担保信用卡——申请的5个步骤
5 steps to apply for a secured credit card
It’s a little-known fact that there are two types of credit cards – secured and unsecured. If you’re here wondering how to apply for a secured credit card, your goal is ultimately to be able to apply for an unsecured credit card.
To provide a bit of a foundation, let’s start with what a secured credit card is.
What is a secured credit card?
A secured credit card requires the applicant to submit a cash deposit as collateral when opening the account. The reason is that the person applying for the credit card tends to have either bad credit or no credit.
These cards can be a way to build new credit or rebuild a bad one because they typically have low credit limits. For that reason, the cardholder needs to use the card to buy small things that will not put a strain on personal finances.
Let’s go through the steps you’ll take to apply for your secured credit card.
Step 1 – Find a Bank
Many larger banks will offer secured credit cards. You can find them at Citi, Discover, and Capital One, for instance.
However, other companies offer secured credit cards, and many of them don’t require a credit score or even a credit check. These are companies like First Progress that specialize in applicants in that category.
Step 2 – Select the right card for you
Just like unsecured cards that don’t require deposits, there are several different cards available.
Whether you qualify generally depends on two things:
- Your credit history
- How much you can deposit upon opening the account
These cards typically don’t come with rewards, so it’s more about trying to find a card that has a low-interest rate and low annual fee.
Step 3 – Submit your application
To apply, most banks will require your social security number and personal information (i.e., name, address, birth date, financial information.) to apply for review.
If the bank requires a credit check, you should be ready for a hard credit inquiry that results in a hard pull. It means a temporary hit to your credit score, but it should come off after a few months. But keep in mind that certain conditions could cause the bank to decline your application for this credit card.
Step 4 – Send your deposit
Once your application is accepted, the bank will give you the minimum deposit required to continue with opening the account.
The deposit amount can vary depending on how risky the bank rates the borrower, ranging from around $200 to $3,000. This deposit is refundable as long as you repay your balance and the fees.
It’s also important to know that, whatever your deposit is, it essentially becomes the credit limit on your secured credit card. You can request a limit increase after a few months of successful payments. But the limits are still lower than unsecured credit cards.
Step 5 – Use the card responsibly
Once you complete all of the other steps, this might be the most difficult. The objective of having these cards is to increase your credit score so that, one day, you can apply for an unsecured credit card and start working towards rewards.
However, consider diligence in repaying your balance. You may want to start by using it once or twice per month and making payment immediately.
Most banks have alert services and auto-payment settings you may want to consider using so you won’t forget.
The good news
Once you’ve proven to be a successful credit card user, some of the banks might automatically upgrade your secured credit card to an unsecured credit card. This process might only take a year or so. It depends on your particular situation and the bank which provided you with the secure credit card. Contact H&S Accounting & Tax Services if you need additional help filing your application.
