Best Secured Credit Cards of August 2024 – Forbes Advisor – Technologist

A few alternatives to secured credit cards may be better for certain borrowers. Let’s take a look at a few options.

Unsecured Cards for Bad Credit

Some card issuers offer credit cards specifically for customers with limited, fair or poor credit. Many credit cards offer a preapproval tool to help you determine if you’re likely to be approved. If receiving approval for an unsecured card is important to you, options exist—they aren’t always ideal though, and may offer terms that don’t favor your best financial interests.

The Capital One QuicksilverOne Cash Rewards Credit Card is available to people with limited or fair credit, and though it charges a $39 annual fee (rates & fees), the card also earns 1.5% cash back on every purchase and 5% cash back on hotels and rental cars booked through Capital One Travel (terms apply).

Credit-Builder Loans

Credit-builder loans provide “training wheels” for building credit without using a credit card. Unlike personal loans, which give borrowers money right away, credit-builder loans hold a predetermined amount of money in an account while the borrower makes additional monthly installments to pay off the loan.

The lender reports the borrower’s payment activity to credit bureaus over the course of the loan. On-time payments help the borrower build a good credit score. On the downside, most lenders charge interest for credit-builder loans.

Prepaid Debit Cards

Some people may not want to own a credit card, and that’s okay. If a card is necessary to make a purchase but not needed to build credit, prepaid cards can be a good alternative. Prepaid cards are loaded with cash, similar to a gift card, and can be used to make purchases at most stores. One downside to prepaid cards is that purchase activity isn’t reported to the credit bureaus.

Personal Loans

Personal loans have many uses, including consolidating credit card debt, paying for an unexpected expense or financing a larger purchase. A main difference is personal loans do not offer grace periods during which a balance can be paid down without incurring interest charges. Personal loans also divide the principal and interest into equal payments based on the terms you chose, but can usually be paid off early.