Are you applying for a secured credit card and wondering what will happen to your deposit? Or perhaps you already have a secured credit card and want to know if and when you can expect your deposit to be returned to you? Well, you aren’t alone!
Secured credit cards are a popular option across the country, allowing people with lower credit scores to easily access a credit card and build their credit score.
You simply place a deposit down and are given a line of credit that providing you use appropriately can boost your credit score.
But do you get that deposit money back? And when?
These questions plague you, keeping you up at night as you wonder and worry about your money, wondering if you will ever see your deposit again. It can even put some people off applying for one altogether, fearing that their deposit will vanish, never to be seen again.
Well, worry no more! Today we are here to put your mind at ease and get you the answers you need. Keep reading to find out if you get your deposit back from a secured credit card and when to expect the money.
Let’s get straight into it! Yes, you can get your deposit back from a secured credit card. The deposit will be refunded to you at different points depending on the terms and conditions of your credit card.
You might get your deposit back after paying off the entire balance or when the account is closed. You can also get the deposit back if you convert your secured credit card to an unsecured credit card.
You can check when your deposit will be returned to you in the terms and conditions of your credit card agreement. It might be a long and tedious read, but trust us, you will get the answers you want this way!
Alternatively, you can speak to your credit card provider, who can usually tell you this information in person or over the phone. It’s worth noting that if you do it this way, you will be required to answer some security questions.
Yes, there can be instances where your deposit for your secured credit card won’t be returned to you.
If you have money outstanding on your credit card, your deposit will not be returned to you until you make these payments.
You can, if needed, use your deposit to make these final payments, especially if you are closing the account entirely.
Your credit card company might deduct any money or fees owed before returning the deposit to you. If possible, pay the outstanding balance beforehand, as the deductions can increase the time it takes to return the money to yourself.
Similarly, if you struggle to pay your credit card before closing it, the lender might use the deposit to pay the outstanding balance.
Some lenders try to leave the deposit alone for as long as possible, whereas others might use it earlier if needs be to recoup their funds.
You can check this in the terms and conditions of your credit card or with the loan provider directly. It’s worth noting that its rare deductions are made on your secured credit card deposit unless you have outstanding fees when the account is closed.
You can avoid your deposit being taken by making your credit card payments on time and ensuring that the balance is cleared before attempting to close the account.
We’ve spoken a fair bit about closing your secured credit card once the balance is paid or if you don’t use the account anymore, but is that the right option for you?
Sometimes it’s best to leave the account open rather than closing your credit card account.
Closing a credit card account can increase your credit utilization ratio (the amount of available credit you are currently using), hurting your credit score! It can cause your credit score to decrease, hindering your chances of applying for loans or mortgages.
It can be better for your credit score to transition the account instead of closing it. You could change your secured credit card into an unsecured credit card with the same provider.
In some cases, the credit card company makes an automatic offer if you have made on-time payments for at least 12 months.
Other providers will require you to make the request, but providing you haven’t missed a payment and have been paying at least the minimum monthly payment, you are likely to be accepted.
Once the transition is complete, your secured credit card deposit will be returned to you, and you will have an unsecured credit card instead.
Consider your needs and credit score when deciding if it’s worth closing your account or transitioning it.
You can always speak to an advisor who can help you find the right option for you! It’s worth noting that although unsecured credit cards can boost your credit score, they have higher interest rates and larger limits.
You will still need to be mindful of what you spend and make the payments on time to avoid landing yourself in hot water.
And just like that, we have come to the end of our secured credit card journey today! As you can see, your deposit will be returned to you, but at different points, depending on the credit card provider.
Be sure to check this information before applying for the card and ensure that you will be okay without that money until it is returned to you.
Remember to carefully consider your options when deciding if you should close your credit card account or not and pick the option that works best for you and your credit.
Financial experts and advisors are on hand to provide you with support and further guidance should you need it. Remember to ask for help when needed and not suffer alone.