How do I use a secured credit card with a $200 limit?

The best way to use a secured credit card with a $200 limit is to make a few small purchases each month and pay off the balance by the due date. You could also make multiple payments per month to keep your credit utilization low. If you manage the account responsibly for at least six months, it’s possible that you’ll graduate to an unsecured card.

Tips for Using a Secured Credit Card With a $200 Limit

Use your secured credit card just like a regular card.

You can use a secured credit card with a $200 limit for in-person or online purchases, just like an unsecured card. Secured credit cards are usually associated with a major credit card network like Visa or Mastercard, meaning you can use them anywhere that network’s cards are accepted.

Keep your credit utilization low.

Whether you’re using a secured card to rebuild or establish credit, try to keep your credit utilization at less than 30% of your card’s credit limit. This will lead to the biggest credit score gains. Unfortunately, that means keeping your monthly statement balance below $60 on a secured card with a $200 limit.

Of course, only having $60 of spending power isn’t super helpful for making purchases. But the good news is that your credit card company will only report your balance the day your billing cycle ends. In other words, you can spend as much as you need to throughout the month and still keep your credit utilization low as long as you make an extra payment and get the balance to $60 or below before that day.

It’s worth noting that you’ll still build credit even if you don’t make any purchases, though not quite as quickly.

Pay your balance in full by the due date.

Making a few small purchases and paying them off every month establishes a history of timely payments while helping you stay well within your $200 credit limit. Payment history is the biggest component of your credit score, and paying in full allows you to avoid interest while also boosting your credit score even more.

Set up automatic payments so you don’t miss a due date.

Automatic payments are withdrawn electronically from your linked bank account every month, guaranteeing that you’ll never miss a payment – as long as there’s enough money in the account to cover the payment amount. Set up your automatic payments to withdraw the full statement balance every month in order to avoid costly interest charges and help keep your credit utilization low moving forward.

Explore opportunities for a credit limit increase.

Secured credit cards typically offer two ways to raise your credit limit. Most secured cards will allow you to add money to your security deposit for a higher credit line, often up to thousands of dollars. And in some instances, an issuer may grant you an automatic limit increase after you meet certain requirements – paying the bill on time for at least 6 consecutive months, for example. There’s no guarantee when, or if, an issuer will grant you an automatic increase, though.

Over time, with responsible card use, you may qualify for an unsecured credit card with the potential for a higher credit limit. Plus, you’ll get your security deposit back when you close the account with a $0 balance. Your credit card issuer may even graduate you directly to an unsecured card and return your deposit without the need for account closure, which is great for your credit score because it keeps a longstanding account on your credit report.

Check out our editors' picks for the best secured credit cards to help narrow your search for the right card. You can also learn more about how secured cards work here on WalletHub.