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Comparing Secured Cards Deposit Amounts

Comparing Secured Cards Deposit Amounts
Comparing Secured Cards Deposit Amounts

Comparing Secured Cards Deposit Amounts

Secured credit cards require an upfront security deposit that acts as collateral for the credit line. The deposit amount varies by card issuer and your credit profile. In general, the deposit is equal to the initial credit limit you receive. Comparing the required deposit amounts can help you choose the best secured card.

How Secured Cards Work

Secured credit cards look and function like regular credit cards. The key difference is the security deposit held by the card issuer. This deposit secures the line of credit extended to you.

The deposit amount serves as your initial credit limit. As you use the card responsibly and make on-time payments, the issuer may increase your credit limit above the deposit amount. After establishing a strong payment history, many card issuers will graduate secured card users to an unsecured card and refund the security deposit.

Secured cards help build or rebuild credit by allowing you to demonstrate responsible credit behavior. They provide access to credit that would be unavailable with bad credit or no credit history.

Factors That Determine the Deposit Amount

Several factors go into determining the deposit amount for a secured card:

Credit Score and History

Issuers will check your credit report before approving a secured card. In general, the lower your credit score, the larger deposit they will require. Those new to credit may need to put down the full requested credit limit. If you have some positive history, like previous loans or authorized user accounts, you may qualify for a lower deposit.

Income

Your income helps issuers gauge your ability to manage the card responsibly. Higher income applicants can often qualify for larger credit limits and lower deposit amounts. Include verifiable income sources when applying.

Relationship with Issuer

Some issuers offer secured cards only to existing customers. They may require a lower deposit if you already have accounts in good standing. Opening a checking account prior to the credit card application can help.

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Individual Provider Requirements

Each secured card issuer has its own policies regarding required deposits. The range can be anywhere from $49 to $500 or more. Comparing deposit requirements is important to find the best match.

Average Deposit Amounts by Issuer

While individual factors determine the exact deposit required, reviewing average amounts by top issuers provides a general idea of what to expect:

Capital One Secured

  • Credit Limit Range: $200 – $1,000
  • Average Deposit: $49 – $200

Capital One offers some of the lowest deposit requirements, especially for applicants new to credit. Even those with poor credit can often qualify for a $200 limit with just a $49 deposit.

Discover it® Secured Card

  • Credit Limit Range: $200 – $2,500
  • Average Deposit: $200 – $2,500

As a major credit card issuer, Discover sets deposit amounts proportional to the credit limit. Most applicants should plan on placing a deposit equal to the desired limit.

Citi Secured Mastercard®

  • Credit Limit Range: $200 – $2,500
  • Average Deposit: $200 – $2,500

Citi also adheres to a deposit matching the approved credit limit. Be prepared to make a deposit equal to the requested limit. Citi reviews accounts periodically for increases without requiring more deposit.

Bank of America® Customized Cash Secured

  • Credit Limit Range: $300 – $4,800
  • Average Deposit: $300 – $4,800

As a major national bank, Bank of America offers higher maximum limits but requires full security deposits. Be ready to deposit the full approved credit limit.

Wells Fargo Secured

  • Credit Limit Range: $300 – $5,000
  • Average Deposit: $300 – $5,000

Wells Fargo offers one of the highest maximum credit limits but also requires borrowers to fully secure the approved amount. Expect your deposit to match the credit limit.

Tips for Minimizing the Deposit Amount

When applying for a secured card, look for ways to reduce the required deposit:

See also  Managing Security Deposits When Upgrading

Ask for a Lower Limit

Don’t request the maximum limit unless you can afford the deposit. A $500 limit with a $200 deposit costs less upfront than a $2,000 limit with a $2,000 deposit. If approved for a higher limit than you prefer, ask the issuer to lower it.

Try a Starter Card

Issuers like Capital One and Petal offer “starter” secured cards with low fixed limits between $200 to $500. The deposit is generally below $100. These can help establish initial positive payment history.

Add an Authorized User

If you have a spouse or family member with good credit, ask to become an authorized user on one of their current cards. Their payment history can help strengthen your application.

Check for Alternatives

A secured card may not be your only option. Those with limited credit may qualify for student cards or credit builder loans to establish history without large deposits.

Build a Banking Relationship

Open a checking or savings account with the secured card issuer if possible and maintain it in good standing for a few months before applying. Existing customers may receive preference.

Weighing Deposit Amount vs Credit Benefits

The required deposit represents the main cost of a secured card. Compare this amount to the potential credit benefits when choosing your card:

Credit Limit

In most cases, the deposit sets the initial credit limit. A higher limit lets you utilize more credit and demonstrates greater borrowing power. Just be sure you can afford the associated deposit.

Credit Building Potential

Make sure the card reports your payment history to all three major credit bureaus. Responsible use will help build your score. Also look for automatic or easy graduation options to transition to unsecured credit.

Fees

Compare annual and monthly fees. Cards with expensive service charges offset the benefits of building credit. Look for no annual fee offers.

Graduation Options

Some secured card issuers automatically graduate responsible users to unsecured lines of credit and refund the security deposit. Others have clear policies for transition requests after meeting certain criteria. Easy graduation terms add value.

See also  Can Secured Cards Help Improve Bad Credit?

Added Features

Consider extra benefits like cash back, travel perks, balance transfer offers, and intro 0% APR periods. These provide additional incentives beyond just credit building.

Recommended Low Deposit Secured Cards

Based on their low deposit requirements, these secured cards make it easiest to establish initial credit:

Capital One Secured Mastercard

  • $49 or $99 deposit based on your credit
  • No annual fee
  • Reports to all three credit bureaus

OpenSky® Secured Visa® Credit Card

  • As low as $200 deposit
  • No credit check required
  • 1% cash back rewards

Petal® Visa® Credit Card

  • $200 deposit if approved
  • Low fixed $30 annual fee
  • 1% to 1.5% cash back on purchases

First Progress Platinum Prestige Mastercard® Secured Credit Card

  • $49 – $298 deposit
  • No annual fee
  • Reports monthly to major bureaus

First Tech Federal Credit Union Secured Credit Card

  • $300 – $5,000 deposit
  • No annual fee
  • Possible unsecured transition after 12 months

Key Takeaways

  • Secured cards require an upfront security deposit to establish the line of credit. Deposit amounts vary based on your credit profile and the issuing bank.
  • Comparing deposit requirements helps identify affordable secured card options to fit your budget and credit needs.
  • Issuers typically set minimum deposits of $49 to $200 for starter secured cards. With poor credit, focus on cards with lower deposits first.
  • As your credit improves, you can consider secured cards with higher limits and deposits for continued responsible use.
  • Make on-time payments and keep credit utilization low to graduate to unsecured cards and get your deposit back.

Using a secured card responsibly by making all your payments on time and keeping balances low will help improve your credit score over time. Comparing deposit amounts upfront ensures you choose an accessible card that matches your credit profile and budget.

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