Secured Card Help

[webs0082]

I am currently trying to create some good credit history for myself with a Capitol One credit card. I have had the card for a year now and have never missed a payment. My credit line is $500, $400 of which is secured. The $100 of unsecured credit was offered to me after 6 months of good payment history.

I just learned today that Capitol One won't transfer my secured balance to an unsecured card if I were to be approved for one. I am confused because I thought the point of having a secured card was to rebuild credit to be able to eventually transfer to an unsecured card. So basically now I will always have a secured card, because otherwise I will lose that year of good credit history, right? I am basically out my $400 forever unless I want to close the account and lose my good history? What is the point in depositing more money to increase my secured limit and ultimately increase my debt utilization if I will never get that money back? How does everyone else deal with secred cards?

[JohnPTEX]

Well your history stays there regardless of whether the card is open or closed - the point of a secured card is only to build credit history - that you've done - the $400 secured amount will be refunded back to you upon closing the card so you're not out any of the deposit money either - you can still apply for a Cap One unsecured card - some secured cards convert to unsecured after a set period, but it sounds like your Cap One is not one of them - you should either apply for another secured card that converts or apply for an unsecured card now that you have credit history

[webs0082]

I guess I was under the impression that you should never close a credit card that you have good history on. It would be better for my credit if I kept this secured account open AND opened an unsecured card, right?

[Anonymous]

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@webs0082 wrote:
How does everyone else deal with secured cards?

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My husband and I have 3 secured credit cards (as you can see in my signature below).  We got the Captial One back in September of last year, the USAA American Express in October and, the US Bank Visa in November -- ALL last year -- none of them are a year old yet.  These cards are reporting on our credit reports with excellent history.  We also had one old Discover Card (a closed account from years ago, also with excellent history) STILL reporting.  We applied for, and were approved, for all the unsecured cards that you see in my signature on the first of this month.  Credit is totally a YMMV (your mileage may vary) kind of thing but, we feel that because we had the history from the old Discover card, plus the 3 secured cards, ALL reporting positively, we were considered low risk.  

This time last year, we did not even have a FICO® score because we didn't have and/or hadn't used any credit cards for a LONG, LONG time.  We were able to build up our credit history and get a FICO® score using the 3 secured credit cards. 

When the AF (annual fee) comes due on the Capital One card in September, we will close that card out and get our money back.  We will also do the same with the US Bank Visa card when its AF comes due in November. The US Bank Visa card says that it can graduate but, we are not holding our breath!  The money we used to fund the USAA American Express card went into a 2-year CD so, we can't touch that for awhile -- but, when the CD matures, you can best believe we will get our money back from that card and close it out too.  These secured cards have done their job and we've moved on. They will continue to report positively on our credit reports for the next ten (10) years.

I wish you well on your credit journey! 

[JohnPTEX]

well there really is no positive to closing a card unless you are being charged a fee - i would keep it open and slightly active, paying in full each month - your available credit is going to increase with another card but expect a slight drop in score once opened, but that will improve over time far outweighing the initial drop - in your case I would definitely open a second card