Credit Card Inform
Secured Credit Cards
A secured credit card is a type of credit card secured by funds provided by the credit card holder. Typically, the credit card holder must deposit between 100% and 200% of the total amount of credit desired.
Secured credit card issuers, like traditional credit cards, can still gain credit rapport through the use of their credit card. This may help individuals with negative or no credit history to improve their credit score. It is also commonly used by students, who's accounts are funded by their parents as a way to assist them with everyday expenses, while also building credit.
The credit card holder of a secured credit card must still make regular payments, as with a regular credit card, but should they default on a payment, the card issuer has the option of recovering the cost of the purchases. Although the deposit is in the hands of the credit card issuer as security in the event of default by the consumer, the deposit will not be debited simply for missing one or two payments. Usually the deposit is only used as an offset when the account is closed, either at the request of the customer or due to severe delinquency (150 to 180 days).
