Secured Credit Card
What is a Secured Credit Card?
A secured credit card is an alternative to unsecured credit card debt. Most people have credit cards, which is a form of unsecured debt. This basically means that borrowers take out debt without any form of collateral. The secured credit card requires that borrowers deposit money into a savings account while the secured credit card is active. The minimum deposit to activate a secured credit card can range from $300-$500 dollars. Initially banks require borrowers to maintain cash in the account for any purchases. After a period of time, some banks will allow borrowers to charge more on the card than the cash in the savings account. Most borrowers that utilize secured credit cards have either had trouble with credit cards in the past or have no previous credit card history. Many borrowers get a secured credit card with the hopes of improving their credit scores in order to be able to qualify for a credit card in the future. The downside to secured credit cards is that they charge much higher interest rates and higher annual fees for making loans to borrowers classified as "high risk" clients. Here is a link to the Bank of America secured credit card.