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Is Secured Credit Card Still Relevant? | secured credit card

 A secured credit card is a form of credit card that demands a saving account or collateral. To apply for a secured credit card, you must give a money deposit usually of around $200 typically that will match your credit limit and be held by the bank in the event of missed or late payments. The banks view this as a safety feature because if you default on your payments, they do not lose any of their money. The secured credit card has a much higher credit limit than an unsecured credit card.

Most banks offer some form of secured credit cards to their customers with histories of poor credit or no history at all. You can use these cards, just like any other card with the added safeguard of a cash deposit. Here are some of the benefits of secured credit cards:

– Provides security for purchases. As long as you use the cash deposit to pay off your balance each month, it will help to build your credit rating. This is due to the fact that the credit card company is protecting your money as collateral for your bad credit. They do this because they would be liable for any unauthorized transactions you make. If you use your savings account as collateral and make no purchases, your security deposit will increase in value, thus negating the need to increase your credit line due to poor credit.

– Builds your good credit score. With time, you can increase your payments as your cash deposit continues to grow. This will help build your reputation as a responsible person who makes on-time payments and does not let debt get out of control.

– Helps prevent fraud. Many companies will check applicants to ensure that they are who they say they are. If someone has fraudulent funds deposited into their name, it is likely that they won't be able to get any credit cards in the future. By using secured credit cards, people are less likely to become victims of fraud.

– Increases your score. When you make payments on time and you don't go over your spending limit, your score will improve. This is due to your payments being reported to all of the three credit bureaus. Once you pay your secured credit card balances on time, you will have an increase in your score, which will help open doors to new credit offers in the future.

– Decreases your risk of loss. Because you put up the security deposit as collateral for your card, it decreases the risk of your account being emptied by creditors. If they empty your account, you lose your security deposit. Most secured credit cards require twenty-four months of on time payments, which decreases the risk of your account being emptied. By paying your account on time and making your payments when they fall due, you reduce the amount of money you are at risk of losing.

– Reduces late fees and finance charges. After you have made the payments required for your secured credit card account, the issuer will send you a communication requesting you to return the balance owed on the card. If you return the deposit, you eliminate the late fees and finance charges associated with your account.

There are many perks that secured credit cards offer. These rewards may include travel miles, cash back, gift certificates, and other products and services that are only offered by a select few issuers. It is important to find one that suits your lifestyle. For example, if you travel extensively and do not take public transportation to work, you may find one that provides coverage for your automobile. This way, you can travel without worrying about providing for your car or other expenses.

One disadvantage of a secured credit card is that the benefits do not accrue until you begin charging on the card. After a short period of time, you may not notice any increase in your savings or checking account. This can lead to the consolidation of the debt and a lower available credit line. Also, the downside to having no interest for an extended period of time is that you will find it more difficult to make payments on time, as your available credit line may be lower. Another drawback that you will find with this type of card is that if you do not pay the balance in full at the end of the year, you will have to pay a large capital one secured Mastercard fee.

Fees that are associated with secured cards also vary from issuer to issuer. Some issuers require annual fees, others do not. The Annual fee generally applies to purchases made using the card and may also apply to any unused portion of the deposit to the account. A portion of the unused credit may be refunded to you, however, this portion is subject to the terms of the bank. Refundable security deposit, also known as debit card fees, are required in most cases for transactions made with your new secured credit card.

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