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Save up for your deposit for a secured credit card

Some secured cards only require a deposit of $75 – but most require $200 to $500 minimums.

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Secured credit cards can offer an opportunity to build or rebuild your creditworthiness. After you’ve improved your score, you can look forward to graduating to an unsecured card where you’ll be able to earn rewards and take advantage of complimentary benefits. But before you can look forward to a better credit card, you’ll first need to save for the deposit required to get a secured card.

Why do I need a deposit for a secured credit card?

A secured credit card’s deposit is similar to the deposit you put down when renting an apartment. Just as a rental deposit protects a landlord if a renter doesn’t pay, the deposit on your secured credit card protects the provider should you find yourself unable to make payments.

The amount you provide as a deposit will usually serve as your monthly credit limit. So if you provide the lender with $300, your monthly credit limit will likely be $300.

Do all secured credit cards require a deposit?

Yes, most secured credit card providers require a deposit which serves as collateral in case you fail to pay your balance.

If you’re looking for a low minimum deposit, there is a secured card on the market offered by Capital One that offers a minimum deposit amount of just $75. However, if you’re looking to pay a bigger deposit in order to get a higher monthly credit limit, a card such as the Refresh Financial Secured Card offers a minimum of just $200 and a maximum limit of $10,000 – which can prove valuable if you’re looking to make a big purchase.

Our guide to secured credit cards with low deposits

Tips to save money for your secured credit card deposit

Before receiving your secured credit card, you’ll need to save up some cash to put down as your deposit. Your plan to get a secured credit card must involve a saving strategy that begins with knowing your fixed expenses. Developing new spending habits can yield a lot of savings, but a little assertiveness won’t hurt either.

Download a free budgeting app

To avoid late payments, set up payment alerts and autopay for your bills.

A free budgeting app such as Mint can be particularly helpful. Use it to set financial goals, track your spending, view your credit score, keep tabs on your investments and balances, pay bills and receive alerts.

Download a free mobile banking app

A free mobile banking app can also help you set aside money. For instance, the Nomi Find & Save by RBC works by moving money from your chequings or savings account to a separate account when you receive your pay or other regular income.

Look into low-income assistance

Many communities offer low-income assistance programs for gas, electricity and other utilities.

Also, if you initially put down a deposit for your utility accounts, ask if you can have it refunded after about a year of timely payments. Some utility providers automatically refund deposits after you’ve established a reliable track record of payments.

Get programmable thermostats and energy-saving appliances

Reducing your overall expenses is key to taking control of your personal finances. Even seemingly small steps like installing a programmable thermostat to lower home heating costs, changing your lightbulbs to LEDs or seeking out Energy Star–labelled appliances matter to your long-term financial success. Some services even offer rebates that partially cover the cost of a programmable thermostat.

Reexamine your phone bill

Examine your cell phone and landline service plans, and talk to your providers about ways to bring down the costs. To get a clearer sense about whether your cell phone plan is right for you, install a free app to track your data use. If you’re not close to hitting your limits, consider a cheaper no-frills plan.

Using a prepaid carrier or joining a friend or family member’s plan can also reduce your monthly smartphone tab.

Ditch cable

Join the growing number of cord cutters by exploring whether Netflix, Amazon Prime Video, hayu or Crave can replace your cable bill. If you aren’t ready to ditch cable, call your provider to negotiate a cheaper deal.

Look into your transportation options

If you live far from work, consider asking your employer if working from home — either one day a week or several — is possible.

For good measure, evaluate public transportation, particularly if you live in or near an urban centre where trains, buses, carpooling and carshare services are available. For those who don’t need a car daily, taxis, rideshare services — like Uber and Lyft — or simply renting a car or using a carshare here and there can save money.

If you do drive, apps like GasBuddy and Gas Guru can steer you to the best gas deals along your route. Also, check if your auto insurance provider offers multiline policies: Bundling your auto and home or rental insurance into a multiline policy can typically shave 10% to 15% off your overall bill.

Compare secured credit cards

Name Product Required Deposit Purchase Interest Rate Cash Advance Rate Annual Fee Reward
Refresh Financial Secured Card
$200 - $10,000
17.99%
N/A
$12.95
The Refresh Secured Card has no credit check, a low annual fee and guaranteed approval once you secure your card with anywhere from $200 - $10,000.
Take advantage of a low annual fee, with no credit check and guaranteed approval once you secure your card with some funds.
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How to compare secured credit cards

Not all banks and credit card providers offer secured credit cards, and some prefer offering cards to people with no credit history — foreign students and immigrants — rather than to people with a poor credit score or a history of bankruptcy. That said, there are cards on the market that cater toward people with poor credit or recent bankruptcies.

Use caution when selecting a secured credit card to apply for. Generally, if you don’t recognize the name of the provider, question the card. Not all secured credit cards are created equal.

  • Check that your card reports to the credit bureaus. When deciding which secured credit card to apply for, check that the provider reports your responsible spending to at least one of the two credit bureaus. If the provider doesn’t report to Equifax or TransUnion, your secured credit card won’t help you to develop or re-establish your credit history.
  • Carefully examine the card’s fees. Secured credit cards typically come with a monthly or annual fee in order to offset the risks for the provider. Once you make a purchase on your secured card, you’ll typically have at least 21 interest- free days before you’ll begin to accrue interest. Be sure to pay off your bill before you incur interest in order to keep costs down and improve your credit score faster.
  • Look into minimum and maximum deposits. With secured credit cards, your credit limit typically matches the deposit you initially put down for it. A bigger deposit often means a higher credit limit, which can help boost your credit score more quickly. However, this isn’t always the case as you can sometimes find a secured credit card that offers a higher credit limit than the deposit, like the Capital One Secured Credit Card that offers a credit limit of $300 for a deposit of $75 only. If you need a higher credit limit later on, you can always provide more collateral to the lender in return for an increased credit limit.
  • How soon do I have to fund the deposit? Typically, you’ll pay the deposit once your application for the secured card has been approved. That said, confirm with your provider when your deposit is required as some will allow you to receive and use the card for 30 days or so before you have to provide the collateral. After a certain number of months, some providers will refund your security deposit while you continue to enjoy the card and its benefits – as long as you’ve proven to be a trustworthy borrower who can pay their balance on time. Other providers will wait until you’re ready to close your account and you’ve paid off your balance in full. However, if you default on your monthly payments, your provider might apply your security deposit to the outstanding credit card balance on your card and close your account – which means you’ll lose your deposit completely.

When can I ask for an upgrade to an unsecured card?

Secured credit cards are often used with the goal of graduating to an unsecured card as soon as you’ve improved your credit score enough.

Some secured card providers will offer you the chance to upgrade to an unsecured card once you’ve increased your credit score and proved that you’re a responsible and trustworthy borrower. If you’re provider doesn’t offer an unsecured card, consider applying for one with a different provide once your credit score is in the good range: about 650 or higher.

Once you decide to close your secured credit card account, you’ll need to pay off your balance in full before you receive your deposit back.

Bottom line

Saving for a secured credit card deposit can be difficult, but once you’ve done it, your secured card can help your overall financial health. With some lifestyle changes and calls to negotiate your existing bills, you can hopefully find the money for your card’s security deposit in no time. Remember that some cards offer deposit minimums as low as $75, which you can increase once you have the money on hand.

Before applying for a secured credit card, compare your optoins to find one that best suits your current and future financial needs.

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