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These secured card statistics show how we’re building credit

Learn how many people use secured cards, why they use them and more.

Finding access to credit is a big part of life in America. When applying for a loan or even renting an apartment, you’re often asked about your credit score. But if you don’t have any credit history, or you need to rebuild your credit, you may run into issues getting the things you need. That’s where secured credit cards can be helpful.

As of the end of 2018, there were roughly 4 million open secured credit card accounts, according to a Federal Reserve Bank of Philadelphia discussion paper. And according to that report, the number of secured credit cards has been steadily rising since September 2012.

Who has a secured credit card?

Secured cards are designed to help those with bad or no credit scores gain access to credit, which is why in 2018, 44.7% of secured credit cards were opened by someone with no credit history, according to the Federal Reserve Bank of Philadelphia. Following those with bad or no credit are cardholders with poor credit (28.7%). This means that almost three-quarters (73.4%) of the secured credit market in 2018 was made up of those with either a sub-579 FICO score or no credit score at all.

This trend has held true since at least 2016, with those lacking credit or with bad credit making up at least 73% of those with a secured card. The only major change: People with poor credit used secured cards at a rate that was 2.8 percentage points higher in 2018 than in 2016, while people with no credit saw a 2.6 percentage point decrease.

Average credit score of people opening a secured card

201620172018
Excellent/Good12.4%11.9%11.7%
Fair14.4%15.0%14.9%
Poor25.9%28.1%28.7%
No credit score47.3%45.0%44.7%

Source: Moving into the Mainstream, Federal Reserve Bank of Philadelphia. Averages based on a 1.5% random sample of 95% of open secured accounts in the Y-14M monthly reports as of November 2018.

Secured cards are especially common among younger cardholders since credit is something you build over time. Secured cards represent 7% of all mass-market cards issued to people under the age of 35, according to the 2017 Consumer Credit Card Market from the Consumer Financial Protection Bureau (CFPB).

What limit can you expect with your secured card?

Credit limits on secured cards are much lower than traditional credit cards. 75% of people opening a secured card account are given a limit of $200, $300, or $500. Often holding onto your card and making on-time payments can result in an increased credit limit, but this depends on your credit score.

For example, if you didn’t have a credit score when you opened your secured credit card, your limit might have grown by an average of $70 over two years, whereas if you’d had a poor score, you would have seen your limit increase an average of $150, according to the CFPB’s 2017 Consumer Credit Card Market report.

How do credit limits compare between secure and unsecured credit cards?

The average credit limit of a cardholder with an unsecured card — meaning total access to credit, and not just on a single card — is $24,032. Whereas the average limit for cardholders with a secured credit card is just $1,379.

Average credit limit on existing accounts

Average credit limit on existing accounts
Secured cardholder$1,379
Unsecured cardholder$24,032

Source: The Secured Credit Card Market, Federal Reserve Bank of Philadelphia. Averages based on secured accounts in the Y-14M monthly reports from June 2012 to December 2015.

How much are people spending with their secured cards?

With the majority of credit limits under $500, secured card balances are far lower than unsecured credit cards. The average balance of a secured card three months after opening is around $200, according to the CFPB. That balance tends to increase over the lifespan of the card, increasing to $350 two years after opening — roughly 75% higher.

Average balance for secured cards over time

Months since account openingAverage balance per account
3$197.39
6$225.18
9$285.04
12$321.38
15$342.76
18$327.79
21$340.62
24$355.58

Source: The Consumer Credit Card Market 2017, Consumer Financial Protection Bureau. Averages based on secured accounts in the Y-14M monthly reports from June 2012 to November 2017.

Those with secured cards actually use less of their available credit than people with unsecured cards, according to a 2016 discussion paper The Secured Credit Card Market from the Federal Reserve Bank of Philadelphia. The average utilization of existing credit for someone with a secured card is just 14.5% versus 31.4% for those with an unsecured card.

Average utilization of existing credit

Average utilization of existing credit
Secured cardholder14.5%
Unsecured cardholder31.4%

Source: The Secured Credit Card Market, Federal Reserve Bank of Philadelphia. Averages based on secured accounts in the Y-14M monthly reports from June 2012 to December 2015.

Can you get a secured card with a low APR?

Unfortunately, the majority (95%) of secured cards come with APRs of between 15% and 25%, according to a 2016 report from the Federal Reserve Bank of Philadelphia.

How do unsecured and secured cards compare on purchase APR?

While unsecured and secured cards can come with similar APRs, you can find lower purchase APRs among unsecured card options. You may even find yourself an unsecured card with an APR in the single digits.

Most common purchase APR accross cards

Purchase APR% of secured cards% of unsecured cards
0%2.4%3.9%
0.1% – 10%0.0%5.1%
10.1% – 15%1.4%24.7%
15.1% – 20%31.6%22.1%
20.1% – 25%64.3%29.8%
>25%0.2%14.4%

Source: The Secured Credit Card Market, Federal Reserve Bank of Philadelphia. Averages based on secured accounts in the Y-14M monthly reports from June 2012 to December 2015.

Do secured credit cards have annual fees?

It’s difficult to find a secured card without an annual fee. According to the Federal Reserve Bank of Philadelphia discussion paper, 83% of secured cards come with an annual fee and another 2% come with monthly fees.

Cards with annual fees cost on average $29.60 for the use of their card, and those with monthly fees cost about $3 a month.

Types of fees for secured cards

Fee type% of secured cards
Annual83%
Monthly2%
None12%
Not reported3%

Source: The Secured Credit Card Market, Federal Reserve Bank of Philadelphia. Percentages based on secured accounts in the Y-14M monthly reports from June 2012 to December 2015.

How can a secured card help you build your credit?

After opening an account, it takes the median consumer about six months to establish credit. According to the Federal Reserve Bank of Philadelphia, 25% of those who took out a secured card without credit history were able to graduate to an unsecured card with an initial credit score of 728 or higher — or an excellent credit score.

Cardholders trying to rebuild a spotty credit score were able to add an average of 24 points to their score over a two-year period. It’s not all sunshine and rainbows, however, as those who closed their secured card or were moved to “charged-off” status after nonpayment saw a credit score drop of 40 points on average.

Changes in median credit scores over time

Closed without a balance568522-46

Account groupingMedian credit score at openingMedian credit score after two yearsChange in score
Open589613+24
Closed with a balance569527-42
Charged off574514-60

Source: The Secured Credit Card Market, Federal Reserve Bank of Philadelphia. Based on secured accounts in the Y-14M monthly reports from June 2012 to December 2015.

How long do people typically have a secured card?

About half of those with no credit history and a third of people with credit at the time of opening a secured account were able to open an unsecured card within two years, according to the 2019 discussion paper Moving Into the Mainstream, from the Federal Reserve Bank of Philadelphia.

% of secured cards that graduate to an unsecured card within 2 years

Credit score at account opening% of secured cards that graduate within 2 years
No credit score31.4%
Excellent/Good (620+)27.6%
Fair (580-619)19.4%
Poor (550-579)13.7%
Very Poor (300-549)10.0%

Source: Moving Into the Mainstream, Federal Reserve Bank of Philadelphia. Graduation rates based on secured accounts that were opened in 2016 and graduated within 2 years according to the Y-14M monthly reports from Jan 2016 to December 2018.

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