Secured Credit Card Limits

Many secured credit card companies require you to start with a low amount of credit in order to help you better improve your credit score. Normally you would deposit $300 to $500 in a savings account held by the bank that is lending you the money. The bank then holds your deposit as a security in order to issue the secured credit card. You are expected to keep the money in the account even though it is your money as this is what makes the credit card issued to you secured. Remember that you have to be able to pay back the loan so the bank therefore needs to hold your deposit in case of any problem that might arise. This is a loan so if you are late with your payment or do not make the payment then the money on deposit is forfeited. This is the lenders security that they will be paid if for some reason you do not make your commitment.

You have a secured credit card but this poses limits on the amount that you may use for credit. In order not to go over your limit the credit card company will not permit you to be approved for an excessive amount of credit. You must also realize that a part of the money you put on deposit is being used to pay the fees incurred to get credit. One of the fallacies behind secured credit is the fact that not all the money put on deposit is kept for your use but part is used for the expense of having credit with your lender.