How to Get a Secured Credit Card

Steps to Finding and Applying for a Secured Credit Card

An approved credit card application
© Courtney Keating / E+ / Getty

Having trouble getting approved for a regular credit card? Perhaps you should get a secured credit card instead. A secured credit card is a type of credit card that lets you put up a security deposit as collateral for the credit limit. Because you’re backing your credit limit with cash collateral, secured credit card issuers are less picky about your credit history and are much more likely to approve you despite a limited or bad credit history.

Take these steps to get a secured credit card.

Scope out the secured credit cards you like.

There are dozens of secured credit cards on the market, some are good deals and others are complete duds, so you have to choose carefully. Almost the major credit card issuers have a secured credit card, so they’re not too hard to find.

The best secured cards have a low interest rate, low or no annual fee, and report to the major credit bureaus each month. Another good feature, but not necessarily a must-have, is the ability to convert to an unsecured one after several months of on-time payments. Read our secured credit card reviews to help you narrow down the options.

Estimate the security deposit you need to make.

Minimum security deposits range from $200 to $500 with the option to pay more than the minimum for a bigger credit limit. The Capital One Secured MasterCard is arguably one of the best secured credit cards.

If you qualify, you can pay a security deposit for as low as $49 for a credit limit of $200.

If you don't already have the funds for a security deposit in the bank, save what you need by setting aside a certain amount of money each month. After you’re approved, your new card issuer might let you make your deposit in payments, but check to see how much time you have to make the full deposit before your application expires.

Complete the application online, in person, or by mail.

If you apply online and are given instant approval, the issuer will give you instructions for making your security deposit. You can typically make your deposit online, over the phone, or by mail. Phone or online deposits will process faster allowing you to get your card faster than if you have to mail a check or money order. Once the issuer receives and processes your security deposit, you'll get your new credit card in the mail.

While it's easier to get approved for secured credit card even without the best credit, you can you can be denied for certain secured credit cards if you’ve been out of bankruptcy for less than a year, you have current delinquencies on other accounts, or you have a negative history with that bank on another account. If you’re denied, the card issuer must mail a letter explaining why. The letter will also tell you how you can access a free copy of the credit report used in the decision.

Many secured credit cards will automatically convert to an unsecured card after 12 to 18 months of managing your card well. That means making all your payments on time and keeping your balance below the credit limit. If your card doesn’t convert automatically, you can try applying for a regular credit card after a year.

There’s a good chance you’ll get approved if you’ve handled your secured credit card responsibly.