What is a secured credit card? - Bad Credit FAQ


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Credit Card Applications » Questions » FAQs » Bad Credit » What is a secured credit card?

What is a secured credit card?

Answered on | Updated on February 5th, 2013
The content is accurate at the time of publication and is subject to change.

A secured credit card requires a security deposit to act as collateral for the line of credit. They are designed for people with limited or damaged credit who want to rebuild their credit history.

Benefits of secured cards include:

  • People with limited or damaged credit histories can get them
  • Most report to major credit bureaus, so they will help you rebuild your credit history and improve your credit score

Drawbacks of secured cards include:

  • Fees including startup fees, monthly fees and/or activation fees
  • High APRs – it is best not to carry a balance from month to month on a secured card because of the high interest rates

A secured card may be your only option though for getting a credit card and rebuilding your credit. Your initial deposit is usually refundable, and there are secured cards with fair fee schedules and good customer service. Just make sure you do your research to find the one that is right for you.

If you are trying to build a good credit history, make sure the secured card you plan to apply for reports to credit bureaus. And check to make sure the issuer will refund your deposit when you close your account.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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