Why I’ll Keep My Secured Credit Card Forever

Getting a Capital One Platinum Secured Credit Card*×Information collected independently. Not reviewed by Capital One. was more of a necessity than a choice. Although I have some of the best credit cards available on the market today, it wasn’t long ago that I was denied approval for multiple credit cards.

The Capital One Platinum Secured card offered me a lifeline to build credit, and I’ve reaped the rewards ever since. I established good credit with responsible use of the card, opening doors to premium credit cards with superior rewards and benefits.

Read this article to see why I kept the Capital One Platinum Secured card for nearly 10 years, and how I maintain my account so it stays active on my credit report.

Why I Applied for the Capital One Platinum Secured Card

When I got my Capital One Platinum Secured card, I had limited access to credit. I didn’t have much on my credit report and had no credit cards. I used debit cards for all purchases and was frankly somewhat terrified of using credit cards. With no credit card accounts on my report, I hadn’t proven myself as a responsible borrower.

I felt secure using debit cards because I couldn’t overspend and get into credit card debt, but I realized that doing so came with many limitations and risks. The incidental holds at hotels came from my checking account, rental car agreements were more complicated, and unauthorized transactions could drain my account.

Getting a credit card wasn’t easy, as I applied for a few credit cards and got denied. I didn’t know anything about preapprovals or shopping around to find a card that worked for my credit rating.

Then, I learned about the Capital One Platinum Secured card. I liked that it was from a major credit card issuer, had a $0 annual fee or maintenance fee, and only required a security deposit of $49, $99, or $200, depending on creditworthiness. Once I applied, I was instantly approved with a $49 security deposit.

It can be tough to accept paying a security deposit to get a credit card, especially when you’re used to using a debit card for free. But for me, it was well worth the cost.

I was confident I would get the deposit back, as it’s refundable if you don’t miss your payments or otherwise default on the card. Demonstrating responsibility with credit by making on-time payments was why I got the card, so I wasn’t concerned that I would lose my security deposit. 

The $49 security deposit was a small price to pay to get my foot in the door with credit cards. Knowing I could step up to better cards if I built good credit, I was happy to sacrifice that amount for a few months.

How the Capital One Platinum Secured Card Improved My Credit

My Capital One Platinum Secured card offered an initial $200 credit line and monthly reports to all 3 major credit bureaus: Equifax, Experian, and TransUnion. That got me started with credit cards and added a positive credit card account to my credit reports.

When I started using it, I didn’t put much thought into the low credit limit other than doing my best to not exceed it. I’d charge $100 or more and pay it off each month. Because I avoided carrying a balance, I didn’t have to pay interest charges, and each month I made my payment, I added positive payment history to my credit report.

However, I didn’t understand why it wasn’t pushing the needle on my credit score forward very much. I thought I was doing everything right, but didn’t realize that I was overloading my credit utilization.

That $100 or so I charged and paid off every month was 50% of my credit limit. That’s way more than the 30% or lower needed for good credit. Fortunately, credit utilization is easy to change with adjustments to payments and spending. My credit score soared as soon as I started charging much less on my card — more like $30 each statement period.

It only took about 6 months before Capital One reviewed my account for a credit line increase. At that point, my credit line increased to $500, offering more wiggle room on credit utilization. I also received my $49 security deposit back as a statement credit.

My card is still a secured card nearly 10 years later, but it doesn’t matter. Now that I have cards with excellent rewards and benefits, I don’t use my Capital One Platinum Secured card regularly. But I’ll keep the account open because it’s an anchor point on my credit report.

Hot Tip:

Sometimes, Capital One converts Capital One Platinum Secured cards to the Capital One Platinum Credit Card — an unsecured card — when you get a credit line increase and your security deposit back. That happened to my husband’s account, which he opened when I got mine. He’s since converted that account to a Capital One Quicksilver Cash Rewards Credit Card, which earns cash-back rewards.

Why I Still Have a Secured Credit Card

With access to the best travel credit cards, you might think the Capital One Platinum Secured card is the least important card I have, but the opposite is true. Keeping it open as my oldest credit card lengthens my credit history, as length of credit history accounts for 15% of your FICO credit score.

It’s not as important as payment history, which makes up 35%, or amounts owed (credit utilization) worth 30%, but it helps your credit if you can keep your oldest accounts active. And even though the $500 credit limit isn’t huge, it still adds to my overall credit limit to help keep my credit utilization low.

The Capital One Platinum Secured card has a $0 annual fee, so I’ve never paid a cent to use it. Because I pay my statement balance in full every time I use the card, I don’t pay interest, either. Using the Capital One Platinum Secured card was the ultimate free path to building good credit.

