Secured credit cards let you access a credit line backed by a cash deposit, commonly equal to your credit limit. They can help build or rebuild credit if the issuer reports to Experian, Equifax, and TransUnion. Fees and APRs vary; some cards charge annual or application fees while others do not. Many issuers offer a path to upgrade to an unsecured card and return the deposit after responsible use. Always confirm deposit handling, reporting practices, fees, and graduation terms before applying.

What a secured credit card is

A secured credit card uses a refundable cash deposit as collateral for your credit line. You use the card like any other card to pay for goods and services. The deposit reduces the issuer's risk, so these cards are often available to people with limited or damaged credit histories.

How the deposit and credit line relate

Typically your credit limit equals the amount you deposit. Deposits commonly start in the low hundreds and can go up to several thousand dollars depending on the issuer. Some issuers hold your deposit in a savings or locked account; a few pay interest on that deposit, but many do not.

Note the deposit is usually refundable when you close the account in good standing or when the issuer "graduates" you to an unsecured card.

Fees, APRs, and protections

Fees and interest rates vary. Many secured cards charge annual fees and carry higher APRs than prime unsecured cards, but product terms differ widely: some secured cards have no annual fee and competitive rates. Review the card agreement for activation, monthly, and penalty fees.

Federal rules since the Credit CARD Act of 2009 require clearer disclosures and limit some unfair practices, but they do not eliminate fees or high APRs. Read the terms before you sign.

Building (or rebuilding) credit

If your goal is to build credit, confirm the issuer reports account activity to the major credit bureaus - Experian, Equifax, and TransUnion. On-time payments and low utilization can help your score over time. Missing payments can hurt your credit just as with unsecured cards.

Graduation and refunds

Many issuers offer a path to upgrade to an unsecured card after a period of responsible use. When that happens, they typically return your deposit. Policies and timelines differ, so ask the issuer how and when they consider a cardholder for graduation.

Practical questions to ask before you apply

  • What is the required security deposit and is it refundable?
  • Does the issuer report to Experian, Equifax, and TransUnion?
  • What are the annual, application, and other fees?
  • What APR applies, and are there penalty rates?
  • Do you graduate to an unsecured card and how is the deposit returned?
  • Where is my deposit held and is it FDIC-insured?

Bottom line

Secured credit cards are a straightforward tool to access a credit line and rebuild credit, but terms vary. Compare deposit sizes, fees, APRs, reporting practices, and graduation policies. Ask clear questions up front so you know when and how your deposit will be returned and whether your activity will help your credit report.
  1. Confirm whether deposits for secured credit cards are FDIC-insured for a given issuer and how they are held.
  2. Verify current typical minimum deposit ranges across major secured-card issuers.
  3. Check which major secured card products commonly pay interest on the security deposit and which do not.

FAQs about Secured Credit Card

Will a secured card help my credit score?
Yes - if the issuer reports your payments and balances to the major credit bureaus (Experian, Equifax, TransUnion). Make timely payments and keep balances low to see improvement over time.
Is my security deposit returned?
Generally yes, if you close the account in good standing or the issuer upgrades you to an unsecured card. Exact refund timing and conditions vary by issuer.
Do all secured cards charge high fees and APRs?
No. Fees and APRs vary. Some secured cards have no annual fee and competitive rates; others charge higher fees. Always compare the card agreement.
Can a secured card be upgraded to an unsecured card?
Many issuers offer a "graduation" path to an unsecured card after responsible use. Policies differ, so ask the issuer about the timeframe and requirements.
Is my deposit FDIC-insured?
The deposit is often held by the issuing bank, and it may be FDIC-insured in some cases. Check with the issuer to confirm how the deposit is held and insured.

News about Secured Credit Card

5 Things to Know About the Kikoff Credit Card - NerdWallet [Visit Site | Read More]

Leading Digital Bank Chime Rolls Out Cash-Back Secured Credit Card - Forbes [Visit Site | Read More]

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Key Secured Credit Card® Program Surpasses 40,000 Graduates, Driving Credit Score Growth and Financial Resilience - PR Newswire [Visit Site | Read More]

How To Choose A Secured Credit Card: 7 Things To Look For - Bankrate [Visit Site | Read More]

Bank of America Unlimited Cash Rewards Secured Credit Card​: Is It a Good Card? - LendingTree [Visit Site | Read More]

New Chime Card™ offers 1.5% cash back and no annual fee - CNBC [Visit Site | Read More]