Secured Credit Card

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By MPS Staff | Nov 22, 2007 | Updated: Sep 25, 2019

A secured credit card is a type of credit card, which is secured by funds in a deposit account owned by the cardholder. Typically, the cardholder must deposit between 100% and 200% of the total amount of credit desired. Thus if the cardholder loads $1000 into account, credit in the range of $500 to $1000 will be given on the card. In some cases, credit card issuers will offer incentives on their secured card portfolios. In these circumstances, the deposit required may be significantly less than the standard secured card credit limit and can be as low as 10% of the credit limit applied. The deposit provided is held in a special savings account.

Featured Secured Credit Card Offers

Deposit and defaults on a payment

After submitting their deposit, the cardholder of a secured credit card is still expected to make regular payments and adhere to terms and conditions as with any regular credit card. In the event, a cardholder does default on payments the issuer has the option to recover the cost of purchases made on the card from the deposit account held.

Although the deposit is held as security by the card issuer to protect against default by the cardholder, the deposit will not be drawn against simply because the holder misses one or two payments. Usually, the deposit is used as an offset only when the account is closed, either at the request of the customer or due to severe delinquency with is normally measured as 150 to 180 days without payment.

Any unpaid account with a balance outstanding will continue to accrue interest for 150 days and this could mean the interest and balance due exceed the deposit held in the cardholders security account. In these cases, the total debt may far exceed the original deposit and the cardholder will not only lose their security deposit, but they will also be left with additional debt and bad credit. You should always contact the card issuer as soon as possible if you are having problems meeting your financial obligations.

The conditions that apply to secured credit cards are described in the card issuer’s cardholder agreement. The cardholder should make sure they are happy with them before signing up and opening their account.

Secured Credit Card Pros and Cons

Secured credit cards can be a good option if they are appropriate for your circumstances. They allow a person with a poor credit history or no credit history to have a credit card, which might not otherwise be available. Secured credit cards are often offered as a means of rebuilding credit, and are available with both Visa and MasterCard logos. Fees and service charges for secured credit cards are often higher than those charged for standard non-secured credit cards. However, for people who have a poor credit history or a background of delinquency with various forms of debt they might be the only practical option, and sometimes the overall cost can less than with standard credit cards, even when the security deposit is taken into account. It all depends on the terms and conditions, the individual user and the manner in which they manage their card.

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2019-09-25T16:53:59+00:00

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Card Offers to Consider

2019-09-25T16:53:59+00:00
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Advertiser Disclosure

Market Pro Secure® is an independent payment card comparison service supported by advertisers, a complete list of which can be seen in our Editorial Guidelines. Even though some of these advertisers are financial product providers and credit card issuers, our paid partnerships don't affect card ratings or the Best Card Picks on our website. We don't post any content that is provided or commissioned by any of our partners. However, our paid partnerships may affect how and where products appear on our site, including the order in which they are presented within listing categories. This order may also be affected by our website rules, as well as the likelihood of the applicant’s credit approval. We can't offer any warranty for the accuracy of the credit card information we share on our website, even though we do our best to keep the Terms and Conditions, rates, and other credit card details up-to-date. For more accurate information, click "APPLY NOW" to get transferred to the credit card issuer's official website. Market Pro Secure® doesn't include all available payment cards in the marketplace.

ADVERTISER DISCLOSURE. Market Pro Secure® is an independent payment card comparison service supported by advertisers, a complete list of which can be seen in our Editorial Guidelines. Even though some of these advertisers are financial product providers and credit card issuers, our paid partnerships don’t affect card ratings or the Best Card Picks on our website. We don't post any content that is provided or commissioned by any of our partners. However, our paid partnerships may affect how and where products appear on our site, including the order in which they are presented within listing categories. This order may also be affected by our website rules, as well as the likelihood of the applicant’s credit approval. We can't offer any warranty for the accuracy of the credit card information we share on our website, even though we do our best to keep the Terms and Conditions, rates, and other credit card details up-to-date. For more accurate information, click "APPLY NOW" to get transferred to the credit card issuer's official website. Market Pro Secure® doesn't include all available payment cards in the marketplace.

EDITORIAL DISCLOSURE. Market Pro Secure® doesn't post any content that is provided or commissioned by our advertisers, the majority of which are financial product providers and credit card issuers whose offers we feature on our website. The entirety of our editorial content – including any opinions, analyses, reviews, and evaluations – belongs to the author alone, and has not been reviewed, approved, or otherwise endorsed by our advertisers.