What Is A “Secured” Credit Card?

November 06, 2020 by Dan Green

A Secured Credit Card is a special type of credit card, typically used to establish and strengthen a person’s credit history.

Secured credit cards are readily available. They’re often no Annual Fee credit cards.

Secured credit cards are similar to other credit cards, with one main difference. Before a secured credit card can be issued, your credit card company will require you to make a security deposit.

The security deposit on a typical secured credit card is between $100-$300.

Click to compare secured credit cards.

When you make a security deposit on a secured credit card, your credit card issuer holds the deposit in a reserve account. The money is their protection against you missing payments or making an Overdraft.

Other than that, secured credit cards act like other credit cards.

You can use your secured credit card to buy items such as coffee or food. Then, when the month ends, you’ll get a Statement via email or postal mail telling you the amount you’re required to repay.

You can make payment on your secured credit card using online bill pay, Direct Debit, or by writing a check. Once your payment is processed, it gets reported to the Credit Bureaus.

This helps to boost your credit score.

A lot of people use secured credit cards as a way to establish credit. It’s cheap, it’s easy, and everyone over 18 years of age can participate.

Even if you’ve been turned down for a credit card in the past, you can get approved for a credit card that’s secured. This is because secured credit cards are secured by your deposit.

Credit card companies are protected from loss.

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