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.
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Secured credit cards can offer an opportunity to demonstrate your creditworthiness and graduate to an unsecured card. But you’ll first need to save for the deposit required to get a secured card. There a few doable ways to save for a secured card 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.
To avoid late-payment setbacks, 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.
A free mobile banking app 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.
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.
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 or 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.
Examine your phone’s service plan, and talk to your provider about ways to 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.
Join the growing number of cord cutters by exploring 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.
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, buses, 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.
A secured card’s deposit is similar to the deposit you put down when renting an apartment. Like 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.
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.
Our guide to secured credit cards with low or no deposits
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.
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 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.
Saving for a secured credit card deposit 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.
Compare secured credit cards for one that best suits your current and future financial needs.
How is a secured credit card different from your typical unsecured credit card?
The main difference between a secured credit card and an unsecured credit card is that secured credit cards typically require a deposit to open and use it.
How can I graduate or transition to an unsecured credit card?
The surest way to graduate to a secured credit card involves selecting a reputable secured credit card and using your secured credit card wisely. After a stated period of good standing, your provider may extend the option to upgrade to an unsecured credit card.
How do I increase the credit line on my card so I can do more with it?
A secured credit card’s credit limit is often linked to your deposit. Your card provider might allow you to top up your deposit to the maximum, thereby extending your credit line. Call your credit card issuer to learn more about how it handles credit lines.
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Both provide the same freedom as a credit card, but without the risk of falling into debt.
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Need to build a credit history? Get started with a secured credit card like First Premier.
Secured credit cards with rewards are rare, but they do exist.