Paddy Sullivan, WalletHub Credit Card Advisor
Yes, a secured credit card will increase your limit under certain conditions. For instance, you can add additional funds to your security deposit to raise your credit limit. Plus, if you make several consecutive timely payments, the issuer may increase your limit without an additional deposit.
With a secured credit card, you add a security deposit to establish your credit limit. As secured cards are designed for people with less than good credit, the deposit also serves as collateral. The amount of your deposit determines your credit limit. You’ll be refunded the deposit in full when you close your account in good standing. Any unpaid balance or fees owed will be deducted from your balance when you close the account.
How to increase your secured credit card limit:
- Increase the amount of security deposit: You can add additional funds through your online account or by contacting the issuer’s customer service line. When you call, you will need to provide your personal information to verify the account. Please note that some credit card issuers require that you make additional deposits (up to the maximum amount allowed) before the account opens.
Check with the issuer to make sure your deposit is within the secured card’s limits. Some of the highest limit secured credit cards, such as the U.S. Bank Secured Visa® Card, allow security deposits of up to $5,000.
- Automatic credit limit increases: Some issuers will consider you for a credit limit increase without an additional deposit after you make your first several payments on time. The Capital One Platinum Secured Credit Card is a good example. However, you have no control over how much and when you credit limit will be increased, if at all.
When evaluating your account for automatic credit limit increases, the issuer will perform a soft inquiry on your credit report. This inquiry does not affect your credit score, nor does the issuer need your permission to generate it. Not all secured credit cards offer automatic credit limit increases, though.
Alternative ways to increase your credit limit on a secured credit card:
Note that your card may be eligible for graduation to an unsecured credit card. If your account has been in good standing for more than 12 months, contact your issuer and see if you are eligible for graduation. If approved, you will receive a refund on your security card. You may also be eligible for automatic credit limit increases or request them yourself if you’ve used your card responsibly.
If you are not eligible or graduation, you can always search elsewhere and apply for an unsecured card that best fits your credit profile. Keep in mind that a credit card application results in a hard inquiry on your credit report, which may cause your score to drop a bit in the short term.
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