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Mailbag Monday: Secured Credit Cards to Establish Credit

collegemoneyHi Jean,

I’m wondering — what is the best secured credit card I could open to reestablish my credit? Thank you.

-Karen

Hi Karen,

You’re on the right track.  A secured credit card, which asks you to make a deposit with the issuing institution as collateral, is a good way to start rebuilding your credit (or to establish it if you never had credit to begin with.) I’d start with the Capital One Secured MasterCard, which is the choice of the folks at Cardhub.com.  It will ask you to make a deposit of $49, $99 or $200 — depending on your credit history — and charge you an annual fee of $29.  It also has an annual fee of $29. Use it at least once a month and then pay it off — in full — every month.  The interest rate is 22.9% so you don’t want to add that premium to your purchases. Then, a couple of years down the road, you should easily be able to graduate to a non-secured card.  In fact, because you’re already working with Capital One, the chances that they’ll offer you one for your good behavior are — I have to think — pretty good.

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