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So what is a secured credit card?

1 minute read

When you are looking for credit cards, there is a high chance that you come across a lot of “secured” credit cards and think, “I know what it is but I don’t perfectly understand it.” Don’t worry – we’ve all been there.

What is a secured credit card?

Secured cards are designed for people who don’t have a credit score or have a relatively low credit score. You first deposit or pay a certain amount of cash to the bank up front, usually the same amount as your credit limit. The bank then issues you a secured credit card and you are allowed to use the card up to the amount you’ve paid. For example, if you deposit $500, you’ll have a $500 credit limit. You will also get your deposit back if you pay your bills on time.

Why get a secured credit card?

When you have a short credit history or low credit score, you might not get approved for unsecured credit cards. Thus, you can use secured credit cards to build your credit. With a secured card, it only takes about a year to build credit that is good enough for most of the financial services you may want.

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Harris Yoon

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