How to Add Funds to a Secured Credit Card

If you’ve hit a snag with your credit, it can be hard to know how to get things back on the right track. One tool for rebuilding your credit, or establishing credit if you don’t have a credit history, is a secured credit card. Secured credit cards look and act like regular credit cards. The card issuer reports your information to the major credit bureaus, so it can give your credit score a boost as long as you use the card responsibly.

How a Secured Credit Card Works

Secured credit cards give you a line of credit. They base the line of credit on your secured card deposit. Some card issuers give you a line of credit that’s equal to the amount you deposit, while others might extend additional credit.

For example, you apply for a secured credit card and you’re approved. You give the card issuer a deposit of $500. If your card issuer gives you a credit line equal to your deposit, your credit line is now $500. The deposit serves as collateral, which means that if you fail to pay your credit card, the card issuer will use your deposit to pay your balance. Even though you’ve made a deposit, you’re expected to make regular monthly payments like you would for any card.

How Secured Credit Cards Build Credit

Since card issuers report your secured credit card activity to the major credit bureaus, they can help rebuild your credit. They will only help if you use the card responsibly. This means making your monthly payments on time. It also means watching how much you charge. Maxing out your credit card can have a negative impact on your credit score, so you want to keep your balance well below your credit limit.

Over time, the secured card issuer may increase your limit without an additional deposit if you have a good payment history. They may also issue you an unsecured card and refund your security deposit.

How to Add Funds to Your Card

Many card issuers will allow you to add funds, which increases your credit limit. Some may only allow you to add funds before you activate your card, while others may let you add funds at any time. To add funds to your secured credit card, contact your card issuer. You may be able to add funds by phone, online or by mailing in a check or money order. Once you send your funds, check your statement or follow-up with the card issuer to make sure the card issuer applies your funds to your security deposit and increases your credit limit. There may be a limit as to how much you can deposit.

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