How Do Secured Credit Cards Work?

secured-credit-cards-15A secured credit card can be a great option for you to build your credit history while enjoying the conveniences of using a credit card.


Start by looking specifically for a secured credit card to apply for. If you apply for a regular credit card and get a denial, some lenders will offer you a secured credit card, and some will just deny you and leave it at that. It will save time and effort to just apply for the secured card from the beginning if you already know you can’t get a regular credit card.

  • Upon being approved for a secured credit card, the lender will require you to send in or electronically transfer a “security deposit.”
  • Creditors generally require a minimum deposit of $300-500, but you can send more than that if you like. Your credit limit will be the amount of your deposit, or possibly a portion of your deposit.
  • The money you send is still yours, held in an account of the card-issuing bank. The money may be put into a Certificate of Deposit and will earn interest for the entire period the creditor has it.
  • You will not be able to touch your deposit until the creditor-specified period of time, generally one or two years. This gives you a chance to practice good money management skills and prove to your credit card issuer that you can handle a standard credit card.
  • If your trial period goes well and you make all your payments on time and as agreed, the lender will allow you to withdraw your deposit (or you can just leave it there to continue to earn interest) and issue you a standard credit card.


Using a secured credit card is a great way to build your credit. And by making smart credit choices now and in the future, you’ll find that over time, obtaining new credit becomes easier and easier.

2 throughts on "How Do Secured Credit Cards Work?"

  1. I’d recommend that you go to the Bank of America Website and apply for a cdiert card there. If you have a clean cdiert record, you’ll probably qualify for their 99/500 secured cdiert card. You send them $99 and they send you a cdiert card with a $500 cdiert limit. That takes care of your first card. In a year, write to Bank of America and ask them to graduate your cdiert card to unsecured status.In ten months after getting your Bank of America card, go to the Capital One Website and apply for your second cdiert card. They’ll probably offer you an unsecured cdiert card and enroll you in their Credit Steps program. This means, for example, that the card might start with a $300 cdiert limit. After three months, it might move to a $500 cdiert limit. Another three more months, and it moves to a $750 cdiert limit. Then the Credit Steps program ends. About six months later, you’ll receive a solicitation from them that invites you to apply for a second cdiert card.A few more things. Never, EVER be late on a payment. Keep your spending to no more than 30% of each card’s cdiert limit. And don’t pay your cdiert-card bill until AFTER the statement arrives. Reason? We had a nut on here last week who would buy something with a cdiert card, then immediately go on line to pay off the charge. This means that his card would report a balance of zero to the cdiert bureaus. FICO measures your use of cdiert, and a constant balance of zero would leave it nothing to measure. I’m not saying that you should carry a balance or rack up interest charges. I’m saying that you have to let the cdiert-card company REPORT a balance BEFORE you pay it in full.Good luck!

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