Who Can Be Approved for a Secured Credit Card?

The approval requirements vary between secured credit cards, but they’re generally less strict than the requirements for unsecured cards. People with subprime credit or no credit history are still eligible for many of them. To qualify, you’ll also need to provide a cash security deposit. It’ll serve as collateral and protect the lender if you default, which is why the cards are easier to access. The amount you deposit also becomes the limit on your credit card. Many have a minimum requirement of around $200 or $300.

How Much Do I Have to Deposit on my Secured Credit Cards?

There is no universal minimum deposit for a secured credit card. Each credit card provider is free to set their own requirements. However, you’ll usually need to put down at least $200 to $300 to qualify for most cards. Keep in mind that your deposit usually becomes your personal credit limit, and if it’s too low, it’ll be harder to keep your credit utilization ratio at appropriate levels.

What's the Difference Between a Secured Credit Card and a Regular Credit Card?

To qualify for a secured credit card, you have to provide a security deposit that serves as collateral to protect the card issuer. A traditional credit card, or an unsecured card, won’t require you to give the issuer a security deposit. Because of the cash collateral, secured credit cards are easier to qualify for than unsecured cards. Your deposit sets the credit limit on your card, which protects your lender if you ever default on the account. In most cases, you can get your security deposit back from your lender once you’ve made your monthly payment on time for about a year. Some card issuers review you for it automatically, but you may have to ask others to initiate the process.

How Do I Apply For a Secured Credit Card?

Applying for a secured card is usually no different than with a traditional credit account. You supply the credit card company with details like your name, Social Security Number, and income. You’ll also need to be over 18 years old with a U.S. address, and even though their standards are lower than average, most still require a credit check. The secured credit card issuer will pull your credit report, and if you fit their profile, they’ll approve you for the account. Once they do, you’ll fund your deposit and get your card.

How Do Secured Cards Help You Build Credit?

Secured credit cards help you build credit by giving you an opportunity to make monthly payments on time and in full, thus improving your payment history. That’s the most significant factor in your FICO score, accounting for 35% of your credit rating. That doesn’t mean you have to pay your balance off each month. You can get away with making your minimum payment. However, it’ll be much more expensive that way. Additionally, a secured card can help you diversify your credit mix if you don’t have a card yet. It’s best to have both installment and revolving debt accounts.

Can You Get Turned Down For a Secured Credit Card?

Secured cards generally have lower credit requirements than unsecured cards, but you can still get turned down for most of them. Many secured cards are for people with fair to poor credit, but some are only for those with no credit history. If you’ve already made mistakes with credit accounts, these types might turn you down. Alternatively, if your income is too low, you won't be able to afford your monthly payments, and the card issuer might deny you. An inability to afford the security deposit would result in the same.

Can You Get Your Deposit Back?

Many secured credit cards eventually refund your security deposit. They may decide to upgrade your account to an unsecured card after you demonstrate responsibility with your account by making your payments on time and in full for a while. That period is somewhere between eight months and a year and a half. Check your credit card provider’s terms to figure out the timeline. If you’ve made all your payments on time for the agreed-upon period, you can request that they review you for an upgrade. Alternatively, you can get your deposit back when you cancel your account. Be aware that if you have an outstanding balance at the time, they’ll take it out of your deposit. And cancelling your credit card will probably have a negative impact on your credit.

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