A secured credit card will increase your limit under certain conditions. You can add additional funds, up to $10,000 in some cases, to your security deposit to raise your credit limit. Also, if you make several consecutive timely payments, the issuer may increase your limit without an additional deposit. For example, the Capital One will consider an increased credit limit if you make your first 5 monthly payments on time.
When you have a secured credit card, you put up 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 for the issuer should you default on the account. The amount of your deposit determines your credit limit, depending on creditworthiness.
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.
Here is how to increase your secured credit card limit:
Increase the amount of security deposit. Contact customer service or log on to your secured card’s website to start the process. Provide your name, address, account number, date of birth, Social Security Number and any other information need to verify your account.
If you have a $700 limit on your secured card and want to increase the limit to $1,500, you will need to submit an $800 payment. You can make your deposit over the phone or online using a checking account or with another credit card. If you are unable to do so, request a mailing address to send a check or money order.
Check with the issuer to make sure your deposit is within the secured card’s limits. Some cards, such as the Wells Fargo Secured have a maximum deposit amount of $10,000.
Make several consecutive online payments. Many issuers will evaluate your account after you make your first several payments on time and consider an increase in your credit limit without an additional deposit. The drawback is you have no control over how much you credit limit will be increased, if at all.
Also, you won’t know when the issuer will evaluate your account. The issuer will perform a soft inquiry on your credit score to determine if you’re eligible for a credit limit increase. A soft inquiry does not affect your credit score, nor does the issuer need your permission to generate the inquiry.
An alternative to a credit limit on your secured credit card is a secured card. If you’ve kept up timely payments, and have had your secured card for more than 12 months., contact your issuer and request an upgrade to a secured card. If approved, your credit limit may be higher than on your secured card. Plus, you will receive a refund on your security card. If the issuer declines, you can always search elsewhere and apply for an unsecured card that best fits your credit profile.
In either scenario, a hard inquiry will be generated on your credit score. Hard inquiries can have a slight negative impact on your credit score, so if you’re teetering on the border of good credit, it might be best to wait a few months and apply after you’ve raised your credit score a few more points.
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