What deposit should you make with your secured credit card? (2023)

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You qualify for onesecured credit card, a smart way to build your credit history or repair damagecreditworthiness. Now you are faced with the choice: how much money should you deposit in the bank or financial institution behind your card?

This is an important decision. The money you deposit with a secured credit card serves as collateral for your card.credit limit. For example, if you deposit $500, your card's credit limit is also $500 and you cannot withdraw more than that amount. However, this does not mean that you have to pay as large an advance as possible. The right deposit amount for you depends on two main factors:

  • Have you created an emergency fund with enough cash to cover repairs and unexpected expenses?
  • Do you plan to use your card for larger purchases or are you more interested in repairing damaged credit or building a credit history?

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  • Rewards from bonus categories have a limit
  • Secure cards don't offer many of the benefits that unsecured cards do.
  • Secure cards require refundable deposits

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  • No credit score is required to apply.
  • No annual fees, cash back and build your credit history
  • Your secured credit card requires a refundable security deposit, and your credit limit is equal to the amount of your deposit, starting at $200. Bank details must be provided when submitting a deposit.
  • Automatic reviews that start after 7 months to see if we can move to an unsecured line of credit and get your deposit back.
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(Video) Secured Credit Card - How Much Should You Deposit?

How much should you deposit?

Most credit card providers require you to deposit a minimum of $200 if you apply for a secured credit card. However, there are exceptions. If your credit is strong enough, you may qualify for a $200 credit limit for a $49 or $99 first deposit withCapital One Platinum secured credit card, For example.

Maximum deposit amounts also vary by card issuer. ofDiscover it® secured credit card, you can deposit up to $2,500. So when should you deposit an amount closer to your card's maximum allowed deposit, and when should you focus more on the card provider's minimum requirements?

Reasons to consider a smaller despot

First, think about your financial situation. You need an emergency fund to cover unexpected financial situations, from a new transmission for your car to a large medical bill.

Financial experts recommend that your emergency fund has enough to cover daily living expenses for three to six months. The establishment of this fund should be a financial priority. If you haven't already, consider making a smaller deposit with your credit card company. This frees up more money that you can use to build an emergency fund.

Also see how much money you have in your savings accounts. If your accounts are running low and you need most of the money you earn to cover living expenses, consider making a smaller deposit. You need to make sure you can pay your daily bills. It should be a priority over withdrawing the largest deposit.

Next, think about your goals for your new secured credit card. Do you primarily want to improve a bad credit score or build a credit history? Then you don't need a large down payment. You only need to make small purchases during the month and then pay them off on or before the card's due date to steadily improve your credit score and history.

Reasons to consider a larger down payment

If you want to use your secured card for larger purchases during the month, you can make a larger deposit. With a smaller deposit you have a lower credit limit, which may prevent you from making much larger purchases.

A larger down payment may make sense if you've already built up an emergency fund and saved enough money to comfortably cover your bills and living expenses. If you have this financial cushion, you can save more dollars for a safe deposit on the card.

But be careful. No matter how much you deposit, only load what you can pay in full each month. Failure to do so could harm the credit score you are trying to improve.

One of the most important factors in determining your credit rating is your ownloan utilization rate, a measure of how much available credit you're using. The less credit you use, the better for your credit score.

If you have a low credit limit (say, $500), you can easily eat up a lot of it on your monthly purchases. For example, if you have a balance of $250, you're using 50% of your available credit, a high amount that will affect your credit score. Therefore, it's best to pay off the full credit card balance on or before the due date. Most loan experts recommend that you keep your usage below 30%.

What is a secured credit card?

A secured credit card works like a traditional card: you can use it to make monthly purchases. If you pay off your balance in full each month, you will not be charged interest on these purchases. If your bill is overdue, the bank or financial institution that issued your card will charge you interest on the amount you owe.

However, secured cards require you to make a deposit at the bank or financial institution that offers them. The amount you deposit is your credit limit. If you deposit $300, that's your credit limit. If you deposit $1000, that amount is your limit. You cannot charge more than this limit.


Traditional unsecured credit cards don't require consumers to put money aside. Instead, the credit limits on your cards are based on your credit scores and reports: the stronger your credit, the higher your credit limits tend to be.

You might think this down payment is a pain. But it makes it easier for consumers with low credit scores or with little or no credit history to qualify for credit because it acts as collateral for issuers and encourages them to extend credit to companies with lower credit scores. If you stop paying, your bank or financial institution can use the money you owe on your deposit to cover the costs. This removes the risk that banks would otherwise face when extending credit to cardholders who may have a history of delinquent payments or late payments. That's why so many consumers turn to secured cards to rebuild damaged credit: they still can't qualify for traditional unsecured cards.

How can secured cards help you rebuild your credit?

Secured credit cards are attractive because they can help consumers with low credit scores or no credit history build a better credit score.

Every time you pay on time with a secured card, the three national credit bureaus are notified,Experian, Equifax en TransUnion. If you keep making your payments on time, your three-digit credit score will steadily improve.

The number of on-time payments you need to take your score to the next level varies depending on where you start. However, expect to make timely payments for at least six months to see a positive difference in your credit score.

Just make those payments on time. Any payment you make late (overdue for 30 days or more) will also be reported to the credit bureaus. This can cause your credit score to drop by 100 points or more. Delinquent payments remain on your credit reports for seven years.

Pay for your purchases in full each month. Too much debt affects your credit score. And if you have a balance, your card issuer will charge you interest on the amount you owe. Interest rates on secured cards are often high, so losing your debt can cause your debt to grow quickly.

There is another reward for paying on time. If you earn enough, your credit card company can automatically upgrade your secured card to an unsecured card. The number of payments you need to make depends on the card.

If your card provider does not check your account automatically, you can iimprovementto an unprotected card. Your card provider is not required to agree to your request, but the longer your history of making timely payments, the more likely your bank or credit union will update your account.

Find the best credit cards for 2023

No single credit card is the best option for every family, every purchase, or every budget. We've selected the best credit cards in a way that's designed to be as useful as possible to as many readers as possible.

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The point

There is no one-size-fits-all answer to the question of how much deposit you need to deposit when applying for a secured credit card. The key is to put down a down payment that will allow you to make the purchases you need each month to steadily improve your credit score while leaving enough savings and emergency fund dollars to cover your day-to-day living expenses and any unexpected financial situations. to cover.

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