What You Need to Do to Open a Secured Card
Getting a secured credit card means putting down a cash deposit that becomes your credit limit, then using the card like a regular card while the bank holds your money. You will need to choose a bank or credit union that offers secured cards, gather basic documents (ID, proof of income or employment, and a Social Security number), and complete an application — either online, by phone, or in person. The deposit typically ranges from $200 to $2,500, though some issuers allow higher amounts. Once approved, you receive a card linked to your deposit, and you begin building credit history by making purchases and paying your statement on time.
The entire process from application to receiving your card usually takes one to two weeks. Some banks approve you the same day you apply online, while others take longer to verify your information. You will not be charged a fee to open the account at most issuers, though some do charge an annual fee ($25 to $50 is common) that comes out of your deposit or your first bill.
Key Takeaways
- You must deposit cash ($200 to $2,500 depending on the issuer) that the bank holds as collateral and becomes your credit limit.
- You need a valid ID, proof of income or employment, and a Social Security number to complete the application.
- Approval typically takes one to two weeks, though some banks approve online applications the same day.
- Your monthly payments and on-time history are reported to the three credit bureaus, building your credit score over time.
- Most secured cards transition to unsecured cards after 18 to 24 months of responsible use, and your deposit is returned.
Where to Apply for a Secured Card
Banks and credit unions that offer secured cards include Capital One, Discover, U.S. Bank, Navy Federal Credit Union, and Chime, among others. Each issuer has different deposit minimums, annual fees, and credit-building features. You can compare them by visiting their websites directly or by checking the terms on financial comparison sites. Some issuers require you to be a customer already (such as having a checking account with them), while others open secured cards for anyone with a valid ID and Social Security number.
Credit unions often have lower fees and more flexible deposit requirements than large national banks, but you may need to join the credit union first. Membership usually costs nothing or a small one-time fee ($5 to $25) and requires you to live or work in a certain area or belong to a specific group. If you are not sure which banks operate in your area or which credit unions you can join, start by checking your current bank's website or asking a banker whether they offer secured cards.
Documents and Information You Will Need
Before you apply, gather a government-issued photo ID (driver's license, passport, or state ID), your Social Security number, and proof that you have income or employment. Proof of income can be a recent pay stub, a letter from your employer, tax returns, or bank statements showing regular deposits. If you are self-employed or retired, tax returns or bank statements work. Some issuers also ask for your current address and may verify it against public records.
If you are applying online, you will enter this information directly into the application form. If you apply by phone or in person, a representative will ask you these questions and may request that you upload documents or bring them to a branch. Have your information ready before you start the application so you do not have to stop and search for documents halfway through.
How the Deposit Works and What Happens to Your Money
Your deposit is held in a separate account by the bank and is not used to pay your bills. Instead, the deposit amount becomes your credit limit — if you deposit $500, your credit limit is $500. You use the card to make purchases, and you pay your monthly bill from your regular checking or savings account, just as you would with any credit card. The bank does not touch your deposit unless you fail to pay your bill for a long time (usually 60 to 90 days past due), in which case they may apply it to your debt.
Your deposit earns little to no interest while the bank holds it. Some issuers pay a small amount of interest (0.01% to 0.5% annually), but most do not. The deposit is yours to reclaim once you close the account or graduate to an unsecured card. If the card is upgraded to unsecured, the bank returns your deposit to the account you used to fund it, usually within one to two weeks.
What Happens After You Are Approved
Once approved, you will receive your card in the mail within 7 to 10 business days. You will also receive a statement showing your credit limit (equal to your deposit), your annual percentage rate (APR), and your due date. Your first statement may arrive before you have used the card at all. Start using the card for small purchases — groceries, gas, a coffee — and pay your full statement balance by the due date each month. Paying in full avoids interest charges and shows lenders you can manage credit responsibly.
Your payment history is reported to Equifax, Experian, and TransUnion (the three major credit bureaus) every month. This means every on-time payment builds your credit score, and every late payment damages it. After 6 to 12 months of on-time payments, you may receive an offer to upgrade to an unsecured card with a higher limit and no deposit requirement. You do not have to wait for an offer — you can contact the issuer after 18 to 24 months and ask whether you are may be able to access to graduate.
Annual Fees and Other Costs to Watch For
Most secured cards charge an annual fee between $25 and $50, though some charge nothing. This fee is usually charged once per year on your statement and is separate from any interest you owe. A few issuers charge a monthly maintenance fee ($3 to $5) instead of or in addition to an annual fee. Before you apply, check the issuer's fee schedule so you know what to expect on your first bill.
Interest charges apply only if you carry a balance — that is, if you do not pay your full statement balance by the due date. The APR on secured cards ranges from 18% to 24% depending on the issuer and your creditworthiness. If you carry a $300 balance at 20% APR, you will owe roughly $5 in interest that month. To avoid interest entirely, pay your full balance every month. Some issuers also charge late fees ($25 to $35) if you miss a payment, and over-limit fees if you exceed your credit limit.
How Long It Takes to Build Credit and Graduate
Your credit score begins to improve as soon as your first on-time payment is reported to the credit bureaus, usually 30 to 45 days after you make it. Most people see a noticeable increase in their score within 6 months of consistent on-time payments. After 18 to 24 months, many issuers automatically review your account and offer to convert your secured card to an unsecured card. When this happens, your deposit is released and returned to you, and your credit limit may increase.
The timeline depends on your starting credit score and how well you manage the card. If you have no credit history at all, it may take longer to see improvement than if you have some history but a low score. Missed payments, high balances relative to your limit, and frequent applications for new credit all slow your progress. Stick to paying on time and keeping your balance low (below 30% of your limit) to graduate as quickly as possible.
Frequently Asked Questions
Can I use my secured card right away after approval?
No, you must wait for the physical card to arrive in the mail, which takes 7 to 10 business days after approval. Some issuers offer a temporary card number you can use online while you wait for the physical card. Check your approval email or call the issuer to ask whether this option is available.
What happens if I do not pay my bill on time?
A late payment is reported to the credit bureaus and damages your credit score. If you are 30 days late, a late fee is charged. If you are 60 to 90 days late, the bank may apply your deposit to your debt. If you are more than 90 days late, the account may be closed and sent to collections, which stays on your credit report for seven years.
Can I increase my credit limit without adding more money?
Some issuers allow you to request a credit limit increase after 6 to 12 months of on-time payments, and they may grant it without requiring an additional deposit. Others require you to deposit more money to raise your limit. Contact your issuer to ask their policy.
What if I want to close my secured card?
You can close the account at any time by calling the issuer or submitting a request online. Your deposit is returned to the account you used to fund it within one to two weeks. Closing the account does not hurt your credit score immediately, but it may lower your score slightly over time because it reduces your total available credit.
Do I need a checking account to get a secured card?
Most issuers do not require you to have a checking account with them, but you will need a bank account somewhere to make your monthly payments. Some credit unions require membership, which may involve opening a savings account with them, but this is usually free or very low cost.