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A secured credit card is a card which is secured with the help of a collateral which the user needs to place with the bank for getting approval for the secured card.
Secured cards are those types of card that will help you in building as well as rebuilding your credit score. It will also aid you to apply for a regular credit card in future. Banks will usually increase your credit limit with good repayment behavior. Thus, this increased credit limit will also add up to your overall credit score.
A secured credit card is nothing but a type of credit card for those with limited or low credit score. Such people will need to place a refundable security deposit, which will be used as a collateral until the account is closed.
As mentioned earlier, a Secured credit card doesn’t work differently than a regular credit card. However, they do come with some obligations. Say for instance, these secured cards will need a cash deposit to be used as a collateral. This action is taken by the bank to make sure that the card holder makes the payment of the secured card bill in full within time.
Secured credit cards are an excellent ways of building a good credit for those with a bad credit history as well as for those who apply for the first time for a credit card. Mentioned below are some of the important features of secured credit cards for your ready reference.
The approval process for a secured card is fast and hassle-free. The application for a secured card is easier because the banks are already risk-free since they accept a security deposit from the borrowers
Usually most of the credit cards are unsecured. Simply because, there is no ability of a guarantee or a security for paying off your accrued balance. This is mainly the money you owe the credit card company. The contract will state that you agree to pay your balance either rin whole or in part every month. However, here you don’t have to put up any of your assets as well as income for backing that promise. This is why the interest rates on credit cards are so high. To be precise, an unsecured debt will always be costlier than a secured debt, say for example, car loans, mortgages etc., for compensating for the lack of collateral.
Usually most of the credit cards are unsecured. This is because, they don’t come with guarantee or a security for paying off your accrued balance. This is mainly the money you owe the credit card company. The contract will state that you agree to pay your balance either in whole or in part every month. However, here you don’t have to put up any of your assets as well as income for backing that promise. This is why the interest rates on credit cards are so high. To be precise, an unsecured debt will always be costlier than a secured debt, such as car loans, mortgages etc., for compensating for the lack of collateral
Prepaid credit cards aren’t too different than prepaid debit cards. All you need to do is load a certain amount of money according to your spending capacity into your bank account. You can then spend up to the limit amount using your prepaid card. Such prepaid credit cards are usually the best options since they do not need credit checks of any type. But, they certainly cannot be used for credit building tool with limited benefits linked with them.
A secured credit card is nothing but a type of credit card for those with limited or damaged credit. Such people will need to place a refundable security deposit, which will be used as a collateral until the account is closed.
As mentioned earlier, a Secured credit card doesn’t work differently than a regular credit card. However, they do come with some obligations. Say for instance, these secured cards will need a cash deposit to be used as a collateral. This action is taken by the bank to make sure that the card holder makes the payment of the secured card bill in full within time.
Secured cards are those types of card that will help you in building as well as rebuilding your credit score. It will also aid you to apply for a regular credit card in future. Banks will usually increase your credit limit with good repayment behavior. This can often be done without using any additional collateral deposits. Thus, this increased credit limit will also add up to your overall credit score.
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