Ditch cable, re-evaluate your smartphone bill, try a budgeting app and more tips to put away money for your deposit.
Secured credit cards can be a practical lesson in personal money management. They offer an opportunity to demonstrate your creditworthiness and graduate to your typical unsecured card after you’ve proven responsible spending and on-time payments.
But you’ll first need to save for the deposit required to secure one — an important first step on the path to financial well-being.
Why do I need a deposit for a secured credit card?
A secured card’s deposit is similar to the deposit you put down when renting an apartment. And 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.
Your typical secured card deposit starts at $200 to $250, either paid as part of your application or after you’re approved. Your deposit then becomes your secured card’s credit line.
You can’t touch this deposit to, for example, pay off monthly charges. But most cards refund your deposit after a series of on-time payments or after you close the account.
But for potential secured credit card applicants, simply finding the money for the cash deposit can be the first hurdle to overcome.
Do all secured credit cards require a deposit?
No. Most secured cards require a deposit, but you’ll find a rare few that accept either no minimum or a low deposit that starts at $49.
For example, the DCU Visa® Platinum Secured Credit Card doesn’t require a minimum deposit and has no annual fee. Meanwhile, the Secured Mastercard® from Capital One® requires a low deposit of only $49 or $99, while still extending a $200 credit line.
Learn more in our guide to secured credit cards with low or no deposits.
Tips to save money on your secured credit card deposit
Failing to plan often leads to the failure of a plan. Your plan to get a secured credit card must involve a saving strategy, and this strategy begins with knowing your fixed expenses.
A few strategically placed calls and new savings habits can yield a lot of savings, but a little assertiveness won’t hurt either.
Download a free budgeting app
To avoid late-payment setbacks, set up payment alerts and autopay for your bills.
A free budgeting app like 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 apps can also help you set aside money. For instance, the Qapital app works by moving money from your checking account to a separate account when your transactions trigger preset rules. Wells Fargo makes interest on Qapital-linked accounts.
Try to lower your rent
When trying to save, don’t forget that big wins — like refinancing your home or negotiating a modest rent decrease — can pack a punch.
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 and seeking out Energy Star–labeled appliances matter to your long-term financial success. Many utilities offer rebates that partly cover the cost of a programmable thermostat.
Reexamine your phone bill
Examine your phone’s service plan, and talk to your provider about ways you bring down your cost. To get a clearer sense about whether your 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 stepped-down 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 explore whether Netflix, Amazon Prime Video, Sling TV or Hulu 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 telecommuting — either one day a week or several — is possible.
For good measure, evaluate public transportation, particularly if you live in or near an urban center where trains, busses, carpooling and carshare services, like Zipcar, 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.
How to compare secured credit cards
Not all banks offer secured credit cards, and some prefer offering cards to people with no credit history — college students, foreign students and immigrants — rather than to people with a poor credit score or a history of bankruptcy.
Use caution when selecting a secured credit card to apply for. Generally, if you don’t recognize the name of the bank issuer, question the card. Not all secured credit cards are created equal.
Check that your card reports to credit bureaus
When deciding which secured credit card to apply for, see if the provider reports your responsible spending to at least one of the three credit bureaus, if not all three.
If an issuer doesn’t report to Equifax, Experian or TransUnion, your secured credit card might not help you develop or reestablish your credit history as quickly.
Carefully examine the card’s fees
Secured credit cards typically come with an annual fee that can also increase each year you keep it. Some secured credit cards charge a monthly fee in addition to the annual fee. Still others begin charging interest on your purchases immediately after you swipe or dip for them.
Top-rated secured credit cards do not charge a monthly fee, and none of the secured credit cards that credit experts highly regard charge a cardholder interest at the moment of a purchase. Typically, you have an interest grace period that extends to the end of the billing period.
When it comes to secured credit cards, consider a monthly fee and no grace period red flags. You’ll often find better solutions to your credit situation.
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, and a higher credit limit can help boost your credit score more quickly.
Consider topping up your secured credit card, if doing so won’t affect your overall savings strategy or financial goals. Ultimately, when you’re refunded your secured credit card’s deposit, you can put in your emergency savings fund. Two birds, one stone.
Ideally, your emergency savings fund should be large enough to cover your rent or mortgage, groceries, transportation and utilities for three to six months.
How soon do I have to fund the deposit?
With the typical secured credit card, you pay a deposit with your application or after you’re approved for a card. Ultimately, you’ll need to confirm your provider where in the process it requires your deposit.
After so many months, some issuers refund your security deposit while you continue to enjoy the card and its benefits. Other issuers wait to return your deposit until after you close the account with no balance due.
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.
The best secured credit cards with low minimums or delayed deposits
| Name | Annual fee | Minimum credit limit | Maximum credit limit | APR | Deadline for deposit |
|---|---|---|---|---|---|
| Secured Mastercard® from Capital One® | $0 | $200 after putting down a $49, $99 or $200 deposit | $3,000 | 26.99% | Before activating the card and within 80 days of approval |
| Citi® Secured Mastercard® | $0 | $200 | $2,500 | 24.74% | At the end of the application process |
| Discover it® Secured | $0 | $200 | $2,500 | 24.49% | With your application |
| OpenSky® Secured Visa® Credit Card | $35 | $200 | $3,000 | 19.64% | When opening your account |
| BankAmericard® Secured Credit Card | $39 | $300 | $4,900 | 22.49% | With your application |
When can I ask for an upgrade to an unsecured card?
Secured credit cards can be used just like any other credit cards, often with the goal of graduating to an unsecured card.
If your provider doesn’t contact you with the opportunity to upgrade, call them after about a year of responsible payments to ask about trading up to an unsecured card. At that time, you can also ask about a refund on your deposit.
Plan to use your card for small purchases that you can handily pay off each month. Remember that payment history is 35% of your credit score, making it the largest single item factored into your credit score.
Bottom line
To some degree, saving for a secured credit card deposit is comparable to maintaining your overall financial health. With a few lifestyle tweaks and calls to negotiate your existing bills, you’ll likely find the money for your card’s security deposit in no time.