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Verdict: If you’re having trouble qualifying for traditional credit cards because of a negative or limited credit history, you do have options: secured credit cards. You set the balance of such cards by making a deposit in a savings account created by the card issuer. You can only charge as much you deposit, providing financial protection for the financial institution passing out a credit card to a consumer with limited or weak credit. You can then use a secured credit card to rebuild your ailing credit or build a credit history if you don’t yet have one. The Fifth Third Bank Secured MasterCard is one such card, and using it wisely can put you on the path to building enough good credit to apply for credit cards with rewards programs and other perks.
Overview: You’ll have to set up a savings account with Fifth Third Bank to apply for its secured MasterCard. Once you do, the amount you deposit in that account will correspond to the amount of charges you can make on your new credit card. If you deposit $1,000 in your Fifth Third savings account, you can make charges up to $1,000 on your secured MasterCard.
How This Card Works: Once you set up your available credit, this credit card works just like a traditional credit card. Be aware, though, that the Fifth Third Secured MasterCard isn’t free: It comes with an annual fee of $24.
Travel and Shopping Benefits: Because this card is designed for cardholders with low credit scores or a limited credit history, it doesn’t come with many perks. The main advantage with such a card is that you can use it to build your credit scores. By paying your bill on time every month and by not running up a huge amount of debt with your card, you’ll be displaying sound spending habits. By doing this over several months, your three-digit credit score will gradually improve. When your score gets high enough, you’ll be able to apply for other credit cards — non-secured ones — that come with higher spending limits, rewards programs and other perks.
Fees: The purchase interest rate with this card is 23.99 percent. That’s high. But remember, if your only option is to take out a secured credit card, lenders and banks consider you to be a financial risk. A high interest rate is one way for them to protect themselves financially in case you fall behind on your monthly payments. The card’s annual fee is $24, while its late-payment fee can rise as high as $35. If you’re late on a payment, or miss a payment, you’ll incur a penalty interest rate of 24.99 percent.
- Can use card to rebuild weak credit.
- Can use card to establish a credit history.
- High purchase interest rate of 23.99 percent.