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What is a Secured Credit Card?

What is a Secured Credit CardDuring your search you may have found an offer for a secured credit card only to be left wondering; What is a secured credit card?

Basically a secured credit card works just like any other card in the sense that you can use your credit limit to make purchases and pay them off over time. The big difference comes in when you look at how you get that credit line to use in the first place.

A secured credit card is funded with the cardholders own money so in reality your not getting a line of credit from a bank but rather creating your own by funding it yourself.

A Secured Credit Card Must Be Funded by the Cardholder

For example you send the company two hundred dollars and in return you get a credit card with your money on it that you can then spend and pay back. This may sound like it defeats the purpose but for those of us with no credit or bad credit, it can become a great tool to help build it up.

Also at anytime you can get back the money you put on the card so don’t worry about that. So in summary a secured credit card is a card you fund yourself so that you may build up credit or work on fixing your credit without a lender having to take on the risk themselves.

 

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