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Will making a deposit into secured credit card help me?


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I figure this has been asked before. I tried searching but I didn't see anything out there. Please forgive me, if this is already been discussed.

Ok, here is my thought process, let me know if you think this will help me.

I opened a secured credit card with US Bank in March 2007. I suspect that it will become unsecured in March of this year. The limit is only $300. That is my initial deposit and I never added to it.

Recently, I got a personal loan. It looks like I'll have a few extra bucks from that. I'm thinking of adding to the secured savings account that is backing my card. I hope that it will make the account look good to the bank and on my credit report. Then if it does indeed unsecure itself then I could use the money to pay down other debts.

I think my reasoning is that I would want to increase the credit limit and look good to the bank. It would also help to have that extra cash locked down.

Ok, what do you guys think? What are the pros and cons?

:)

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Pro#1: probably will boost your limit to the size of your secured deposit. If they unsecure it, they may allow you to withdraw funds but keep the higher current limit on the card.

Pro#2: It is cashed squirreled away and saved for another day.

Con#1: This additional saved money is borrowed money (you stated it is from a personal loan). That is non-deductible high %apr expensive money. Then you are receiving a nominal % savings rate that is fully taxable, reducing the gain further. From a financial standpoint, you'd be better off paying down the balance of the personal loan with that money.

You have to decide if the 'credit' benefit outweighs the 'financial' cost of what you plan to do. It all depends on your situation.

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I've had my secured US Bank Visa for 2 years - they won't unsecure it. in other words - don't carry a high balance percentage and don't dare go over limit

Now that you mention it. I think I remember reading about your US Bank card. Can you expound on your experience?

The low limit it what scares me. $300 is not a very large limit.

According to their site, I understood it as if they would unsecure the savings account and move the credit card account to a different type of credit card. Here is the link. http://www.usbank.com/cgi_w/cfm/creditcards/secured/usb_secured_card.cfm

As far as the loan, I don't have any problems making the payments and I should be able to pay if off in full before it's totally due. I thought I might could use the extra financial cushion to help my credit.

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I was overlimit and late (though only 2 days or so) with payments, that's why they won't do it for me. My bad behaviours with them a year or so ago...

But overall it's a great idea....so long as you can be a good consumer nad not go over or be late :p

Oh, ok. That makes sense now. I wasn't totally sure that you were talking about your personal experience or the terms of the card.

Hopefully, they will unsecure it for you someday. I'll probably send then some money. I just don't know how much would be best. I really want to keep a good relationship with them. Hopefully, they would move me to a really good card once it unsecures.

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I wouldn't bother increasing the limit. Pay your bills on time, keep a clean credit report (or continue to clean it up if needed) and the bank should unsecure the card and give you a decent limit. If they do not, forget them then. There are pleny of other banks out there that would LOVE your business. The money is better paying down the loan a bit, or putting away for a rainy day.

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Isn't this the card where you put down $99 and they give you a CL of $500?

Yes it is.

But you won't find it advertised anywhere. One has to apply for (and get denied for) a Platinum Plus VISA account with BofA, then if you're credit is OK they'll counter offer with the 99/500 secured either online or snail mail (mine was snail mail).

It is like any other secured card, except your CL is higher than the amount you deposited.

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Pro#1: probably will boost your limit to the size of your secured deposit. If they unsecure it, they may allow you to withdraw funds but keep the higher current limit on the card.

Pro#2: It is cashed squirreled away and saved for another day.

Con#1: This additional saved money is borrowed money (you stated it is from a personal loan). That is non-deductible high %apr expensive money. Then you are receiving a nominal % savings rate that is fully taxable, reducing the gain further. From a financial standpoint, you'd be better off paying down the balance of the personal loan with that money.

You have to decide if the 'credit' benefit outweighs the 'financial' cost of what you plan to do. It all depends on your situation.

I was overlimit and late (though only 2 days or so) with payments, that's why they won't do it for me. My bad behaviours with them a year or so ago...

But overall it's a great idea....so long as you can be a good consumer nad not go over or be late :p

I wouldn't bother increasing the limit. Pay your bills on time, keep a clean credit report (or continue to clean it up if needed) and the bank should unsecure the card and give you a decent limit. If they do not, forget them then. There are pleny of other banks out there that would LOVE your business. The money is better paying down the loan a bit, or putting away for a rainy day.

Ok, I really appreciate the advice. I *really* want to improve my situation and I'm hoping to clean up my credit well enough to qualify for a prime card pretty soon. I'm looking at the American Express Clear Card. I think I should qualify for it in a short time. I sure would be proud to have that card. I guess the Wal-Mart discover might be consider prime by some people but it's still a store card to me.

So, I decided to kind of go against the advice and make a compromise. I had a limit of $300. I sent them another $300. I really don't want to go over the limit or get too high on utilization. I still have a good chunk of money in the bank for a rainy day so I'm not too worried about that. I just didn't want to tie up too much money so I stuck with $300.

I guess we'll see if it really helps or not. I hope it isn't a mistake.

:)

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