Credit Cards

The Best Credit Card for Rebuilding Your Credit

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Rebuilding your credit can be difficult, but not impossible. The key is to avoid credit cards that are just fee-filled products targeted at those who have a troubled credit history. What you need is a strong product from a reputable lender with a reasonable fee structure.

Capital One offers its Secured MasterCard for people who need to rebuild their credit without being soaked by outrageous fees and punitive terms.

How this card works

As with all secured cards, Capital One requires that new customers put down a refundable deposit before being extended a line of credit. But thankfully, this Capital One product offers a few features not always found on a secured card.

First, customers can be extended a line of credit in excess of their deposit. For example, a minimum deposit of $49 can enable a $200 line of credit. Customers also have the option of placing more money on deposit in order to secure a larger line of credit.

Next, this this card offers a standard grace period of 25 days. This means that your due date will be at least 25 days after the close of each month’s billing cycle. You will not be charged interest on any of your purchases as long as you pay your balance in full and on time each month. In contrast, some secured cards incur interest on all purchases from the moment of the transaction, even when cardholders pays their entire statement balance.

Most importantly, Capital One will automatically report your payment history to all three major credit bureaus.  This will make sure your on time payments result in the maximum benefit to your credit score.

And finally, Capital One will grant you credit line increases based on your payment and credit history.  And eventually, you will be able to qualify for a standard credit card. How long will this take? There is no preset schedule, but with a perfect payment record, most cardholders are able to receive an unsecured card within 12-18 months of receiving their secured card. However, the bank may want to see a longer payment history for those who have a bankruptcy in their past.

Costs of the Capital One Secured MasterCard

Minimum deposit:$49

APR: 22.9% variable APR tied to the Prime Rate

Annual fee: $29

Foreign transaction fee: None. Capital One is one of the few credit card issuers that does not charge this unnecessary fee on any of its products.

Processing fee: Unlike many secured cards on the market, there is no processing fee for this card.

At publishing time, Capital One Secured MasterCard is offered through Credit.com product pages and Credit.com may be compensated if our users apply for and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment.

Image: Digital Vision

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