USAA® Secured American Express® Card: Builds credit and carries interesting perks

If you want a card with features closer to those you’ll find on a top-tier unsecured credit card, the Discover it® Secured Credit Card is a great match. It comes with Discover’s Cashback Match, a unique welcome offer where Discover matches the eligible cash back you earn at the end of the first year. You also earn 2 percent back on restaurant and gas station purchases (up to $1,000 in combined purchases each quarter, then 1 percent). Plus, Discover provides the chance to upgrade to an unsecured card starting at seven months of on-time payments, which is much faster than most rival cards.

These features make this card a much stronger contender than the USAA Secured American Express, especially for people with no credit history. However, the USAA Secured Amex still has the unique feature of an interest-earning CD account, which encourages you to save during your credit journey and provides interest earnings whether or not you use your card.

The Navy Federal Credit Union nRewards Secured Credit Card is another secured card for military members. The nRewards Secured card earns a flat rate of 1X points on all purchases, which isn’t much, but is a good introduction to earning rewards. This card has no annual fee and no fees for cash advances, balance transfers or foreign transactions. The lack of fees for card activities like these offers a great advantage for cardholders deployed overseas.

The APR on the nRewards Secured card is also much lower than the USAA Secured American Express, making it a safer option for users wary of falling into high-interest credit card debt.

Navy Federal also offers the chance to graduate to an unsecured rewards credit card after 12 statement cycles, but some may consider this timeframe too long when other secured cards can help you accomplish this same feat in six or seven months.

Unfortunately, this card does not graduate to an unsecured card. However, it’s still a useful tool to build your credit score to qualify for unsecured credit cards. You should wait six to twelve months to build your credit before applying for another card.

Secured cards will often use your initial deposit on the card as your limit and then automatically check your eligibility for a higher credit limit every six to eight months. If you have paid your balance on time and have kept your credit utilization under 30 percent for over six months, you can call USAA customer service and ask for a larger limit.

It varies depending on your credit history. If you are rebuilding your credit, it will be more difficult to increase your score than if you’re just starting to build credit for the first time. However, no matter your credit history, if you establish good habits and focus on having as little debt on your card as possible, you can earn a good or excellent credit score over time.

A student or credit-building card’s cost has a large influence on its overall score. 

Students already face a ton of expenses, so extra card costs are best avoided if possible, and people with limited or damaged credit tend often find the cards they can qualify for are much pricier than traditional credit cards designed for people with a good or better credit score. 

We compare a card’s total cost, including any annual fees, account activation fees, monthly fees and more against the total cost of other cards in this category and assign each card a score based on its affordability. We also factor rewards-earning potential into our assessment of a credit-building card’s total cost, subtracting a card’s expected earnings from the sum of its fees. 

To get a sense of a card’s rewards-earning potential, we estimate its average annual rewards rate and average annual earnings based on the most popular spending categories (as covered in the latest Bureau of Labor Statistics consumer spending report). 

However, we use a slightly lower spending assumption ($300 per month or $3,600 per year) to estimate average earnings, assuming students and credit-builders will start out with a lower credit limit, will want to keep credit utilization low and will focus primarily on small purchases they can easily pay off.

Given the many costs students face — from textbooks to laptops — the presence of an introductory APR on purchases or balance transfers also plays a role in a student card’s score.

A card’s APR is also a major factor in its credit-building score. Each card’s average APR is compared against the average APR of other cards in the category, and the cards with lower-than-average APRs receive a higher rating. 

Though high APRs are hard to avoid when you’re just starting out or working on your score, credit-builders should strive for as low an APR as possible since they’re likely to either be new to managing cards or trying to establish better financial habits and avoid falling into debt.

Along with a credit-building card’s cost, our rating system takes into account how easy the card makes it to build credit. To assess this, we evaluate its credit limit potential and minimum deposit requirement.

Unsecured cards with a high starting credit limit and secured cards that let you put down a large deposit and get a matching high credit limit will score the highest according to our “Ease of building credit” rubric and are more likely to appear on our list. 

This is because a high credit limit can make it much easier to keep your credit utilization low, a primary credit-building factor that makes up 30 percent of your FICO credit score. 

Secured cards have a slight advantage in this category since the maximum credit limit on a secured card tends to be much higher than the typical starting credit limit on an unsecured card that’s available with a bad or fair credit score. However, unsecured credit-building cards have the upper hand in another key aspect of building credit: accessibility. 

Cards that carry no or a low deposit requirement can also receive a high score according to our “Ease of building credit” rubric since these cards offer a lower barrier to entry than secured cards that require you to put up hundreds of dollars in an upfront deposit. 

Indeed, some users may prefer to pay a non-refundable $50 annual fee while they work on their credit score than tie up hundreds in a refundable security deposit.

We also evaluate each card’s benefits based on how useful they are for students or someone looking to build a positive credit history and save money on everyday spending. 

We consider the inclusion of a rewards program, student-centric perks and access to your credit score or a credit monitoring service of prime importance, along with the ability to prequalify for the card with only a soft credit pull and a clear path to increase your credit limit or graduate to an unsecured or full-fledged rewards card.

Cards that include these benefits are likely to score higher according to our credit-building card scoring rubric.