How to use a Secured Credit Card to Establish Credit

man holding credit card and money

I’m not sure when I first learned that the length of your credit history is an important factor in determining your credit score, but I know I learned it early because I applied for my first credit card while in high school, purely in an attempt to establish good credit.   It would have been a good financial move except I got rejected by every card I applied to.   I remember being so frustrated.  How was I supposed to establish credit if getting it required I already have good credit?

The solution I eventually found was a secured credit card through my bank.  I provided a $500 deposit, and they gave me a credit card with a $500 spending limit.  After having used the card responsibly making regular, on-time payments for months, I reapplied for a rewards credit card and was finally approved.  The secured card had served its purpose.  I was now credit-worthy.

Young adults aren’t the only ones who sometimes need to build credit.  A secured credit card may also be a good solution for someone with a poor credit history.  It can allow them to turn over a new leaf and work to improve their credit.  For over spenders, it inherently protects you from yourself, since your initial deposit will always be able to pay up to your credit limit.  And it gives you a chance to prove you are capable of making regular, on-time payments, both to yourself and future lenders.

Secured credit cards are still subject to credit approval, but you’ll find they are much easier to attain.  You provide a one-time deposit of anywhere between $300 up to $5,000 to set your credit limit.  Sometimes, with a perfect payment record, you’ll qualify for a spending limit beyond your deposit in as little as 7 months.  And if you continue to make payments on time, you may even be able to get your deposit back in as little as 11 months.

Secured credit cards are subject to interest and annual fees.  Summary of Credit Terms from  First Bankcard.

By Adam Lucas Adam Lucas holds a Finance degree and an MBA from the University of Kentucky. His work has appeared in many major outlets including Yahoo,, and

Monday on the Money is a weekly commentary from Bank of the Ozarks providing financial advice and solutions important to you and your family.