Capital One® Secured MasterCard®

From the CompareCards.com Editorial Team:

This card is meant for those who have bad credit and want a card that helps them rebuild it while also delivering the convenience of carrying plastic instead of just cash. Unlike prepaid cards, this one doesn’t require that you back up your entire line of credit with cash unless you have really terrible credit.

Those with poor credit that is not downright bad, for example, will likely deposit between $50 and $100 – depending on their overall credit history – in exchange for getting a $200 credit limit. You can increase your credit limit up as high as $3,000 by depositing more money, and if you have really bad credit then you can still get your $200 credit limit by depositing the full $200 – although that basically puts this in the category of prepaid cards.

The interest rate on this card is high at 22.9%, and there is also a $29 annual membership fee, so those add to the cost of the card. But for people with damaged credit those are usually a small price to pay for the chance to rebuilt and get back to having good credit. The Capital One Secured Mastercard also reports to the “big three” major credit bureaus on a regular basis. So if you are paying bill on time and not using more than 30 percent of your available credit – two strategies recommended by credit improvement experts – then that will contribute to improved credit history.

The Bottom-Line
This is a good alternative for someone with poor credit who wants a chance to rebuild their credit while they carry a card that is better than the standard prepaid cards. You can leverage your good credit performance into a higher line of credit, too, which is helpful.

The Good
This is a good card for people with poor credit who want to rebuild it by following smart money management strategies and lowering their debt. There is no balance transfer fee and you can sign up for free enrollment in online tools to help you track your credit. As your payment history improves you can earn opportunities for increases in your line of credit.

The Not So Good
The 22.9% APR is steep, and there is a $29 annual fee. You have to put up a cash security deposit in order to get a line of credit, but at least this card is not as restrictive or costly as most fully prepaid cards.