What should I know about secured credit cards?

Question

What should I know about secured credit cards?

Answer 1

Secured credit cards

A secured credit card is a type of credit card secured by 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 puts down $1000, they will be given credit in the range of $500–$1000. In some cases, credit card issuers will offer incentives even on their secured card portfolios. In these cases, the deposit required may be significantly less than the required credit limit, and can be as low as 10% of the desired credit limit. This deposit is held in a special savings account. Credit card issuers offer this because they have noticed that delinquencies were notably reduced when the customer perceives something to lose if the balance is not repaid.

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http://en.wikipedia.org/wiki/Credit_card...

Answer 2

It is like a prepaid credit card except that you will build up a credit rating. You need the have a balance in another account to cover the maximum charge. After a period of time they may lower or eliminate the deposit required.

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Answer 3

The lender (bank) attaches itself to something of value or you agree to pay, or forfeit something of value in case you default on your payment agreement. If you don't have to don't do it.

It's kind of like a car loan or house mortgage. If you don't keep up with the payment agreement than they can (and probably will) repossess house or car.