What is a secured credit card?

A secured credit card is a type of credit card that is backed by a security deposit. This security deposit is typically equal to or greater than the credit line amount allocated to the account. To obtain a secured credit card in California, the cardholder must open an account with a bank or other financial institution and deposit funds into the secured credit card account as collateral. Generally, these funds are held in order to secure the debt and are used to repay any balances due if a cardholder fails to comply with the terms and conditions of the account. The secured credit card may also carry additional fees such as annual, late payment, or over-limit fees. The cardholder is then issued a credit card, usually with a Visa or MasterCard logo, which may be used for purchases just like any other credit card. As the cardholder makes payments and demonstrates ability to manage the account, it is possible for the funds to be released and the cardholder to qualify for an unsecured credit card.

Related FAQs

How do I calculate my credit card APR?
What is a foreign transaction fee?
Are there any rules or regulations that apply to credit card companies?
What happens when I miss a credit card payment?
How do I dispute a charge on my credit card statement?
What is the best type of credit card for me?
What is an introductory APR?
How do I choose the best credit card for my needs?
How can I lower the interest rate on my credit card?
What is a Fair Credit Billing Act?

What is a secured credit card?

Related FAQs

Related Blog Posts