Everything you need to know about getting a secured credit card (2024)

FAQs

What do I need to qualify for a secured credit card? ›

A secured credit card is a type of credit card that requires a security deposit or savings account collateral. To get a secured credit card, you need to provide a cash deposit—usually $200-$500—which usually matches your credit limit and will be held by the lender in case of late or missed payments.

Secured credit cards tend to have: High fees and interest rates. Secured credit cards may charge high application, processing or annual fees. Additionally, these types of cards typically have high interest rates because credit card issuers may expect high default rates from people with lower credit scores.

To use a secured credit card with a $200 limit, first put down a refundable security deposit of $200 to establish your credit line, then use the card to make a few small purchases each month, and pay off the balance by the due date. You will get the $200 back when you close your account or receive an upgrade offer.

It can take three to six months or longer to build your credit score for the first time when using a secured credit card. However, the time it takes to build up a good credit score will vary depending on things like your current debt, payment history, and debt-to-income ratio.

You may be denied a secured credit card for various reasons, including a lack of credit history, low credit score or no verifiable income. If you've been denied a secured credit card, working toward increasing your credit score can help improve your chances of approval if and when you decide to reapply.

The Discover it^® Secured Credit Card is our top pick for easiest credit card to get because it's geared toward those with limited / poor credit. It offers great rewards and charges a $0 annual fee.

While it's impossible to say exactly how much your credit score will improve, using a secured card can boost your credit score relatively quickly — typically in under six months. This is especially true if you focus on the five factors that make up your credit score: Payment history. Credit utilization.

You should put at least $200 on a secured credit card, especially if you want to use the card for everyday purchases. The deposit you put down on your secured credit card will also function as your credit limit in most cases, so putting down very little will make using your card more difficult.

The key to building credit with a secured credit card is to use a small percentage of your credit line each month and then pay it off when your statement arrives. This demonstrates to your card issuer, and in turn the credit bureaus that you can responsibly manage credit.

It typically takes anywhere from 6 months to 18 months for a secured card to become unsecured, but this timeline can vary.

Are secured credit cards good for beginners? ›

If you have no credit history, a secured credit card can be a first step to begin building one. If you have a low credit score that makes it difficult to qualify for an unsecured credit card or other loan, a secured credit card can help you rebuild your credit.

While secured credit cards require you to provide a security deposit that usually establishes your spending limit, they can be used to cover many of the same transactions as unsecured credit cards, including renting a car.

The impact on your credit score: Closing a secured card can have the same consequences on your credit score as closing any other credit card by bringing down the average age of your accounts and lowering your overall credit limit.

Myth 1: Your credit card security deposit is nonrefundable

Reality: The security deposit on your secured credit card is fully refundable. You can get your security deposit money back if you close your account, so long as you pay your balance in full.

Whether you're building credit from scratch or rebuilding a poor credit history, there's no minimum amount of time you should hold on to a secured credit card. Instead, focus on how the card is helping you work toward your goal and consider the card's features to determine the right approach.

Secured credit card offers do not specify a minimum income requirement, but all credit card applicants must demonstrate an ability to pay before being approved. To get a secured credit card, you will need at least enough income to afford the card's security deposit and minimum monthly payments.

But even if you have the money for a deposit, you can be denied a secured card if your credit profile is deemed too risky to a lender. Each lender, or card issuer, has a set of standards as to what an ideal borrower looks like. This includes your credit score, your income and your current and former debts.

The credit limit on a secured credit card is usually determined by the security deposit you provide when applying. This limit is often equal to your deposit and serves as the amount you can spend on the credit card. For example, your $500 deposit would become your secured card's credit limit.

No credit score is required to apply for Discover it^® Student Cash Back, Discover it^® Student Chrome, and Discover it^® Secured Credit Card. Discover will consider information you include on your application and provided by others to determine your eligibility.