Secured credit card

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Secured Credit Card

A credit card with a credit limit that is at least partially collateralized by funds in a special savings account. That is, a cardholder places a certain amount of money into an account with the credit card company, and this is used to protect the company from the cardholder's default. Depending on the cardholder's credit history, he/she may be required to place anywhere from 50% to 100% of the credit limit into the savings account. These funds still belong to the cardholder, and he/she may retrieve it if he/she pays off or cancels the secured card. Because these reduce the risk to the credit card company, it may charge a lower interest rate. Secured cards are particularly useful for persons with bad credit or little credit history.

Secured credit card.

A secured credit card is linked to a savings account you open with the bank or other financial institution offering the card.

You deposit a sum of money in the account, and you can borrow up to that amount using your card. If you don't repay what you borrowed, the creditor can access your account to cover your debt. The creditor may also change substantial fees for a secured card.

Secured credit cards look the same as other credit cards, so no merchant can identify a card as secured. But if you have trouble qualifying for credit, perhaps because you've just started working, you can use a secured card as a first step toward establishing a record of using credit responsibly.

References in periodicals archive ?
Just like the secured cards, unsecured cards can be an excellent way for you to build up credit and upgrade to a card with lower fees and interest rates.
Evolis' solutions support any requirement in card personalization, from basic printing in small runs up to the personalization of advanced and secured cards in large volumes.
Al Salem continued: "Salary transfer to Warba allows customers many advantages, namely Warba debit MasterCard, of distinguished design, which can be used for cash withdrawals of up to KWD 5000 per day; a special percentage on personal financing facilities; credit cards' promotions booklet that saves up to KWD 3000; and shopping by Warba's various highly secured cards via local and international Points of Sale (POSs), with local and international SMS service and free online banking."
This follows the series of measures taken by SBI Cards to improve its asset quality, such as tightened underwriting norms, compulsory credit check with Credit Information Bureau (India) Ltd (CIBIL), and enhanced focus on secured cards (cards issued against the security of fixed deposit with SBI).
Although secured cards are uncommon in this country, they are quite legal.
However, I have heard about banks that offer secured cards that match your account deposit dollar for dollar.
Everyone in the business knew who they were, and secured cards were viewed differently by other creditors.
Unlike other credit cards, secured cards are linked to a savings account containing enough money to back up the credit limit.
Rewards cards, travel cards, secured cards, and unsecured cards: you might not understand the difference.
The expectation - based on historical experience - is that secured cards and other alternative credit products will be the only source of consumer credit for individuals who have had significant credit trouble.
Although secured cards are very uncommon in this country, they are quite legal.
Check out www.bankrate.com for the latest rates on secured cards.