What is a Secured Credit Card?
A secured credit card is a guaranteed VISA or MasterCard and is secured by a deposit to the issuer’s bank. It works simply as a credit line that you fund for yourself with your own cash. To get a secured credit card you have to deposit on the issuer’s bank account an amount ranging from $250 to $3,000. Then this bank will send you a credit card. Their rules differ but usually you can use your credit card up to 100% of your deposit. Secured credit cards are sometimes the only way for individuals to more or less quickly establish or repair their credit. The acceptance is practically guaranteed, after all you are putting your money where your mouth is and don’t fret, there are some fees that secured credit card issuers will charge you. Unless there is something truly disgusting on you credit report.
A secured credit card is a credit card that requires a security deposit. These types of credit cards are generally for people with no or damaged credit. Your credit line will represent a percentage of your security deposit or savings account balance. If you establish good credit with the card, the credit card issuer may extend your credit line or offer you an unsecured card.
In a secured credit card, as opposed to an unsecured credit card, a savings deposit is required as collateral. To get a secured card, you deposit money into a savings account. According to the policy of the creditor, you may not be permitted to withdraw this deposit until the account is closed. There may be an application or processing fee to open a secured credit card. Annual fees may be high. The credit limit may start out very low, such as 00 or 00. The interest or finance charge is generally higher for secured credit cards. If you don’t pay the bank on time each month, the creditor may withdraw the amount you owe from the savings deposit. A secured card is not always the method of choice, but it may be a suitable choice if you have a poor credit history. When you pay your bill on time each month, you will build a positive credit history.
Secured credit cards are popular with people who have trouble getting credit. Simply speaking, with this type of credit the financial institution requires you to deposit and maintain a minimum amount of money in an account. Your “credit limit” may equal the amount on deposit. Interest charges and late fees are made on your purchases.
