A man compares his Discover secured credit card with information on his laptop.

Common Questions About Secured Credit Cards & Security Deposits

6 min read

Last Updated: May 9, 2025

Table of contents

Key Takeaways

Secured credit cards require a cash security deposit as collateral for your credit limit, which often equals the deposit amount.
You may qualify for a secured credit card even if you don’t have a credit history or have a low credit score.
Secured credit cards can help you build or rebuild your credit history with responsible use.

Are you worried you won’t qualify for a new credit card? If you haven’t started building credit history or have a lower credit score than you’d like due to past financial setbacks or hardships, qualifying for a card can be difficult. But you have options. Even without a very good credit score, you may still qualify for a secured credit card account. Using a secured card responsibly could help you build positive credit history and good credit habits.

Secured credit cards defined

A secured credit card is a card that requires a refundable cash deposit to “secure” your credit limit. Your credit limit often equals that deposit amount, which may be as low as $200 in some cases.

An unsecured credit card, which is a traditional credit card, extends a credit limit without requiring a deposit or collateral. An unsecured card may have a higher credit limit or lower interest rate than a secured card.

You may be able to convert your secured card to an unsecured card after practicing good credit habits that increase your score. For example, Discover conducts automatic reviews starting at 7 months to see if we can transition you to an unsecured line of credit and return your deposit.¹

Do secured credit cards help raise your credit score?

When used responsibly, secured credit cards may help raise your credit score as long as your credit card issuer reports your activity to a major credit bureau. Secured cards often have lower eligibility requirements than unsecured cards, making them more accessible options for people with poor credit scores or no credit history.

If you make timely payments and keep your balance as low as possible, a secured card can boost your credit score. Just keep in mind that building credit history takes time and won’t happen overnight.

Did you know?

The Discover It^® Secured Credit Card is a real credit card. And, since Discover reports your payment history to the three major credit bureaus, it could help build your credit with responsible use.²

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How much will a secured credit card raise your credit score?

The effect that a secured credit card has on your credit score depends on your unique circumstances and credit management. If you have multiple installment credit accounts, like personal loans, then opening a secured credit card may improve your score a little by increasing your credit mix. But other impacts depend on your decisions. If you use your secured card for some small purchases each month and make consistent, timely payments, you may increase your score by building a positive payment history.

Repaying your entire balance each month may also improve your credit score by establishing low credit utilization. Your credit utilization ratio is the sum of your total outstanding balances compared to your total available credit. Keeping credit utilization low shows you can manage your credit card debt, which may help you build a good credit score.

Is a secured card a “regular credit card”?

A secured credit card is a regular credit card that offers you access to a line of credit and may build credit history when used responsibly. Some people mistakenly believe a secured card works like either a prepaid card or debit card, but that’s not the case.

Prepaid (like a bank account or direct Prepaid cards doesn’t involve borrowing. Because they don’t involve borrowing, they don’t report any activity to a credit bureau–so they don’t affect your credit score. so they don’t affect your credit score.

When you use a secured credit card, on the other hand, you’re not accessing the cash deposit. You’re instead borrowing money from your available credit, which you’ll pay back (sometimes with interest).

Are credit card security deposits nonrefundable?

The cash deposit you make when you open your secured credit card account is refundable. It’s true that if you don’t make your credit card payments, the card issuer may keep your deposit and close your account. But as long as you make consistent payments and ultimately repay your balance in full, you can get your money back when you close your credit account. Likewise, if your card issuer converts your card to an unsecured credit card, they’ll refund your deposit. Note that the timing of your refund may differ from issuer to issuer.

Can you increase the credit limit on a secured credit card?

You may be able to increase the credit limit on your secured credit card, depending on your credit card issuer and their rules. Your deposit amount on a secured credit card determines your credit limit. Some cards allow you to increase the credit limit by providing an additional deposit.

Are secured credit card security deposits too expensive?

The security deposit for your secured card doesn’t have to be expensive; it just has to meet the card issuer’s requirements for opening an account.

With the Discover It^® Secured Credit Card, your credit line will equal your deposit amount, starting at $200.³ So, once you save $200, you can use it for your security deposit.

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Do secured cards provide credit card rewards?

While some card issuers don’t offer a secured reward card, the Discover It^® Secured Credit Card lets you earn rewards just like every other Discover credit card. You’ll earn 2% Cashback Bonus^® at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus earn unlimited 1% cash back on all other purchases.⁴

The bottom line

With a bit of research, you’ll see that a secured credit card can be a powerful tool for building or rebuilding credit history and learning healthy habits. If you want to establish credit for the first time or make positive changes to your credit history and credit score, applying for a secured credit card may help you manage your spending and build a stronger financial future.

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