Holding and responsibly using a credit card is one of the fastest ways to improve your credit score. However, most credit cards will require at least average credit or better to qualify for a credit card.
It can become a circular problem in which using a credit card is the fastest way to improve credit – but you need good credit to qualify for a credit card.
Capital One Secured MasterCard review
The Capital One Secured MasterCard reports borrowing activity and builds credit just like other cards. But with a cash deposit, even applicants with poor credit can get approved for this card.
Here’s a quick Capital One Secured credit card review:
- Easy to qualify for and meant for rebuilding credit. So even if you have poor credit, you can still get a Capital One Secured credit card.
- Make a refundable cash deposit to open your Capital One Secured credit card.
- No annual credit card fee, balance transfer fee or foreign transaction fee. Transparent costs and interest make it easy to manage and avoid credit card costs.
- Access your free credit score and credit building tools through CreditWise from Capital One.
So is the Capital One Secured MasterCard right for you? That depends on your situation. It’s a great tool for rebuilding credit and learning to responsibly spend with a credit card.
However, the Capital One Secured MasterCard might not be your best option if you:
- Have average credit or better. There could be better credit cards with more advantageous benefits available to you.
- Can’t or don’t want to make a cash deposit, which will range from $49 to $200.
- Carry a balance and pay credit card interest. With an APR of 24.99% (as of April 2017), credit card debts on this card will cost you.
- Want to earn rewards. The Capital One Secured MasterCard doesn’t offer any credit card rewards like points, miles, or cash back. However, most rewards credit cards require good to excellent credit.
How the Capital One Secured credit card works
As a secured credit card, the Capital One Secured MasterCard is accessible to borrowers who have bad credit or no credit. Capital One only requires that new cardholders put down a cash deposit (explained in the video below).
This acts as collateral on your account. If you become delinquent, the credit card issuer can use the deposit against the amount you owe. But if you pay your balance in full, this security deposit is fully refundable upon account closure.
Usually, a secured card requires a cash deposit equal to the total credit line of the account. For example, a cash deposit of $300 would get you a matching $300 credit limit on a secured credit card.
The Capital One Secured MasterCard, however, matches the cash deposit required to your credit score. Those who have the worst credit will have to deposit the full $200 to get the card’s standard $200 limit. But those with higher credit might be able to get the $200 limit with a smaller deposit of just $49 or $99.
Want a credit line higher than the standard $200? All you need to do is add to your deposit. Capital One will raise your credit limit by $1 for each additional $1 you deposit. You can do this to increase your credit limit up to $1,000.
You can also wait and make on-time payment for five months. After that, Capital One will automatically raise your credit limit without requiring an additional deposit.
Do you qualify for a Capital One Secured MasterCard?
The Capital One Secured credit card is accessible, even for consumers with poor credit (a FICO score below 630). In advertisements, Capital One is clear that the Secured MasterCard is “for people rebuilding credit.”
There are many reasons you might have a credit score below 630. People who have never had a credit card, have a short credit history, or have a thin credit file often have a poor credit score. You might also have poor credit if you’ve defaulted on a loan or credit card in the past.
The Capital One Secured MasterCard is still an option, even with no credit history or derogatory marks on your credit reports. And as mentioned above, the higher your credit score, the lower the deposit you’ll have to make.
If you’re not sure what your credit score is, or think you might be right on the border between poor or average credit, try the Capital One pre-qualification tool. You provide information about yourself and in just 60 seconds, Capital One returns a list of credit cards for which you’d be a good fit.
How to apply for the Capital One Secured credit card
If you’re ready to apply, the process is fairly easy. You can navigate to the page for the Secured MasterCard on Capital One’s site and click “Apply Now.”
This will take you to a secure online application for the Capital One Secured MasterCard (pictured above). It will display the details of the card for you to review and have fields you’ll need to fill in before submitting your application. This page also includes links to frequently asked questions about this card and the application process.
Scrolling down, you’ll find the fields to enter in your personal information (pictured below). The Capital One Secured MasterCard online application asks for the following details:
- Identifying information such as name, date of birth, U.S. citizenship status and Social Security number.
- Contact details including residential address, email address and phone number.
- Employment status and amount of total annual income.
- The type of bank accounts you have.
- Monthly rent or mortgage amount.
Once you’ve completed the field and reviewed the credit card disclosures, hit “Continue.” Capital One will process your application and notify you of their decision once it’s made. You can also apply by phone at 1-800-695-5500.
