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how does a secured credit card work

how does a secured credit card work插图

Best answer

Secured credit cards function a lot like traditional credit cards. The primary difference is that with a secured card, you pay a cash deposit upfront to guarantee your credit line. While credit history may be used to determine eligibility for a secured card, the line of credit it offers requires a security deposit.

People also ask

  • What is an secsecured credit card?

  • Secured cards are one of the best options for credit newbies or people with less than stellar credit. Here鈥檚 how secured cards work, the credit requirements to get one and how to transition to an unsecured card. Select鈥檚 editorial team works independently to review financial products and write articles we think our readers will find useful.

  • How do I use a secured credit card?

  • Once you鈥檝e been approved for a secured credit card and made your deposit, you can use the card to make purchases in person or online鈥攋ust like a traditional, unsecured credit card. Many secured cards look like traditional cards. So chances are no one but you will know you鈥檙e using a secured card.

  • What are the advantages of secured credit cards?

  • There are plenty of advantages to using secured cards: A secured card can give you experience using a credit card, help you improve your credit profile and help you work toward a card with better rewards or a higher credit limit.

  • Can I move from a secured card to an unsecured card?

  • There鈥檚 no single right time to move from a secured card to an unsecured card. When and why you decide to apply for a traditional credit card will depend on your situation and goals. But some credit card companies may allow you to move seamlessly from a secured card to a traditional card without closing your original line of credit.

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