Credit limits for secured credit cards
Quick insights
- Secured credit cards require a deposit when the account is opened.
- The deposit you provide when applying for a secured credit card usually determines its credit limit.
- The credit limit of a secured credit card can change in certain situations.
Secured credit cards can be an appealing form of credit depending on your financial situation. Chase does not offer secured credit cards.
Secured credit cards may help to build or rebuild credit when used responsibly. The credit limit on a secured credit card is initially set when the account is opened but may change under certain circumstances.
How is the credit limit on secured credit cards determined?
The credit limit on a secured credit card is usually determined by the security deposit you provide when applying. This limit is often equal to your deposit and serves as the amount you can spend on the credit card. For example, your $500 deposit would become your secured card’s credit limit.
The exact conversion of your security deposit to your credit limit depends on a variety of factors. Some issuers may also offer promotions or incentives that provide a credit limit that’s a certain percentage higher than your security deposit. The terms of a secured credit card should be visible when you shop for cards and provided in full when you apply for one.
Can your credit limit increase or decrease on a secured credit card?
Whether the credit limit on a secured credit card can change depends mostly on the specific card you have. In rare cases, you may be able to provide additional funds to change your card’s credit limit.
Your bank or card issuer may change the credit limit on your secured credit card in certain situations. One may be after you’ve demonstrated responsible use and positive payment behavior over time. This may allow an issuer to increase your credit limit without requiring an additional deposit.
How do credit limit increases work with a secured credit card?
The availability of credit limit increases for secured credit cards depends on the card you have. Not all credit card issuers offer secured cards, and each issuer’s policies vary. The first place to check whether an increase may be possible is your card’s terms and conditions.
It’s possible that demonstrating an ability to pay the established credit limit on a secured credit card could result in the ability to increase your credit limit. Paying credit card bills on time is just one aspect of responsible credit management. Good payment history may also increase your credit score over time.
