How to Get a Secured Credit Card

If you are trying to bounce back after some financial struggles or are building a credit score for the first time, traditional credit cards may be out of reach. A secured credit card can be a great alternative that helps you start your credit-building journey. 

There are some details you need to know about how to get a secured credit card. Learn how these cards work, what to look for, and how you can use one to build your credit profile. 

How to get a secured credit card

Getting a secured credit card is simpler than applying for a traditional credit card. While lenders will still review your score and credit profile, the deal is less risky for card issuers. That’s because you’ll be required to pay a refundable security deposit, which is equal to your credit limit. Here’s how the process works:

• Check your credit situation
• Compare secured card options
• Identify options with the most competitive fees and reporting practices
• Apply online or through a bank
• Make your security deposit
• Start using the card responsibly 

If you don’t have enough cash to make a deposit or would like to boost your score first, consider a credit-building platform. Kikoff provides tools that help you build your credit through reported payment activity. When you’re ready, you can also apply for a secured credit card through Kikoff’s partner. 

How secured credit cards work

A secured credit card functions a lot like a standard credit card. The major difference is that you have to pay a security deposit. Here’s how it works:

• You provide a cash deposit up front
• Your spending limit is usually equal to your deposit
• You can use the card for everyday expenses
• You’ll receive a bill each month
• You must make at least the minimum payment
• Your payment activity is reported to the credit bureaus 

Over time, using your card responsibly and making on-time payments can improve your credit profile. Eventually, the card issuer may offer you the option to switch to an unsecured card. 

What to look for in a secured credit card

When comparing secured credit cards, you should pay attention to a few factors. 

Fees

Some secured cards come with fees that can add up quickly. Before accepting a card offer, find out whether the issuer charges annual or monthly fees. Some institutions also charge application or processing fees.

Don’t turn down a card just because there are fees involved. Instead, consider what you get in exchange for those fees. 

A card with minimal or no fees is usually ideal, especially when you are attempting to rebuild your financial profile. That way, more of your money goes toward building credit rather than paying administrative costs. 

Security deposit requirement

The deposit requirements will vary by the issuer and your credit score. Typically, card issuers offer secured credit cards with limits between $200 and $500 for entry-level cards. If you are approved for a higher credit limit, you’ll have to put more money down as a deposit. 

There’s nothing wrong with starting small. Just verify that your deposit is refundable if you decide to close the account in good standing. You don’t want to risk losing your deposit simply because you didn’t read the fine print on the agreement. 

Whether it reports to all three bureaus 

Finding out who the credit card issuer reports to is one of the most important steps in your decision-making process. Ideally, you want to work with a card issuer that reports to all three major credit bureaus:

• Experian
• TransUnion
• Equifax

If a card doesn’t report your activity, it won’t help you build credit. If none of your offers are for cards that report to all three, choose one that reports to at least two of the credit bureaus. 

Path to upgrading to an unsecured credit card

A good secured credit card will serve as a stepping stone to an unsecured card. Look for card issuers that:

• Automatically review your account at set intervals (i.e., once annually)
• Allow you to upgrade to an unsecured card
• Refund your deposit after consistent on-time payments

While you don’t need to take on a high-limit card once your credit improves, you should work toward an unsecured card. Once you make the leap, continue using the credit responsibly and make all payments on time. 

How to use a secured card to build credit

Now that you know how to get a secured credit card, look at how you can use it to build a stronger credit score. Make sure you:

• Pay on time, every time
• Keep your balances low
• Use the card regularly 
• Pay off the balance when possible
• Monitor your credit score over time 

If you want to build credit outside of using a card, platforms like Kikoff can complement your efforts. 

Kikoff is a user-friendly credit-building platform that offers free and paid tools for strengthening your credit profile. Our platform includes verified rent reporting, a secured credit card, an invite-only credit-builder loan, and much more.

Start building a positive credit history with Kikoff.