What is a secured credit card?

A secured credit card is a type of credit card that requires an upfront deposit to secure it. This deposit acts as a guarantee to the issuer that they will be able to get their money back if the borrower is unable to pay their credit card bill. In Washington, secured credit cards are regulated by the Washington State Department of Financial Institutions and the Federal Trade Commission, which sets the interest rate limits for all types of credit cards. A secured credit card is typically used to help build or rebuild credit. Instead of having a credit limit based on your credit history or income, the credit limit is usually equal to the amount of the deposit. A secured credit card may also require you to make payments on time and keep your balance below the credit limit to prevent penalty fees. Secured credit cards can help people with no or bad credit build their credit score. However, it is important to note that secured credit cards may not be reported to credit bureaus or reflected on your credit report until you make at least six months of on-time payments. Additionally, if you default on payments, the issuer may use your deposit to cover the balance owed. It is important to read the terms and conditions of your secured credit card before signing up. Be sure to research different options and compare terms, interest rates, and fees to find the best option for you.

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What is a secured credit card?

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