Secured Credit Card
A secured credit card is an alternative method of payment based on the cardholder’s savings account. A savings account that he will need to open with the secured credit card provider. This account is called a collateral savings account.
The cardholder authorizes the bank (or credit card company) to deduct the payments, in case he doesn’t pay his monthly dues . To maintain a secured credit card, the cardholder must first have a savings account to ensure he has funds as important as the credit limit approved by the bank on its behalf. For the safety of retailers and online sellers, this amount is kept in a separate account from other accounts of the cardholder. He is authorized to use the card up to the limit he has deposit in his collateral savings account. The amount that is needed depend on the bank’s policy concerning secured credit card and may range from several hundred to several thousand dollars.
Users of secured credit cards receive a plastic card as for other types of credit cards. Secured credit cards are usually issued to people whose credit history are poor or may have difficulty making payments by credit card or have no credit history. Therefore, even though you may have a bad credit history, you will not be turn down. One thing you should look when you apply for a secured credit card is if the bank will pay interest on the collateral account
A secured credit card is probably the best tool you may find to restore or improve on your credit history. But before applying for this card, one need to make sure that the company card provider reports every financial activities to the three major credit bureaus: Equifax, Experian and TransUnion. At the end, it’s your responsibility by having a good financial practice and paying your monthly dues in time.