in a bad position if your roommates take their time in paying you back.
Instead, you might want to set a rule that you will only pay the bills once your roommates have given you their share.
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If utility bills or other shared expenses are on the high side, you may want to sit down with your roommates and talk about some ways to save money. You might decide, for example, to invest in energy-saving light bulbs you can turn off using an app or get rid of one or two streaming services.
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You can make saving money a group activity with your roommates. Every week, before you go shopping, you can all look for coupons to use at the store on sites like Coupons.com and SmartSource.
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When vetting potential roommates, it can be helpful to discuss some of the expense-sharing ideas listed here. If they are open and amenable to sharing expenses equitably, you should have very few issues when it comes to splitting costs.
You may also want to make sure any potential roomies have a steady income, good referrals, and a solid credit score, as this can indicate they tend to be responsible with money.
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While roommates come with many benefits, sharing a space–and expenses–with other people isn’t always easy.
Being open about finances and setting some ground rules from the get-go, however, can help ensure that everyone contributes their fair share and all your bills get paid on time.
Using technology and smart money management resources can also make it easier to track and share expenses with your roommates.
Related:
This article
originally appeared on SoFi.comand was
syndicated by MediaFeed.org.
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