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Can You Have A Credit Card Against Savings Accounts?

Written by Banks Editorial Team

Updated June 28, 2022​

2 min. read​

Yes, you can have a credit card against savings accounts. Banks offering secured credit cards require you to make a security deposit in a collateral account, which is generally a savings account. Secured credit cards require a cash collateral deposit which becomes the line of credit for that account. Most banks require a minimum deposit of $300 or $500 for the collateral deposit. The minimum requirements for obtaining a secured credit card include placing an asset as collateral before securing a credit line, having a certain minimum credit score, showing that you can meet the minimum monthly payments, and making monthly payments to continue financing the card.

One of the toughest periods to obtain a credit card is when your credit is bad or you don’t have any credit history. The challenge is that you usually need a credit card before you can build a good credit history. You can obtain a credit card against savings accounts. If you are not eligible for a conventional credit card, a secured credit card is an option to consider. A secured credit card is different from traditional credit cards because you need to make a deposit to use the credit card. The deposit stands as collateral when you use the credit card to make purchases. If you failed to make your payments, the card issuer will keep your deposit. As your account remains in good standing, the credit card issuer will return your deposit after a particular number of months or when you choose to close your savings account.

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Obtaining a Secured Credit Card Against Savings Accounts and How It Works

Banks offering secured credit cards require you to make a security deposit in a collateral account, which is generally a savings account. A secured credit card against savings accounts requires a cash collateral deposit which becomes the line of credit for that account. For instance, if you make a deposit of $300 in the account, you can charge a maximum of $300.

For a secured credit card against savings accounts, banks use different kinds of savings accounts to keep the collateral deposit. One major bank differentiates its “collateral account” for secured credit cards from checking accounts and traditional savings accounts. The collateral deposit amount depends on the credit card. Most banks require a minimum deposit of $300 or $500. Most card issuers do not pay interest on a customer’s collateral deposit, although a few banks offer rewards on credit card spending. A secured credit card is a good alternative for people who have trouble being approved for a credit card due to past credit mistakes or the absence of credit history. Secured credit cards are easier to obtain because you make a collateral deposit to “secure” the credit limit. Before opening your savings account, compare interest rates in your area:

The benefits of using a secured credit card against savings accounts include helping to establish or reestablish your credit because the card issuers usually report to credit bureaus, you only forfeit your security deposit if you default on your payment, and can you earn interest on your collateral deposit. The disadvantages of using secured credit include payment of the collateral deposit and other additional fees and payment of higher interest rates.

This list provides the nine best-secured credit cards for 2018.

Minimum Requirements for Obtaining a Secured Credit Card

  1. You must place an asset as collateral before securing a credit line.
  2. You need to have a certain minimum credit score before you obtain a secured credit card against savings accounts. Usually, a minimum score of 700 is regarded as sufficient to obtain a secured credit card at a decent rate.
  3. You need to show that you can meet the minimum monthly payments before securing the credit card. A Proof of income is usually needed for this.
  4. You are required to make monthly payments to continue financing the card.
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