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Are you considering a secured credit card to help build or repair your credit? These cards can be used the same way as unsecured credit cards, but require a refundable security deposit that protects the card issuer if you default on the payments. In most instances, the security deposit amount will equal your credit limit and will be returned to you if you cancel the card or convert it to an unsecured product in the future.
It can take a little over a week from the time you apply to when you have your new secured card in hand (assuming you're approved). Read on to learn more about the application process, which secured cards are best and how a secured card can improve your credit.
How Long Does It Take to Get a Secured Card Approval?
The application process for secured and unsecured credit cards is similar. You will need to fill out the online application, and the card issuer will then evaluate your income and possibly other factors to determine your ability to repay any debt you incur on the card. The lender might request income documentation to verify your claims, and may or may not do a credit check.
Once you submit your application, you could receive a decision in minutes. If approved, you will find out your credit limit and the security deposit required to open the account. To make sure the process goes smoothly, it's best to have the funds for the deposit on hand. Cardholders typically receive their new secured card within seven to 10 business days, and can begin using the card right away.
There are instances where an approval decision cannot be made using the automated system. If this happens, expect written correspondence in the next seven to 10 days notifying you of the credit card issuer's decision. If you are not approved, the lender will send you a letter noting why and explaining your rights.
How Fast Can a Secured Credit Card Help My Credit?
A secured credit card can help you build credit if you use it to make small purchases and pay the balance in full on or before the due date each month. This shows creditors that you're able to responsibly manage your debts. Your credit score could also benefit if you pay on time, as payment history accounts for 35% of your FICO® Score☉ . Keeping the balance low is another credit booster because it helps your credit utilization, which is the second most important component of your credit score.
There's no set time frame for how long it takes for a secured credit card to help you build credit. But opening an account and making timely payments can add positive information to your report that will benefit your score and possibly help improve it over time.
Best Secured Credit Cards
Considering a secured credit card to help improve your score? The following are good options. They all report to the three major credit bureaus (Experian, TransUnion and Equifax) to help begin boosting your scores:
- Secured Mastercard® from Capital One: Capital One will review your credit to determine whether you'll pay a $49, $99 or $200 refundable deposit, and you'll start with a $200 credit line. If you're on a tight budget, you can pay the deposit over time in payments as low as $20, and if you want a higher credit line, you can deposit up to $1,000. If you make all your payments on time, Capital One may offer you a higher credit limit starting at six months and possibly allow you to earn your deposit back as a statement credit. This card has no annual fee but a variable APR of 26.99%, which is on the higher side.
- First Progress Platinum Prestige Mastercard® Secured Credit Card: There's no minimum credit score requirement for this card, making it suitable for those with little to no credit history. You can apply with no negative impact on your credit score, it only takes a few minutes to get a decision, and you could get approved for a credit line of $200 to $2,000 if you're able to make a required refundable deposit of equal amount. There's an annual fee of $49, and the ongoing APR is a variable 9.99%.
- Merrick Bank Secured Visa® Card: With this product, your credit line will depend on the initial refundable deposit, which can be any amount from $200 to $3,000. You can add additional deposits at any time to increase your credit line up to $3,000. Once you've had the card for nine months, Merrick Bank will review your account activity to determine if you're eligible for a credit line increase without an additional deposit. There is no minimum credit score for this card. The card features a variable APR of 17.45% and an annual fee of $36.
Alternatives to Secured Credit Cards
If you can't get approved for a secured credit card or would prefer to explore other options to build credit, consider these alternatives:
- Get added as an authorized user on someone else's account. You could benefit from becoming an authorized user on a parent's, family member's or close friend's credit card if you have minimal or no credit history—assuming the cardholder has exceptional payment history and is only using a small percentage of the total available credit. It's also important that the card issuer reports authorized-user account activity to the credit bureaus.
- Apply for a credit-builder loan. Credit-builder loans allow you to save money while establishing or rebuilding your credit. You can typically borrow $300 to $1,000, which you'll be able to access once you're done making monthly payments to reach your approved amount. There's no deposit requirement, and some lenders do not require credit checks to get approved. You could also possibly save on steep interest that you might otherwise pay on a credit card.
- Open a debit card if you don't need additional credit. If you don't need additional credit and simply need a way to pay bills electronically, consider opening a debit card. Swiping a debit card to make purchases will not help you build credit. It will, however, allow you to stay current on your bills and help you avoid the risks of borrowing money.
Consider a Secured Credit Card to Rebuild Your Credit
It doesn't take very long to get a secured credit card. You can use it to build or repair your credit by making all payments on time and keeping the balance low (or paying it off each month). Consider using Experian CreditMatch™ to find cards you may qualify for, or explore other alternatives to help boost your credit health if a secured credit card isn't a good fit.