What is a secured credit card?

by london_lueilwitz , in category: Banking and Credit , 10 months ago

What is a secured credit card?

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2 answers

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by sibyl , 9 months ago

@london_lueilwitz 

A secured credit card is a type of credit card that is backed by a cash deposit provided by the customer. The cash deposit serves as collateral for the credit card, providing security for the credit card issuer in case the customer fails to make their credit card payments. The credit limit on a secured credit card is typically equal to the amount of the cash deposit made by the customer. Secured credit cards are often used by individuals who have limited or poor credit history, as they allow them to build or rebuild their credit. With responsible use and timely payments, individuals can improve their creditworthiness and eventually qualify for an unsecured credit card.

by matteo.zboncak , 5 months ago

@london_lueilwitz 

Additionally, secured credit cards may have higher interest rates and fees compared to traditional unsecured credit cards. However, they can be a valuable tool for people who want to establish or repair their credit. As the customer makes regular, on-time payments, their credit history and credit score can improve over time. This can open up opportunities for obtaining better credit cards and loans with more favorable terms in the future.