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Deposits on Secured Credit Cards

As we mentioned in our post about how secured credit cards work, you will need to provide a deposit when you open a secured credit card. This guide explains everything you need to know about secured card deposits.

Why Do Secured Credit Cards Need Deposits?

When you have bad credit or no credit, credit card issuers are taking a big risk on you. You might have just emerged from a bankruptcy or have been late on payments or have a few collections. Unsecured credit card issuers tend to charge high fees and rates to take a risk on you. For example, many charge a one-time application or processing fee, an annual fee and even a monthly maintenance fees. Most secured credit cards have just annual fee (and more of them now have no annual fees), but require that you deposit a certain amount with them and they will issue you a credit limit that equals (most of the time) the deposit that you gave them.

How much is a typical deposit on a secured credit card?

Most secured credit card issuers have a minimum amount that you have to deposit and a maximum amount that you can deposit. The minimum tends to be around $200 to $300. The maximum ranges from $2,000, $3,000 to $5,000.

Here are a few examples. The Citi Secured Mastercard has a minimum deposit of $200 and a maximum of $2,500. The Wells Fargo Secured credit card allows you to deposit anywhere between $300 and $10,000.

Partially Secured Credit Cards and Their Deposits

For the most parts, the amount of deposit you put up with the credit card issuers will be the credit limit that you get. The deposit acts as a collateral and if you default, you will lose your deposit. For example, if you deposit $200, your credit limit will be $200.

However, a couple of issuers have come up with something innovative. Capital One's secured credit card MAY NOT require you to put a full deposit. For example, you may only be required to deposit $49 or $99 and yet get a credit line of $200.

When do you have to give your deposits to your credit card issuer?

This varies. Many secured credit cards require you to to fill in your bank account and routing number during your application. Very often they will draw the deposit from your bank account a day or two after you submit your application. In fact, most issuers like US Bank, Citi and Discover are known to withdraw your deposit a couple of days after you submit your application and they will approve you maybe two weeks. Some folks do not even get a notice that they got approved but just got their card in the mail!

Do you need a bank account to pay your deposit?

For the most parts yes. However, there are some issuers like Opensky allow you to deposit from Best Western (in fact for them, this is the fastest way to deposit). Some issuers allow you to walk into the branch (especially credit unions) and deposit cash and open an account with them.

Can you increase your deposit?

It depends. Some issuers allow you to add to your deposits (rules vary) and some do not. For example, according to Citi's customer reviews, some have said that they do not allow you to add to the deposit.

Some cardholders of US Bank secured card have mentioned that US Bank require that 6 months have passed before you can increase your credit limit.

Discover card members have mentioned that you can increase your deposit by calling their customer service and that it cannot be done on the website with your account login.

As you can see, different issuers have different policies. If you intend to increase your deposits after you get approved for a secured card, you should check what their policy is with regard to this.

Earning Interest On Deposits

Some secured card issuers will pay an interest on the deposit while others would not. In fact, the vast majority of secured card issuers do not pay interest on the deposits. Examples of issuers that do include US Bank.

Do you get your money back from a secured credit card?

Yes, you most definitely would. The question is how long. While many issuers will say it will take 6 weeks or so after you cancel the card, the reality is that most will refund you within a couple of days after you cancel your card.

What's Next?

What should a typical deposit be on a secured credit card?

How to use secured credit cards wisely?

How fast can secured credit cards build credit?

How many secured credit cards do you need to build credit?

What is a secured credit card and how does it work?

Pros and Cons of secured credit cards