How I Use My Capital One Platinum Secured Card

My Capital One Platinum Secured card no longer has a place in my wallet, but I still want to keep it open for my credit history. However, credit card accounts can be closed for inactivity, so I have to be careful to keep this account alive.

I still monitor it for unauthorized transactions, but I don’t make charges on it very often. I keep the card locked in my online account so no charges can go through, but unlock it when I want to make a purchase. 

While it’s never been a daily driver card, I use my Capital One Platinum Secured card every few months for small purchases to keep the account open and avoid cancellation. I like to use it at Capital One Cafés to get 50% off drinks and add a small charge to my account. Using it for small charges doesn’t harm my credit utilization, even though the limit is low.

Hot Tip:

Keeping an old credit card open can be useful for backup purposes, even if you never intend to use it regularly again. If you’re dealing with accounts locked because of credit card fraud or losing your wallet, you might need to use your old credit card until you can replace compromised cards.

8 Steps To Build Credit

A secured credit card is a reliable tool to help you build credit or repair damaged credit. Unlike unsecured cards, secured cards require a security deposit. Making a deposit to open a credit card can be off-putting. Still, the deposit protects the issuer if you default on the card and can make the difference between being approved for a card or denied altogether.

1. Apply for a Secured Card

Applying for a secured card is similar to applying for an unsecured card. Even with a security deposit, approval isn’t guaranteed, though it is more likely. Often, credit card issuers — Capital One included — offer preapproval checks to determine if you’re likely to be approved before you apply and allow a hard credit inquiry to hit your credit report. 

When you make your application, you must provide personal information and a security deposit. Sometimes, the security deposit amount equals your credit limit, but not always. You may be required to pay the security deposit when you apply, but some cards, such as the Capital One Platinum Secured card, allow you to make payments until you reach the security deposit amount and can formally open your account.

2. Prioritize No Annual Fee

If you’re shopping for a secured credit card, look for a card with no annual fee, even if you have to pay a higher security deposit. Assuming you don’t default, a security deposit is temporary and will come back to you, but an annual fee is due every year and isn’t refundable. 

You can keep a no-annual-fee card long term. But if you have a secured card that charges an annual fee, you might want to close the account once you’ve improved your credit enough to get better cards. That can save you money, but you lose what may be the oldest credit card account on your credit history, which can hurt your credit rating.

3. Know Your Credit Limit and Security Deposit Terms

You should expect a low credit limit from a secured card. Over time, some credit card issuers will automatically increase your credit limit without an additional deposit.

After months of responsible use, you can get your security deposit refunded. The amount of time varies by card and issuer but should be made clear when you apply, or you can review your card’s terms and conditions. If you’ve stayed current with your card’s payments and don’t get a credit line increase or refund on your security deposit, you can contact the issuer to ask for it.

4. Understand Rewards and Benefits

Although most secured cards don’t earn rewards, some do. Rewards can be a nice perk, but don’t lose sight of the main goal of a secured card: building credit with responsible use. Anything else, like rewards and benefits, is just icing on the cake.

5. Pay Your Bill on Time, Every Time

Ideally, you should pay your secured card bill in full and on time each statement period to avoid interest charges and establish a positive payment history on your credit report. Always pay on time, even if you can only make the minimum payment. 

Keep your credit utilization low — below 30% is good, but under 10% is better. A 10% to 30% credit utilization on a $200 credit limit translates to $20 to $60 each statement period.

Although you should keep your credit utilization low, you need to use your card regularly to keep it active. Make small, manageable purchases for consistent activity that can help you earn a credit line increase as you make on-time payments.

6. Avoid Pitfalls

Overusing your credit limit, missing payments, or closing your card can be mistakes when using a secured credit card. Exceeding a 30% credit utilization ratio — using more than 30% of your credit limit — can bring down your credit score. Missed payments can affect your credit score for years. And if a secured card is your oldest credit card, closing it can shorten the length of your credit history, negatively affecting your score.

7. Track Your Credit Improvement

Many credit card issuers offer free access to your credit score and credit report activity. You can use these resources to track your credit score and see how paying on time and keeping your credit utilization are helping to improve your credit rating as you use your secured card.

8. Move Up to Unsecured Cards

Some credit card issuers automatically graduate your credit card to an unsecured card once you’ve demonstrated responsible use. If you haven’t received a card change and think you’re ready, you can request a review. Otherwise, you can review your credit score and seek out preapprovals to see if you qualify for unsecured credit cards with higher credit limits and better cardholder perks.

Final Thoughts

I used the Capital One Platinum Secured card as a stepping stone to good credit, and I’ll keep this account open indefinitely. It adds to the length of my credit history to keep my credit score strong and provides a buffer for credit utilization. This card helped me tremendously and offers a great opportunity to anyone who wants to establish or rebuild a good credit history.