How to Use a Secured Credit Card

Written by Banks Editorial Team
3 min. read
Written by Banks Editorial Team
3 min. read

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Secured credit cards are ideal for consumers who are credit newbies or those seeking ways to rebuild their credit health. They’re similar to unsecured credit cards but with a few key differences. And with responsible use over an extended period, the card issuer may convert your secured credit card to an unsecured credit card. 

Before applying for a secured card, though, you should understand how it works. You may find that an alternative debt product, like a line of credit with no credit check required, could be a better option to build or improve your credit while having available credit at your disposal. 

Get a Digital Credit Card
Access a revolving line of credit based on your cash flow, not your credit score, with the Grain digital credit card.

What is a Secured Credit Card?

A secured credit card is a debt product that requires a cash security deposit before it is issued, which is usually equivalent to the credit limit you receive. However, you may be able to access a higher credit limit with a lower deposit in some cases. 

 If you fall behind on your monthly payments, the credit card issuer will use a portion or all your security deposit to settle the balance in full and close the account. 

Oftentimes, you’ll have to undergo a credit check before you can be approved for a secured credit card. However, you should also know that some credit card companies offer cashback rewards for everyday purchases. 

What is the Difference Between a Secured and an Unsecured Credit Card?

Both secured and unsecured credit cards can be used to make everyday purchases online and at brick-and-mortar locations. Furthermore, you’ll be required to pay at least the minimum monthly payment that includes a portion of the principal balance and interest. The key difference lies in the security deposit requirement – unsecured credit cards can be opened without a cash deposit. 

So, you’ll generally need good or excellent credit to qualify for an unsecured credit card with decent terms. However, you’re more likely to get approved for a secured credit card if your credit score is low or if you’re just starting out in the credit world since secured credit cards don’t pose as much of a risk to the credit card issuer. 

Do You Have to Use a Secured Credit Card Before Moving to an Unsecured One?

Not necessarily. You have the option to apply for an unsecured credit card if you’d prefer to bypass secured credit card products. But if you’re unable to get approved and opt for a secured credit card, you could be upgraded to an unsecured credit card if you demonstrate responsible use over a six- or twelve-month period. 

If this happens, the credit card issuer will notify you of the change and refund your security deposit to you. 

You also have the option to explore other unsecured credit cards with different credit card issuers. 

Get a Digital Credit Card
Access a revolving line of credit based on your cash flow, not your credit score, with the Grain digital credit card.

What are the Most Common Uses for a Secured Credit Card?

Most consumers use secured credit cards to build credit, which can unlock more debt products with competitive terms. They’re also commonly used by individuals who encounter challenges when trying to get unsecured credit cards due to minimal credit history or past credit issues. 

How to Use a Secured Credit Card to Build Credit

If you’re planning to use a secured credit card to build or boost your credit rating, here’s how to meet your goal: 

  • Only spend up to 30 percent of the credit limit – 10 percent is even more ideal. So, if your card comes with a $500 limit, aim to make no more than $150 in purchases. 
  • Remit payment for your entire balance, if possible, before the due date. Doing so prevents you from paying interest on your purchases. Plus, it demonstrates that you can responsibly manage the card by paying on time and keeping credit utilization low. 
  • Once some time has passed, and your credit score is higher, request an unsecured credit card with a higher credit limit. The credit card company may be willing to conduct a manual review to determine if you qualify. 

Where to Get a Line of Credit with No Credit Check

Perhaps a secured credit card seems like a viable option to build or repair your credit, but you’d prefer to explore alternatives. If so, consider Grain, an online platform that offers a secured line of credit up to $600. Even better, you can get approved without having to undergo a credit check. So, if you’re a credit newbie or have a low credit score, you could still qualify for a line of credit. 

To get started with Grain, download the mobile app, create an online profile and connect your bank account. It should be a checking account that’s based in the U.S. and the one you primarily use to receive direct deposits, pay bills and make other everyday purchases. Grain will analyze your account history to determine your credit line amount in minutes. 

If accept your credit offer, you can start accessing the funds as soon as your security deposit clears. Simply open the mobile app, tap the button to initiate a withdrawal, input the amount you need, hit the withdraw button, and you’re all set. Then swipe your debit card as you normally would. 

Would you like to learn more about this innovative secured credit card alternative? If so, visit the website or download the mobile app to discover all the exciting features you’ll have access to as a Grain customer. Plus, you can have peace of mind knowing your data is secure since Grain uses bank-level security to shield your information from cyber thieves. 

The Grain mobile app can be downloaded on the AppStore, or you can join the Android Waitlist to be notified when it becomes available on Google Play. 

Get a Digital Credit Card
Access a revolving line of credit based on your cash flow, not your credit score, with the Grain digital credit card.

Disclaimer: Credit offer based on cash flow in the linked checking account and may require a credit check. All accounts are subject to ID verification and approval. See your Credit Agreement and Terms of Service for further details.

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