What is a secured credit card?

It is a kind of card that helps people to build credit, especially those with poor or damaged credit.
A secured credit card requires a cash deposit which is the same amount as your credit. In other words, the amount of your credit will be equal to the amount of money you deposit.
Here is some useful information you may need to know about.
Secured credit cards are basically like any other normal cards, however, to get one you need a deposit.

Secured credit cards have a low level of credit compared to unsecured credit cards.

Usually, people with low or damaged credit levels can use secured credit cards to build their credit score. Also, if someone has low credit levels, he or she can’t get unsecured credit cards. So at first, they need to build some credit scores.

How to get a secured credit card?


Getting a secured credit card is so simple. You can simply get one at a bank. Almost every bank offers a secured credit card.
You can also get one at some companies that provide financial services. Among the secured credit cards, Discover, Capital One, MasterCard, and Visa are some of the most famous ones. However, there are still many secured credit cards with different names.

How to build a credit score with a secured credit card?

First, if you have good credit that will be great because it can help you to get better rates. So let’s say when you want to buy something like a car, a piece of land, or anything, you can get better interest rates and that will help you to save more money.
However, if your credit is not good you can follow the steps I’m going to show you and build credit within a couple of months.

Save at least $1,000 or $2,000 dollars and then use this amount of money to deposit on your secured credit card. You can use less than that like $500 dollars or even less in order to get a secured credit card and build your credit. however, $1,000 or so would be better.

Use your secured credit card responsibly and make sure to pay your bill on time and in full. For example, if you charge $400 dollars to your credit in a month, make sure to pay that off at the end of the month.
If you have some extra money you can put it into a deposit for a couple of months. This will really build your credit. However, if this affects your ability to pay the bills and other necessary stuff, then don’t do it.

Lower your credit utilization rate. This is the total amount of money on your secured credit. It is better to keep your utilization rate below 30%. If you can keep it around 10% or even less than that, it would be great, because it helps your credit score to go higher. In order to keep that rate below, whenever you charge an amount of money to your credit for example $400 and your credit is 1,000 make sure to pay off $390 dollars as soon as possible. In this way, only ten dollars will be charged to your account. This means that your utilization rate would be around 10%.

How are secured credit cards different from unsecured credit cards?

The difference is so simple. In order to open a secured credit card, a refundable deposit is needed while to open an unsecured credit card a refundable deposit is not needed.
In a secured credit card the amount of your deposit serves as your card’s spending limit. However, in an unsecured credit card, the card’s spending limit is based on your overall income as well as your debts.

Everybody with different credit levels can get a secured credit card even people with poor credit. However, people with poor or low credit levels can’t get an unsecured credit card.

When to close your secured credit card?


You can close your secured credit card whenever you want to. However, it is better to close it if you have more than one unsecured credit card. And your secured credit card has less than 25 percent credit.
The reason that you can close your secured credit card when you have more than one unsecured credit card is that you already have a backup. So for example, if you have two unsecured credit cards with a total deposit of let’s say $4,000 dollars then you can get rid of your secured credit card.
And if anything goes wrong with one of your unsecured credit cards, you still have another one. I’m using two unsecured credit cards as an example, you may have even four or more of them.

Wrap UP
Getting a secured credit card can be helpful, especially if you have a damaged or poor credit level. Also, it is easy to get one, and if you use your secured credit card responsibly then you can build credit and that will help you a lot in the long run.

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