2011 Credit Card Fees Survey
credit cards
Secured credit cards: What to know

Initial deposit
Next
4 of 6
Back
Initial deposit

Generally speaking, the deposit amount is up to the consumer. According to Sklar, a few hundred dollars is typical for a deposit, and it's unusual for an issuer -- or a consumer -- to go beyond $1,000, at least when first applying for the card.

But while the deposit is theoretically the credit limit, McGrigg says consumers need to look out for products that set the limit above the collateral. Sometimes, says McGrigg, issuers will extend $1,300 of credit on a $1,000 deposit. While that may sound like a nice offer, McGrigg cautions that consumers using secured cards have probably had some credit trouble and might not want the higher limit.

Consumers trying to improve their credit scores typically do well going with a limit of between $500 and $1,000, says Sanford, because that's an amount they should be able to pay off each month.

"If the cardholder wants to raise the limit, they should talk to the bank about increasing their deposit," says Sanford.

As for the deposit money, it is possible to earn interest on your collateral, says Sklar, but consumers shouldn't expect much.

"Interest on the deposit works just like a savings account," Sklar says.


 

 

advertisement

Show Bankrate's community sharing policy
          Connect with us
Product Rate Change Last week
Balance Transfer Cards 15.67%  0.04 15.71%
Cash Back Cards 16.32%  0.04 16.36%
Low Interest Cards 10.91% --0.00 10.91%
 
Search
advertisement
CREDIT CARD WEEKLY NEWSLETTER

Get advice for managing credit cards, building your credit history and improving your credit score. Delivered weekly.

advertisement

Blog

Allison Ross

What’s your most embarassing number?

NFCC poll: 37 percent of respondents are most embarrassed to admit their credit card debt.  ... Read more

Partner Center
advertisement

Connect with us