Make your Capital One Secured credit card deposit
If you’re approved, you still need to pay the Capital One Secured MasterCard deposit to get your card. The notification of approval will include instructions to submit your deposit and set up your account. Capital One also includes a button to submit a deposit on the Secured MasterCard page.
You will have to supply your Capital One customer number (which you received upon approval), your ZIP code, and the last four digits of your Social Security number to start your deposit process. Capital One will use this information to look up your account. You can then enter your bank account or debit card information to securely make the deposit.
Once Capital One receives and processes your deposit, it will send you your new Capital One Secured MasterCard. Follow the instructions on the card to activate it, and you can start using it to make purchases — just like any other credit card.
Using your Capital One Secured MasterCard to rebuild credit
Once you have your Capital One Secured MasterCard, you’ll want to use it responsibly to build credit. Unlike with a debit card or prepaid card, spending and repayment behavior on a Secured MasterCard and reports it to credit bureaus. These bureaus keep track of this borrowing and repayment behavior and add it to your credit reports.
If you’re rebuilding credit, you want to make sure that all your behavior on your Secured MasterCard is positive. Here are three ways you can use your Capital One card to build credit.
1. Always make payments on time
A positive payment history is the main ingredient of a good credit score. Luckily, Capital One gives you the flexibility to choose your own payment due date. Pick one that you can easily remember, and that falls at a time when you’ll have the funds to make your payment. You can even set up payment alerts to remind you when your due date is getting close.
2. Keep your credit card balance low
An important factor to your credit score is your credit utilization ratio. You want to keep your balance at 30 percent of your credit limit or less to keep it from hurting your credit. For the Capital One Secured credit card, that’s $60 to the $200 limit. To build credit, you’ll want to keep balances at or below half of that — around $30.
Here are some ideas to keep your balance low:
- Limit spending on your Capital One Secured MasterCard to $30 or less each month. When you hit that limit each month, switch to another card.
- Set up a balance alert for $30. When your balance reaches that high, pay your card off immediately. You’ll make more than one payment a month, but you’ll keep your balance and credit utilization low.
- Make a bigger deposit to increase your spending limit. This will increase the amount you can safely spend. If you deposited enough to get the full $1,000 limit, for instance, a credit card balance of $150 or less would hit the 15 percent utilization mark.
3. Use Capital One CreditWise to monitor your credit score
Capital One actually has a great tool for monitoring and improving credit, with CreditWise. This is free to use and you don’t have to be a Capital One customer to use it. But as a cardholder, you’ll get easy access to your free credit score through CreditWise.
The credit tool will even analyze your credit, to help you understand the factors affecting your score. CreditWise will also suggest actions you can take to raise it.
The Capital One Secured MasterCard has several tools to help you rebuild credit. Additionally, you’ll also need to do your part by making on-time payments and keeping your credit card balances low.
Capital One Secured MasterCard fees and APR
If you’ve never had a credit card or have struggled with them in the past, the Capital One Secured card is easy to understand and use. A clear fee structure will help you anticipate and avoid credit card costs.
The Capital One Secured MasterCard has few fees. It has $0 annual credit card fee. Cardholders are not charged balance transfer fees.
There is a cash advance fee of $10 or three percent of the advance, whichever is greater. Late payments will also incur a fee of $35.
However, APRs of 24.99% are common on credit cards designed for subprime consumers with poor credit. You’re not likely to get better offers without building credit. Plus, credit card interest is easy to avoid if you repay your balance in full each month.
Capital One Secured MasterCard customer experience
If you’re looking for a tool to rebuild credit, this card satisfies. Cardholders of the Capital One Secured MasterCard love that it is easy to qualify for. And according to Capital One Secured reviews on Credit Karma, cardholders saw their credit scores improve fast. One reviewer saw a credit score jump of around 120 points in just 10 months.
What didn’t cardholders like? Some thought getting their deposit back was harder than it should have been — the only way to do so is to close the credit card. Capital One Secured cardholders also did see their credit limits increase with on-time payments, but only in modest increments.
Bottom line: the Capital One Secured MasterCard is a great tool to rebuild credit. Once you’re well on your way to a great score, you can decide if you’d rather keep the credit card open or close it to reclaim your deposit.
Capital One contact information
If you have more questions about the Capital One Secured MasterCard, you can easily reach their customer service team.
Call 1-800-695-5500 if you’re a potential customer interested in applying. Or if you already have an existing Capital One account, call 1-800-CAPITAL (1-800-227-4825).
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Citizens Bank Disclosures
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