Introduction
A secured credit card may be defined as a credit card linked to a savings account whereby the funds in the account may be claimed by the particular company issuing the credit card when the holder fails to make all the necessary payments. This arrangement allows for the issuer to take on more risky applicants of credit cards.
History
A secured credit card is a credit card that needs collateral for you to be able to use it. One has to deposit the amount that he would require credit for. Therefore, to be able to get more credit, you have to deposit more though at times a particular bank may reward you by extending your credit limit. This credit card can be acquired even when an individual has a poor credit history.
The best companies that recognize secured credit cards may allow an individual to go ahead and use the card when they notice that he has made all payments on time and that he is responsible. If you happen to obtain a card from a company that will not allow you to use an unsecured card, as long as you make your payments on, you will be in a better position to get a credit card that is not secured from another company.
Features
For you to be able to choose a good secured credit card, there are some questions that you need to ask yourself. Some of the questions may be about the much that the security deposit. You also need to know about the fee, the eligibility requirements, your credit limit and whether the card can be converted to an unsecured credit card.
Like any form of payment, secured credit cards do have their advantages and disadvantages. Some of the advantages are that one can earn interest on whatever he deposits. This means that by paying the security deposits it gives the card issuer incentive to accept your application. It can help an individual establish his credit. Security deposits are normally used if one defaults on his payments, and they normally report to credit bureaus. This has been a sure way of getting back the money.
Tips and comments
In spite of the many advantages of secured credit cards, there are few disadvantages which include the presence of higher interest rates; one has to pay a security deposit and there is the presence of fees in addition to deposits. When you are not in a position of getting a traditional credit card, you can always opt for this card since it is the best way for you to be able to improve your credit.
The major parties involved when transacting are the card holder, the issuing bank, a transaction network, the merchant and the affinity partner. In conclusion, secured credit cards are very important form of payment and are much better than the traditional methods of payments. The card is not bias as other credit cards since anyone can apply for it since the more you deposit the more you get credit you will get.It is among the latest developments of technology used globally.
