I think my point here is that it might be hard to come up with $300-$600 deposit especially if you just got out of bankruptcy, or maybe still paying some debts. Would you rather spend your $300 as a collateral to a secured credit card or would you use it to repay your debts?

I agree with monty, it's a good way to build discipline and I agree with average_joe that it's a small price to pay.

Hi bebiesean,

I'm not sure if having to save up the security deposit is a drawback, I actually think that's a positive thing. Let's be honest about this, if you can't come up with the money for a security deposit, should you really have a credit card in the first place?

When I was younger I could afford was $50 a month to save, and it literally took me one year to save $600. Prior to that I would spend my money easily, and never developed the discipline to save.

After I saved $600 it gave me a lot of confidence, and changed my way of spending/saving. So if it takes an individual a year to save up a $500 deposit is a bad thing. I know that's not an answer that is popular, but it's the truth.

as I am starting to see, if you get a credit card and don't have cash you're probably be in trouble in a short period of time, unless you're really disciplined

If you apply for a capital one card on this site and you are denied for their regular card they will send you information on their secure card. The security deposit that is required is $300.00 and the annual fee is $59.00 and the interest rate is around 19.8%.I believe it’s a small price to pay for you to get your credit back on track.

Secured credit cards can help you re-establish your credit score. But there are few drawbacks as well. You need to deposit atleast $500 for the security deposit. It's not easy to come up with this kind of money but this will determine your credit limit. But no worry, your deposit is put in an interest-earning account which you can refund after you close the account (as long as you don't have any outstanding balance, in which case the balance will be deducted from the deposit).

You might be required to pay other fees such as the processing fee and the annual fee. Including the deposit, this is a high price to pay.

Lastly, secured credit cards have higher interest rates because lenders consider you a higher credit risk than those with good credits. But secured credit cards are still the best way to improve your FICO score so in the end, it's all worth it.