How much should I deposit for a secured credit card?

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shoptalk01
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How much should I deposit for a secured credit card?

Postby shoptalk01 » Mon Aug 13, 2012 10:48 pm

Just want to make sure I do things correct. I recently was approved for a Capital One secured card they said $49 for a credit line of $200. If I read everything correct, it sounded like they were going to offer me $1 for $1 on any additional deposit I made, so if I make a $300 security deposit I will get $600 in additional credit for a total of $800.

Now my question is, does it boost my credit score more if I have more available credit? Would it be better to have a second card or a higher credit line on the Capital One card? Does charging more build credit faster or does say charging a couple hundred and paying it off before continuing build credit just as fast?

When I say use 2 cards, I'm talking about put a small purchase on one, send the payment then use the other. In my research, Capital One won't convert the card to an unsecured card, but they have been known to increase the credit line with no additional deposit required. From what I understand, they will allow you to keep adding to your deposit so you could add an extra couple hundred every few months, would this be advisable? I figured out how I could make a couple of cards with a low credit line work for daily spending, no splurging, no unnecessary spending, just say charge that doughnut instead of paying cash.

If I get another secured card, I'm looking at Citi. They convert you to an unsecured card in 18 months. Any thoughts? I'm selling some stuff so going to have some nice cash soon, looking to make the best use of it.


Rory
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Postby Rory » Mon Aug 13, 2012 11:48 pm

three areas come into consideration with your strategy for raising your credit score

1. Credit utilization

2. # of accounts (lines of credit)

3. Does your spending affect your credit score (no it doesn't, if you spend 10$ a month or $10000 all that matters is credit utilization and that you are paying off your balance in full)

Both are important and though credit karma weighs credit utilization higher than the numbers of accounts, everyone knows that creditkarma's scores are not an accurate comparison device towards FICO scores.

I would suggest that you raise the credit limit of your secured capital one card but keep enough cash aside to open a second one in the coming months. Furthermore for you to have access to these higher credit limits it seems to me that you must keep a certain amount of cash available to offset your balances so in fact you are using twice as much money to gain access to it and obtain more influence on your credit score. I personally dont like this approach but you gotta do what you gotta do and if you dont have to credit record to obtain a nonsecured card then i guess this is your best option.

all the best and good luck
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t528491
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Postby t528491 » Tue Aug 14, 2012 5:37 pm

I would advise getting a second secured card and using the extra deposit there. I'm not a huge fan of the Capital One secured, since they won't ever upgrade you to an unsecured card.

And if money is tight, you might be better off making the minimum secured deposit and just using your debit card for any overage. Since more spending on the CCs won't raise your score at all, there's really no point in raising your limit.
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DavidNY
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Postby DavidNY » Tue Aug 14, 2012 6:48 pm

If your credit history is clear of bankruptcy, I would recommend checking out the Bank of America secured card.

agp
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Postby agp » Tue Aug 14, 2012 7:21 pm

shoptalk01 wrote:so if I make a $300 security deposit I will get $600 in additional credit for a total of $800.


Do you mean $900?

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shoptalk01
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Postby shoptalk01 » Tue Aug 14, 2012 9:09 pm

Is Bank of America better? I've been looking at Citi, US Bank and Wells Fargo. Really want something that converts to unsecured in a year or so

shoptalk01
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Postby shoptalk01 » Tue Aug 14, 2012 11:26 pm

Just applied for Bank of America. I just put in for $300 so now we'll see what happens. It said my card should arrive in 7 to 10 days if approved.


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Postby DavidNY » Wed Aug 15, 2012 8:43 am

The BofA secured card should convert within 18 months, maybe sooner. It reports as a regular credit card to the CRAs.

Were you declined for an unsecured card?

shoptalk01
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Postby shoptalk01 » Wed Aug 15, 2012 11:33 am

Silly thing, I had 3 pre-approved applications in the mail and was denied for all of them. I then tried online for several other cards and was declined minutes after filling out the applications. I was offered several secured cards, but didn't want to go that route yet. Days later I had a call that several apartments had opened up in my area. Within a couple days of filling out the application I received a denial letter and they said their decision on all three applications was based on a report from a consumer reporting agency. They suggested I start with a couple of credit cards and build my credit back up from there. I talked to someone who suggested I try First Premier.........first they wanted a $95 processing fee, then there's a $75 annual fee charged to the card when you get it and something about a $6.25 monthly maintenance fee after the account is activated. I called them and they said they would refund the $95 processing fee provided I didn't use the card. I tried a couple prepaid cards because they appeared to be a better deal than anything anyone offered me. The problem was still with credit. I called Capital One and was offered a secured card with a $200 limit and a $49 deposit. Didn't seem like a good deal since my bank debit card gives me a $300 daily spending limit but the other week I decided to take the deal from Capital One. I sent the $49 deposit but haven't heard anything further. Last night I applied online for a secured Bank of America card and sent a $300 deposit but it sound like the decision will come in the mail in 7 to 10 days.

I did get an offer from American Express, they said if I used their new prepaid card for a year or so they would offer me a regular unsecured card. A while back I had an American Express rebate gift card and I had a hard time getting local merchants to accept it, they said it was because Amex charges high merchant fees and they would prefer I use a different card. After I threatened to take my business out of town, the guy finally broke down and took it. Family run business in a small town have proven to be a bad place to pass off an Amex card, not sure I would even want one after my experience with their prepaid and gift cards.

Silly thing is I don't have many friends who use credit anymore, most people I know have grown tired of paying off debt, so they all went with prepaid.



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