Will I get my deposit back?

Generally, yes, once the account is closed in good standing, or in some cases when the issuer converts it to an unsecured card. Confirming the specific terms for deposit return with the issuer before opening the account clarifies what to expect.

How long does it take to build meaningful credit with a secured card?

There’s no universal timeline, but consistent, on-time use over a period of months to a couple of years typically builds a credit history sufficient to access other credit products. Patience and consistency matter more than any single action.

Is a secured credit card the same as a prepaid card?

No. A prepaid card isn’t a credit product at all, and it generally doesn’t build credit history the way a secured credit card does, since spending on a prepaid card is limited to money already deposited and isn’t typically reported to credit bureaus.

Do I need a Social Security number to open a secured credit card?

It depends on the issuer. Some secured card issuers accept an ITIN in place of a Social Security number, particularly cards marketed toward newcomers building credit for the first time, though this varies by institution and isn’t universal. Confirming this directly with a specific issuer before applying avoids a wasted application.

Is it worth paying an annual fee for a secured credit card?

It depends on the alternatives available. If a fee-free secured card with similar reporting practices is available, it’s generally worth choosing that option first, since the fee doesn’t add anything to the credit-building process itself. That said, if a card with a modest fee reports to all three bureaus while a fee-free alternative doesn’t, the fee can still be worth paying, since building a broadly recognized credit history is the actual goal, not simply avoiding a small annual cost.

Back to Glossary

Secured credit card: a deposit that becomes your first credit line

Key takeaways
- A secured credit card requires a cash deposit, which typically becomes the credit limit.
- It’s one of the more accessible tools for building credit from scratch, with less stringent qualification requirements than an unsecured card.
- Using it responsibly, with on-time payments and low utilization, builds credit history just like an unsecured card would.
- Many secured cards eventually convert to unsecured, or return the deposit, once a track record is built.
- Comparing a few secured card options helps in finding one with reasonable terms and fees.

A secured credit card requires a deposit, which becomes the credit limit. It’s a genuinely accessible tool for building credit from scratch. Here’s how it works, and what to look for.

What is a secured credit card?

A secured credit card is a type of credit card that requires an upfront cash deposit, which typically becomes the credit limit and serves as collateral for the card issuer. This structure makes it more accessible than an unsecured card, since the deposit reduces the issuer’s risk, allowing them to extend credit to someone with limited or no existing credit history⁠(opens in new window). A deposit of $500 typically results in a $500 credit limit, for example, and that dollar-for-dollar relationship is what separates a secured card from an unsecured one, where the limit is based purely on a lender’s judgment of creditworthiness rather than money put down upfront.

Secured credit cards: benefits, limitations, and what to watch for

What can work well:

Accessibility for someone with no credit history. Since the deposit reduces the issuer’s risk, secured cards are often available to applicants who wouldn’t qualify for an unsecured card.
It builds credit just like an unsecured card. Responsible use, on-time payments and low utilization, contributes to credit history the same way an unsecured card’s use would, a point covered in more depth in Remitly’s guide to secured cards for building credit⁠(opens in new window).
Many cards eventually convert or return the deposit. After a track record of responsible use, some issuers upgrade the account to an unsecured card or refund the deposit.

What to watch for:

The deposit is tied up while the account is open. This means the funds aren’t available for other use until the account is closed or converted.
Fees and terms vary significantly between cards. Some secured cards carry an annual fee or other charges that can offset the value of building credit through them.
Not every secured card reports to all three credit bureaus. Confirming this before choosing a specific card ensures responsible use actually builds a broadly recognized credit history.

What secured credit cards mean for newcomers and immigrants

For immigrants with no U.S. credit history, even arriving with an excellent financial track record elsewhere, a secured credit card is often the most practical first step available. The CFPB specifically names secured cards⁠(opens in new window) as a common path for building credit from a limited starting point, since a credit line starts small and can grow as reliable payments accumulate. Understanding how to use it correctly, low utilization, on-time payments every cycle, matters as much as simply having the card, since the goal is building a genuinely strong credit score⁠(opens in new window), not just holding a card.

It’s also worth setting realistic expectations about the deposit itself. Saving several hundred dollars for a security deposit can be a genuine stretch for someone who has recently arrived and is also managing living expenses, so timing the application for when that amount is actually available, rather than rushing into a card before it’s comfortable, avoids straining an already tight budget during an already difficult transition period.

First steps for choosing and using a secured credit card

Confirming the card reports to all three major credit bureaus helps ensure responsible use builds a broadly recognized credit history.
Comparing deposit requirements and any fees across a few options matters, since terms vary meaningfully between issuers.
Using the card for small, regular purchases paid off in full, rather than treating it as a significant borrowing source, keeps utilization⁠(opens in new window) low and predictable from the start.

Common questions about secured credit cards

Will I get my deposit back?

Generally, yes, once the account is closed in good standing, or in some cases when the issuer converts it to an unsecured card. Confirming the specific terms for deposit return with the issuer before opening the account clarifies what to expect.
How long does it take to build meaningful credit with a secured card?

There’s no universal timeline, but consistent, on-time use over a period of months to a couple of years typically builds a credit history sufficient to access other credit products. Patience and consistency matter more than any single action.
Is a secured credit card the same as a prepaid card?

No. A prepaid card isn’t a credit product at all, and it generally doesn’t build credit history the way a secured credit card does, since spending on a prepaid card is limited to money already deposited and isn’t typically reported to credit bureaus.
Do I need a Social Security number to open a secured credit card?

It depends on the issuer. Some secured card issuers accept an ITIN in place of a Social Security number, particularly cards marketed toward newcomers building credit for the first time, though this varies by institution and isn’t universal. Confirming this directly with a specific issuer before applying avoids a wasted application.
Is it worth paying an annual fee for a secured credit card?

It depends on the alternatives available. If a fee-free secured card with similar reporting practices is available, it’s generally worth choosing that option first, since the fee doesn’t add anything to the credit-building process itself. That said, if a card with a modest fee reports to all three bureaus while a fee-free alternative doesn’t, the fee can still be worth paying, since building a broadly recognized credit history is the actual goal, not simply avoiding a small annual cost.

In Summary

A secured credit card offers a genuinely accessible path to building credit from scratch, with the same underlying mechanics as an unsecured card once it’s being used responsibly. Comparing terms across a few options, and confirming the card reports to major credit bureaus, ensures a first credit account builds toward a strong financial foundation. Understand your options and compare a few secured card offers before choosing one to start building your credit history.

This publication is provided for general information purposes only and is not intended to cover all aspects of the topics discussed herein. This publication is not a substitute for seeking advice from an applicable specialist or professional. The content in this publication does not constitute legal, tax, or other professional advice from Remitly or any of its affiliates and should not be relied upon as such. While we strive to keep our posts up to date and accurate, we cannot represent, warrant, or otherwise guarantee that the content is accurate, complete, or up to date.