What is a Secured Credit Card and How Does It Work?
What is a Secured Credit Card?
This cash security deposit helps to protect the credit card company from recognizing a loss by issuing you a credit card, and then you failing to make payments.
How Do Secured Credit Cards Work?
Secured credit cards work by having the cardholder front a required deposit to open an account, reducing the risk to the credit card issuer of you defaulting or missing a payment.
Who Uses Secured Credit Cards?
Secured cards are often used as a starter credit card for people without credit history or as an alternative for those who have poor credit.
How Can a Secured Card Help Build Credit and Improve Your Credit Score?
If you make your payments on time, your regular spending activity and collateral will help you to build your credit. To provide you more financial flexibility with time, you may opt to move to unsecured card issuers’ options.
How and When Do I Switch to an Unsecured Credit Card?
Once you build a positive credit history and demonstrate you can make regular payments on time, you might be able to switch over without any problems.
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