If you want to rebuild your credit, Capital One is one of the many companies that offers a secured card. Even if your credit is in the “bad” range, you can still apply for this card. In this article, we outline the pros and cons of a Capital One Secured MasterCard.
Application Process/Security Deposit
You need to complete and application and then submit it. The company does not automatically approve applications. For example, if you don’t have a bank account, your application will be declined.
In addition to your name, address and phone number, you will need to supply your employment status, total annual income, and your rent or mortgage amount. As a general rule, your monthly income should be at least $425 more than your rent or mortgage.
If your application is approved, you will be required to pay a security deposit, and you can choose to do this online or by phone. The reason you need a bank account is that your security deposit has to come from this account. You cannot pay by or cash, check, or a money transfer.
The amount of the security deposit varies, and depending on your credit score, it might be $49, $99, or $200. If you cannot afford to pay the total security deposit at once, you can spread the amount out and pay at least $20 dollar increments over a period of time. However, you must pay the total deposit amount within 80 days. If you don’t the offer will be voided.
The security deposit is refundable should you later decide to close your account – provided you don’t have an outstanding balance.
After making the security deposit, your card should arrive within 2 to 3 weeks.
Initial Credit Line
After making the initial deposit, and upon approval, your Capital One Secured MasterCard will have a credit line of $200. However, if you decide to deposit a higher than required amount within the 80 days before the account is opened, then your line of credit will be higher. You can use deposits to increase your initial credit line up to $1,000.
Increasing Credit Line Without Additional Deposits
Also, if you make the first 5 monthly payments on time, your credit line will increase. You won’t have to make additional deposits in this instance.
The interest rate on this card is 24.99%. It is variable, which means that the rate can change depending on the Prime Rate.
There is no annual fee for this card. Also, there are no one-time fees, or monthly fees.
However, each time you fail to make your monthly payment on time, you will be charged up to $35 in late fees. Also, if you want to withdraw cash, you will have to pay the greater amount of $10 or 3% of the amount of the cash advance.
You can choose your monthly payment date, for example, on the first day of every month, on the 15th, on the 30th, etc. You also have the option of choosing if you want to pay online, by check, or if you want to go to a local branch to make payments.
Your card will not have the words “secured” on it, so it will look like other Capital One credit cards and no one will know that it is secured.
If you need assistance, customer service is available 24 hours a day, 7 days a week online, by phone, or via your mobile device.
When you make purchases with your card, you can get extended warranties on these items. Also, if you purchase a car with your card, you can get auto rental insurance to cover theft or collision damage. You can also get travel insurance for loss of limb or loss of life
Does the Card Really Help You Rebuild Your Credit?
Your payment history is reported to the major credit card bureaus. Consistently making timely payments helps you to establish a history of responsible use. This is a major advantage over prepaid cards, which only allow you access to the amount of money that you have deposited into the account, so they don’t demonstrate credit usage. That’s why prepaid card activity is not reported to credit bureaus.
If you’re looking for a card to help you rebuild your credit, the Capital One Secured MasterCard is a good option because it has no annual fee. However, it has a high interest rate, so once you have established a solid payment history, you may want to search for a card with a lower interest rate.