Poor credit or a short credit history can make it difficult to get the kind of credit card you want. All hope is not lost, though. You can work your way up to a credit card with the kinds of rewards and perks you want by building your credit with a secured credit card.

A lower credit score typically signals to card issuers that issuing you a card may be risky for them. To mitigate this risk, they require security deposits. Once you’ve raised your credit score, it’ll be time to move on from a secured credit card and get your secured card deposit back.

Do I get my deposit back from a secured credit card?

You will get your secured credit card deposit back after the account is closed. Once you’ve increased your credit score with your secured card, you can simply close the secured card account — but you need to understand the risks first. Closing your credit card will increase your credit utilization ratio and may temporarily lower your credit score. If you prefer to avoid that, consider having your secured credit card upgraded to an unsecured credit card with your card issuer. You will still get your security deposit back since the original account will be closed.

However, some issuers may refund your deposit after a periodic account review for positive credit use. These account reviews search for on-time payments, spending within your credit limit and keeping your account in good standing. Depending on the issuer, these account reviews may begin within your first year with the card, but the shortest periods are typically after just six or seven months with your card.

When do you get your secured credit card deposit back?

When the time comes for you to close your secured credit card account or upgrade your secured credit card to an unsecured card, the issuer will return your secured credit card deposit. The funds from your deposit typically are returned in the form of a check, a statement credit or funds issued directly into your bank account.

How your funds are returned, and the time it takes to get them back depends on the issuer. For example, with the Capital One Platinum Secured Credit Card, security deposits are returned as a statement credit within two billing cycles once your credit card is upgraded to an unsecured card. Other secured credit cards like the Citi® Secured Mastercard® take up to 30 days to return your security deposit in the form of a check.

How to get your secured credit card deposit refunded

Once you’re ready to upgrade to an unsecured credit card or close your secured credit card account, starting the process is simple. Reach out to your secured credit card issuer and follow these steps:

  • Contact your credit card issuer. Reach out to your credit card issuer and find out what your options are for your secured credit card account. If there are options to upgrade your secured credit card account to an unsecured one with your issuer, work with them to find out what your next steps would be. If not, start to shop around for a new unsecured credit card.
  • Submit your information to your card issuer. No matter what options your credit card company offers, when you close your secured credit card account, you’ll get your deposit back. To do this, you’ll need to submit your information to the secured card issuer so they can issue a refund directly to your bank account, send you a check or issue a statement credit to your new unsecured credit card.
  • Shop around. If your secured credit card issuer doesn’t offer any unsecured options that suit your needs, start your search for a new unsecured credit card.
  • Get your deposit back. Once your account is closed, and your issuer is sure there aren’t any other charges that will be posted to your account, your deposit will be returned to you. This process usually takes 30 to 90 days, but varies by issuer. If you haven’t heard from your issuer within this time frame, reach out to find out the status of your deposit.

When to upgrade to an unsecured credit card

A secured credit card is a great way to help you reach your credit goals. To hit your credit score goals, you should keep your secured credit card for about a year. During this time, stay diligent about paying your credit card bills on time, completely paying off your card balance and keeping your credit utilization ratio as low as possible. Once you’ve hit those goals and raised your credit score, it may be time to upgrade to an unsecured credit card.

Whether or not you can upgrade your secured credit card directly to an unsecured credit card depends on what credit cards the issuer offers. If your goal is to upgrade your secured card to an unsecured card directly with your credit card issuer, look into cards like the Discover it® Secured Credit Card. This card has a minimum deposit of $200, you’ll earn 2 percent cash back on gas stations and restaurants up to $1,000 in combined spending per quarter (1 percent thereafter) and you may be able to upgrade it to the Discover it® Cash Back.

The bottom line

There is a lot of misinformation floating around about secured credit cards, including what happens to your deposit after you’ve moved on from a secured credit card account. The truth is that secured credit cards are a great way to help consumers build credit, and as long as your account is in good standing, you’ll get your secured credit card security deposit back when you’ve closed the secured credit card or upgraded to one of your issuer’s unsecured credit cards.

However, if your secured credit card is your first card (and therefore your oldest account), closing it could impact your credit score by reducing your accounts’ average length of credit history. For this reason, it may also be worth considering a no-annual-fee secured card account that you can easily maintain and keep open rather than close outright — by either upgrading to an unsecured counterpart or receiving a refund following an account review for positive use.