Security deposits on credit cards: What to know

Quick insights

• Secured credit cards may be a good option for people looking to build credit who are unlikely to qualify for an unsecured card.
• Deposits for secured cards typically range from $200 to a few thousand dollars.
• The credit limit is often the same amount as the deposit, but in some cases, it may be higher.

Making a security deposit on a secured card is a way to help people with a limited or non-existent credit history acquire a credit card. Security deposits are made at the time of account opening. They’re also a common form of collateral that a borrower looking to build their credit score or establish credit history can put down to support their creditworthiness.

For a credit card issuer, a security deposit can be a powerful way for a cardmember to demonstrate responsibility. While Chase does not offer secured cards, here’s some information about how security deposits work on credit cards.

How much are security deposits on credit cards?

Security deposits for secured credit cards can typically range from $200 upwards to a few thousand dollars. The security deposit is usually the same as your initial credit limit. Generally, to obtain a higher limit, you’ll need to make a larger deposit. But some secured credit cards are capped at a certain deposit amount.

When do you pay your credit card security deposit?

You pay the security deposit after completing an application and receiving initial approval for the card. Before filling out an application and putting your money down, you may want to consider checking whether the card charges an annual fee or a setup fee. If approved, keeping your credit utilization below 30% of the card limit may be helpful, even on a card with a relatively low initial limit.

Whether you are using a secured or unsecured credit card, sticking to a moderate level of credit utilization, may help improve your credit score and receive more new credit card offers. However, keep in mind that your credit score depends on many factors.

Are credit card security deposits refundable?

Yes, deposits to secure a card are usually refundable in two ways:

• When you voluntarily close out a paid in full account with the credit card company.
• When you are offered an unsecured credit card and your application is approved, you can switch your account.

How to get a credit card without a security deposit?

It’s possible for people with limited to no credit to obtain a credit card without a security deposit—that is, to receive an unsecured card as their first credit card. One way is to apply for a starter card or respond to a promotional offer you receive in the mail.

When evaluating a credit card offer received in the mail or online, it may be helpful to verify that the institution is credible. In addition, you may want to consider reviewing the card’s introductory interest rate on charges or any balance transfers, as well as the regular APR.

Best practices when applying for a Freedom Rise™ card

One credit card, that is not a secured credit card, but is designed for someone who wants to start building their credit today is Chase Freedom Rise™. There are several benefits available to cardmembers. With Freedom Rise, for example, you can receive cash back on every purchase.

To apply for a Freedom Rise credit card, apply online and visit your local Chase branch.

In summary

Secured credit cards are one option for people looking to build credit who may not qualify for an unsecured card. For secured cards, the cardmember usually provides a deposit—generally at least $200—to the credit card issuer that may be equivalent to or higher than the credit limit. Note that Chase does not offer secured cards.

Unsecured credit cards designed for people with limited or no credit, such as Chase Freedom Rise, are one alternative to secured credit cards.