If you have a bad credit history or no credit history at all, a secured credit card is perhaps the best card for you.
What is a Secured Credit Card?
A secured credit card, commonly misspelled as secure credit card (without the ‘d’), is a type of credit card that requires the card holder to deposit a certain amount, typically 100 to 200 percent of the total credit desired. This type of credit card is often used by those who have poor credit record and want to rebuild it. It’s used by new cardholders to create a good credit history the first time. Most credit card companies offer this type of card for such purpose.
This type of credit card is generally offered by Visa and MasterCard. Another popular card that belongs to this type is the Orchard Bank secured credit card. You can check on each detail by visiting their official websites.
Why Secure?
The term secure or secured is taken from the credit card provider’s perspective and not from the cardholder’s. A secured credit card would need a deposit or collateral that the bank will temporarily ‘own’ as a guarantee for any loaned or borrowed money. Given this characteristic, banks and credit card companies issue a secured credit card especially to those who don’t have any credit profile or those that have bad credit standing. This gives them the opportunity to lessen the risk of not having to recoup their capital when lending money.
The security deposit left in the hands of the bank or credit card companies would usually equal or exceed the credit limit imposed on the credit card. This is the method they use to lessen payment delinquencies from cardholders. This is because a cardholder would feel like losing something when the balance is not paid on time.
Regular payment is still required from the cardholder if there’s any outstanding credit card balance. In most cases, the security deposit will be left untouched for a missed one or two payment. The moment the cardholder defaults, the card issuer would then recover all the cost and fees from the deposit.
Note that the features of secured credit card offered may vary. Some may have fees or other policies that are different from others. That is why when applying for a secured credit card, you have to understand the terms and conditions completely to make sure you get the best secured credit card that fits your needs.
More on Secure Credit Card
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Completely different from the ones discussed above, a secure credit card can also be perceived from a transaction perspective. Cardholders always seek the best security whenever using their credit card online or in person. Generally having brand or name attached to the card, would assure you of having better credit card security. This is because most known brand would invest in tightening their cards’ security feature and provide services such as on-call support for lost/stolen credit cards, and the like. Online merchants also partner with different security companies to ensure that every transaction happening on their site is secured.
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