Secured

A secured credit card is a type of credit card secured by a deposit account owned by the cardholder. Typically, the cardholder must put down 100-200 percent of the total credit desired. In simpler terms, if the cardholder deposits $1,000, they are usually given a $500-$1,000 credit limit. In some cases, credit card issues may only require 10 percent of the total credit desired or even offer special incentives for their secured credit cardholders.

Credit card companies issue this type of card because delinquencies are often reduced when the customer perceives something is going to be lost if the balance is not repaid. These types of cards are ideal for a person with poor, or even no, credit history. These cards are usually available when other types of credit cards are not. If you suffer from poor credit or are struggling with delinquent payments, a secured credit card may be ideal for you.

A point to keep in mind is that some credit card companies who offer secured credit cards are deceptive with their advertising for these types of cards. Before you apply be sure to ask what the application fees are and whether or not they will be refunded to you if you are denied the credit card. Be sure to investigate any annual fees or late fees, and always read the contract thoroughly from cover to cover, though this goes for any credit card. If you are using this card to re-establish your credit, be sure the issuer reports to a bureau so your efforts will work towards establishing good credit.

Secured credit cards are a great way to control spending and build up credit, and almost every major credit card issuer offers some type of secured credit card option.