Best second chance credit cards with no security deposit of June 2024 (2024)

Best second chance credit cards with no security deposit

• Chase Freedom Rise℠*: Best second chance credit card with no security deposit.
• Petal® 2 “Cash Back, No Fees” Visa® Credit Card*: Best for preapproval.
• Capital One Platinum Credit Card*: Best for no frills.
• Petal® 1 “No Annual Fee” Visa® Credit Card: Best for rebuilding credit.
• Upgrade OneCard: Best for predictable monthly payments.

Compare the best second chance credit cards with no security deposit

Guide to second chance credit cards without a security deposit

When applying for a second chance credit card, you want to make sure that you’re not going to further negatively impact your credit. Here are some tips to help you protect your credit when applying for a new card.

What is a “second chance” card?

A “second chance” credit card is designed to help those looking to rebuild their credit after financial missteps by adding positive information to their credit profiles.

The standards for approval on second-chance cards tend to be much lower than with regular credit cards, and the cards may be secured (requiring a security deposit) or unsecured. Through responsible usage, such as paying on time and keeping a low balance, you may boost your credit score as your account and payment activity get reported to the credit bureaus.

Note, if you’re new to credit, see our recommendations for best first credit cards.

How to avoid hard inquiries

When you apply for a new credit card or loan, your lender typically runs a hard inquiry on your credit report. This can decrease your credit score by a few points, though your score will usually bounce back over time once you start using your new card responsibly.

If you want to avoid hard inquiries when you’re not sure you’ll qualify for a new credit card, search for opportunities to pre-qualify or get preapproved. Pre-qualifying lets you see if you have a solid chance of getting the card but doesn’t impact your credit score. Keep in mind that just because you pre-qualify for a new card, it doesn’t mean you’re guaranteed approval.

Once you decide to submit a full application, the lender will likely run a hard credit check to verify your credit history.

Getting an unsecured credit card after bankruptcy

Filing for bankruptcy has a long-term impact on your credit, which can make it difficult to qualify for a credit card. However, there are a variety of secured credit cards and unsecured second chance cards designed for borrowers who need to rebuild or establish credit. Keep in mind that you may need to complete your bankruptcy proceedings before you can apply for a new line of credit.

Wondering how to repair damaged credit? Here’s how to do it.

Pros and cons of “second chance” credit cards

Here are some pros and cons of “second chance” credit cards:

Pros

• The opportunity to rebuild your credit history and credit scores.
• Some cards allow you to see your chances of being approved through a preapproval tool, thereby avoiding a hard inquiry.
• You can earn cash-back rewards on select second chance cards, although the rewards rates tend to be a bit less generous than on cards marketed to consumers with better credit scores.
• Some issuers conduct credit line reviews after a certain period of time to see if you qualify for a credit line increase.

Cons

• You’ll likely start out with a low credit limit.
• Some second-chance cards come with very high APRs and fees.
• Card benefits, such as travel protections, may be very limited.
• Low or no welcome bonus. Regular rewards cards typically come with a generous welcome bonus of cash back, points or miles.

Should you get a second chance credit card with no security deposit?

Secured cards often require a deposit of $200 or more that must be submitted to the issuer once you are approved, and that cash will then serve as your credit line. Essentially, you’ll be borrowing against your own funds. Once your credit score improves, you can transition to an unsecured card from the same issuer or apply for another card and get your deposit back.

However, it’s good to know that you have the option to apply for a second chance credit card that does not require a security deposit. This can be especially helpful if you’re tight on cash. We recommend you use any pre-qualification tool offered to weigh your odds of being approved, however, as some second-chance unsecured cards may have more stringent approval requirements than secured cards.

How to choose a second-chance credit card with no security deposit

When deciding which second-chance card is best for you, here are some factors to consider:

• Annual fee. None of the cards on this list charges an annual fee, but this is something you should always check before you apply.
• APR. Credit cards geared toward those with no or very low credit scores can come with sky-high interest rates, sometimes over 30%. You can avoid interest charges by paying off your balance in full every month.
• Pre-qualification tools. Instead of risking multiple hard inquiries on your credit reports by applying for cards and getting declined, search for a card that offers a pre-qualification tool so you have a good idea of your approval odds before you apply.
• Fees. In addition to an annual fee, credit cards may also assess fees for late or returned payments, card replacements, account setup, foreign transactions and more. The fewer the fees, the better.
• Rewards. You generally won’t find the same generous rewards programs on credit-building cards as on rewards cards marketed to consumers with good-to-excellent credit. However, focus on using a second-chance card responsibly to build your credit so you can qualify for more attractive rewards cards in the future.
• Credit standing requirements. Pay close attention to any credit requirements. For example, some cards are specifically aimed at consumers with no credit while others are geared towards those who need to rebuild their credit.
• Credit bureau reporting. Make sure that whatever second-chance card you are applying for reports account and payment activity to all three credit bureaus (Equifax, Experian and TransUnion). If you can’t find that information, you can call the issuer and ask.
• Credit line reviews. If you are trying to build or rebuild your credit with a credit card, odds are that your initial line of credit will be low. Lenders typically will be cautious with anyone they might consider a risk. Look for a card that offers to review your credit line for a potential increase after a certain period of time.
• Benefits. You won’t find as long a list of benefits, such as baggage protection or car rental insurance, on second-chance credit cards as you might on other credit cards. But do make sure you review any benefits that come with the card before you apply.

Is a second-chance credit card with no security deposit right for me?

If you have poor or fair credit, typically considered a FICO Score between 300 and 669, you’ll have trouble getting approved for most credit cards. But using a credit card responsibly is one of the best ways to improve your credit. Getting a second chance credit card, meaning one accessible to folks with less-than-stellar credit, could be the answer.

As long as the issuer reports activity to the credit bureaus, and you make sure to always pay on time and avoid maxing out your card, using a second chance credit card can help build a good credit score.

Many credit cards available to people with poor or fair credit are secured cards. However, the second chance cards we’ve selected here are unsecured, meaning there’s no deposit required.

When choosing between a secured card or an unsecured second chance card, you should weigh the pros and cons. Not having to submit a deposit can be helpful if you think you’d struggle to put together the lump sum required by secured cards.

Either way, once you attain a good or better credit score, you can open a credit card with better terms and rewards and then close your second chance card. But make sure to pay off any outstanding balance in full before closing the account.

Frequently asked questions (FAQs)