March 29, 2014
What is a secured credit card and how does it work?
What is a secured credit card and how does it work?
A secured credit card is a kind of credit card you get when you have no credit or bad credit, you give the bank a set amount of money, normally a minimum of $200 and they put that money in a saving account that cant be accesses while the card is active, your credit card will have a limit of however much money you gave the bank. The money you gave is like collateral. The card still works like a normal credit card and you build your credit the same way, its a great option for someone just starting out. Veridian Credit Union and many other banks or credit unions offer them.
Nice job in explaining the matter, Garrett. Let’s review.
The secured credit card helps a person start down the road of building credit or starting over. DO NOT pay fees with this card. If a bank/credit union is going to charge you something, go elsewhere. After 6 months to a year, you can ask them cancel the secured part and make it a regular credit card. At that point, you will receive your cash back with whatever interest you had occurred over the previous months. Knowledge is POWER!!!!