Regarding a secured credit card...will I still have to pay a bill?

Question

I know that you deposit xxxxx amount of money into it and that's the money you're allowed to spend, but wouldn't I have already paid money to spend the money in the card so I wouldn't have a bill to pay at the end of the month? I'm confused. Please help :P Thanks!

Answer 1

You shouldn't, unless you were, somehow, overdrawn.

Answer 2

You're confusing a secured card with a pre-paid card.

With a pre-paid card you deposit funds on to the card. Each time you use it the balance errods until it reaches 0. This is not reported to the credit bureau and you won't have a bill. It's just like a debit card.

A secured card means that if you give the credit card company $1000, they give you an equivalent spending limit. Each time you use the card, you'll attract a balance owing. You'll get a bill and you have X number of days aka grace period in which to pay the balance or at least the minium (this attracts interest). The card is called secured because if you default on paying your account, they just keep your money as collateral. This is a real credit card, your payements ARE reported to the credit bureau and you will get a bill if you have a balance.

Answer 3

All the ones that I have seen, you still have to make the monthly payment on it.  It just helps build your credit record.  The money in reserve is in case you default on it.

Answer 4

The way that a secured card works is that you deposit the credit card limit.  If you don't pay your bills on time the payment is taken out of the deposit and your limit shrinks by the amount taken out.  So, if you have deposited $300 into the card then you charge $250 and don't make a payment  the most that you can charge on the card is $50.