Secured credit cards with rewards are rare, but they do exist.
Banks offer credit card bonuses all the time — something the industry calls rewards. These are extra earnings you get on top of normal spending.
You may have heard of these rewards that include points, miles, cashback and more. And you may even want a credit card that offers them.
If you have poor credit or if this is your first time applying for a credit card, you may consider a secured credit card. This type of card emphasizes rebuilding credit, so rewards are a secondary consideration. Before diving in, understand whether it’s worth shooting for rewards now — or if you should wait for a better card.
The best secured credit cards with rewards
Looking for a secured card with rewards?
Choices are sparse, but there’s one bright spot: the Discover it® Secured. It offers cash back, which is unheard of among its competitors. Other options include good-but-niche secured cards like the SKYPASS Visa® Secured Card and nRewards® Secured Credit Card.
Why get a secured credit card?
When people think of credit cards, they usually think about unsecured credit cards. These typically offer the best perks and rewards. However, you usually need a good credit score to qualify for one.
If you don’t have a good credit score — or have no credit at all — you’re likely to be denied. That’s when you might consider a secured credit card. As someone with fair, poor or no credit — a credit score below 670 — you’re likely to have luck getting this type of card.
How is a secured card different from an unsecured card?The biggest difference is that with a secured credit card you’re required to put down a security deposit. If you fail to make payments, your bank can simply take your deposit. That’s why lenders are much more willing to offer secured cards to consumers with less-than-perfect credit.
Differences between unsecured and secured credit cards.
When you get a secured credit card, you can slowly build your credit by consistently making payments on time. After you’ve raised your credit score, you’ll have a better chance of being approved for an unsecured card.
Do secured cards come with rewards?
You may have heard of reward credit cards — cards that offer bonuses for spending.
For example, a cash back card will give you a portion of your spending back to you. If your card offers 2% cash back on all purchases, spending $10,000 means you get $200 back.
A travel card, meanwhile, offers points or miles based on your spending. Maybe your card offers 2 points per dollar you spend at restaurants. If you spend $5,000 on dining, then, you’ll earn 10,000 points. You can later redeem these points for hotels, flights, car rentals, cruises and more.
Compare cashback cards for poor credit
Rewards for unsecured and secured cards: It’s lopsided
Here’s the thing about rewards: You’ll almost always find them with unsecured cards.
Secured cards with rewards do exist, but they’re rare. Lenders largely offer rewards to attract consumers with good credit. In the secured-card space, they offer few bonuses.
What to watch out for
- Deposit minimums.
You may need to deposit $200, $300, $500 or another amount to open your secured credit card. Consider whether it’s worth depositing a large amount of money and whether a card’s rewards justify the cost.
- Annual fees.
Reward cards are more likely to come with annual fees. If a secured card offers rewards, expect the annual fee to be $25 to $50.
- Rewards expiration.
Points or miles may expire. Read a card’s fine print to understand how long your rewards are valid.
Why the annual fee matters
If a card comes with rewards, check if your points or miles might be diminished by an annual fee.
Consider a card like the Discover it® Secured, for example, which comes with no annual fee. This means all cash back you earn goes into your pocket.
On the other hand, a card like the Best Western Rewards® Secured MasterCard® will earn you points at Best Western hotels and everyday purchases. But you’ll pay a $29 annual fee. That means your points value is less.
How to make the annual fee worth it
To decide if the annual fee is worth paying, calculate how many points or miles you need to earn to break even. Then find how much you must spend to obtain them.
Let’s look at the Best Western Rewards® Secured MasterCard® as an example.
|Step 1: Calculate the value of points or miles.||Let’s say you want to spend your points on Best Western Travel Cards.|
A $100 Travel Card costs 24,000 points. That means each point is worth $100/24,000 = 0.4 cents. (That’s $0.004.)
|Step 2: Find how many points or miles you need to break even.||The card’s annual fee is $29. That means you must earn at least $29/$0.004 = 7,250 points to break even.|
|Step 3: Find how much you must spend to break even.||The card offers 13 points per dollar you spend on everyday purchases. Assuming you only make everyday purchases, you must spend 7,250/2 = $3,625 to break even.|
Don’t forget about the signup bonus
Spending may not be the only way to earn points or miles. Your secured card may also offer a signup bonus — a one-time reward you earn after meeting certain requirements.
For secured cards, the most common signup bonus is bonus points or miles after using your card once. With the Best Western Rewards® Secured MasterCard®, for example, you’ll earn 5,000 points after your first purchase.
You can use the signup bonus to decide whether an annual fee is worth paying. In our example above, you need 7,250 points to make a $29 annual fee worth paying. If you earn 5,000 points from a signup bonus, you must now earn only 7,250 – 5,000 = 2,250 points.
If you factor the signup bonus into your calculations, remember that you won’t have it the following year.
Our pick for rewards: Discover it® Secured
Cash back is rare among secured cards, which makes the Discover it® Secured all the more impressive. Here’s what you’ll earn with the card:
- 2% cash back at restaurants and gas stations — up to $1,000 in combined purchases each quarter.
- 1% on all other purchases.
On top of that, Discover doubles the cash back you earn at the end of your first year. In a field of secured cards that offer very few rewards, the Discover card really shines.
The Discover it® Secured is also an excellent secured card overall, with no annual fee and a potential upgrade to an unsecured card.
Other secured cards to consider
Each of the following secured cards offers rewards, but is somewhat limited. For example, a card may charge an annual fee, but is available only to certain consumers or offers limited rewards.
Before applying for one of these cards, consider whether it’s worth holding out for a better choice. If you build your credit slowly, you may eventually qualify for unsecured cards with top-notch rewards.
SKYPASS Visa® Secured Card
SKYPASS is the loyalty program for Korean Air, but you can use your miles for flights on other airlines. This list includes carriers like AeroMexico, Air France, Delta and KLM.
Unlike many other secured cards, the SKYPASS Visa® Secured Card comes with an annual fee of $50. That’s a high price considering you’ll find many excellent secured cards with no annual fee.
nRewards® Secured Credit Card
Best Western Rewards® Secured MasterCard®
AeroMexico Visa® Secured Card
How we selected our top cards
We compared all secured credit cards with rewards and considered factors such as the minimum deposit, the APR, annual fee and other fees associated with the card. Then we chose the cards that offered the best combination of these features.
What’s changed in 2019
Our selection of the best secured credit cards with rewards stands strong this year as none of the competitors offered better perks.
Secured cards are a great way to build your credit, and they can also be a good way to earn rewards if you choose the right card. While secured cards don’t typically offer the same level of rewards as unsecured cards, you still have some great options.
If none of these cards seem right for you, you can find several excellent secured cards that don’t offer rewards but are user-friendly. And when you build up your credit enough, you might qualify for even better rewards with unsecured cards. A secured card with some solid rewards could be a good alternative for you until then.