What do you mean by a ‘secured credit card’?
Secured credit cards are one more very well-liked breed of credit cards. Secured credit cards, as their name implies, are secured or are safe. Well, they’re guaranteed for the charge card supplier, really. Guaranteed credit credit cards need you to open an account with the credit card supplier and maintain some cash balance in that account. This cash balance functions as a security for the provider of secured credit card. Your credit limit is reliant on the amount of money you hold in the account that you’ve started using the supplier of guaranteed charge card. This is usually between 50 to 100% of your account balance. So in that sense, secured credit cards are not really credit cards (since they don’t provide you any credit really). For this cause, the secured credit score credit cards are sometimes also referred as debit cards.
Why is the concept of guaranteed credit score cards so important?
As we know, credit card debt is a raging issue which is caused by improper usage of credit cards. This kind of people ends up spoiling their credit score to an extent where they can’t get another unsecured credit card (that is what we call the commonly utilized credit cards). Even after they have paid off their dues and cleared their debt, their credit rating still haunts them. For such individuals, guaranteed credit credit cards are a boon. Secured credit credit cards present them with an opportunity to not only get a credit card in the first place but also to improve their credit score by utilizing the secured charge card in a disciplined way (paying their dues in time, controlled spending, utilizing a maximum of 70% credit score limit etc.. etc.). As they continue with these great habits, their credit rating gradually improves over a period of time. Hence guaranteed credit score credit cards supply them with the means of rectifying their mistakes (credit rating).
It’s not just the individuals with bad credit rating who choose secured credit cards. Some people choose secured credit cards simply because they do not wish to bother themselves using the bills and so on for credit cards. They don’t like to even fill-up application forms for unsecured credit cards.
Then you will find some who just do not like to borrow money (even if it indicates borrowing from a charge card supplier by using their credit card). Nevertheless, such individuals are really rare to find.
Some people just choose guaranteed credit cards simply because they’ve heard a lot of horrifying stories on credit card debt – maybe someone from their family or one of their friends was devastated by charge card debt and they don’t wish to repeat the mistake. So they decide to choose a guaranteed credit card.
Whatever be the cause for going for it, the secured credit cards are surely popular too.
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