Money Matters : Secured Credit Cards are Major Credit Cards
If you are looking for ways to establish a credit relationship with a financial institution and/or you aren’t otherwise able to obtain unsecured credit — try a secured credit card. Secured credit cards are a great way to establish, build or rebuild your credit relationship.
What are secured cards?
Secured credit cards are major credit cards, they function the same way as normal unsecured major credit cards. The only difference is the credit limit is backed by a savings account in which you determine the credit limit amount of your credit line. Most financial institutions have secured credit products that range anywhere from $200 to $5,000. You may borrow the amount up to the amount in which you have chosen to send in as your savings amount to secure your credit limit.
How do I apply for a secured credit card?
There is a credit card application process with financial institutions who have secured credit card products. You will need to apply and follow the guidelines established by each institution.
Will I qualify for a secured credit card?
This is a credit product specifically designed for consumers with no credit, lower credit scores, or other financial hardships. There are some instances where consumers are declined, more so this product it’s designed to help customers rebuild, re-establish or build a credit relationship after their credit score has sustained some drops. Consumers are more likely to be approved for this product due to the credit line being backed by your savings amount deposited with the bank.
What is the difference between a debit card and a secured credit card?
A debit card is linked to your checking account, your checking account is funded by some sort of deposit. For instance, that means funds like your salary direct deposit or your unemployment check — essentially funds the checking account which is linked to your debit card. Your deposit funds determine the available amount of money you are able to access on your debit card to make purchases.
Whereas with a credit card, a financial institution will fund a credit card with a credit line amount for you to access without deposit funds needed. When you make purchases on your credit card, you will then receive a statement or a bill requesting you to pay back the money you borrowed. You will then have the option make payments to the bank to repay the full amount you borrowed. With secured credit cards, yes you send money in to secure the line but many financial institutions refund that money after a certain amount of time-if you are able to establish a worthy credit relationship.
Secured credit cards report to ALL major credit reporting agencies.
Money Matters:
- Find a Money Mentor or speak to a Personal Banker
- Plan the money you get now — yes! Plan even with a little
- Set reasonable financial goals for yourself
- Save something — ANYTHING! It will eventually add up
- Speak positive financial affirmations to yourself
