credit cards

Secured card helps build credit history

Don TaylorDear Dr. Don,
For the past six months, I've held a secured credit card with Bank of America averaging a 30 percent month-to-month balance. I've maintained a perfect payment history on the card. When is it reasonable to request a credit limit increase or to request a standard card?
-- William Wonders

Dear William,
The credit limit on most secured credit cards is equal to the amount you have on deposit with the card provider. So, increasing the amount of the deposit would increase your credit limit on your secured card. The typical card requires a minimum deposit of $500, but the deposit can be as much as $2,000 to $15,000, depending on the card issuer.

What you -- and most secured credit cardholders -- really want is to graduate from a secured card to a credit card. The secured card is helping you build a credit history. You need a good payment history over a long enough time period before the lender will approve your credit card application.

According to the Bankrate feature "10 questions before getting a secured credit card," the average secured credit cardholder will qualify for the card provider's unsecured credit card after a year of making timely payments on the secured card. If you want to try to beat the average, call your card provider and ask about their standards.

You want to ask first, because every time you apply for a credit card, your loan application triggers a credit inquiry on your credit report. The inquiry stays on your credit report for two years, but it is only used in calculating your credit score for one year. For more details on credit scoring, download the publication "Understanding Your FICO score." Also, be sure to order a copy of your free credit report.

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.

Ask the adviser

To ask a question of Dr. Don, go to the "Ask the Experts" page and select one of these topics: "Financing a home," "Saving & Investing" or "Money." Read more Dr. Don columns for additional personal finance advice.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.


Show Bankrate's community sharing policy
          Connect with us
Product Rate Change Last week
Balance Transfer Cards 16.23%  0.01 16.24%
Cash Back Cards 16.49% --0.00 16.49%
Low Interest Cards 11.27% --0.00 11.27%
Credit cards on a table

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


Credit Card Blog

Jeanine Skowronski

Amazon’s store card gives 5% back

Is this big bonus worth it? It depends on whether you're a regular Amazon shopper and you can afford to pay off your bill monthly.  ... Read more

Partner Center

Connect with us