What Is a Secured Credit Card?
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Secured Credit Cards Defined
How Secured Credit Cards Work
Secured Credit Card Terms
Annual Percentage Rate (APR)
Annual Fee
Activation and Other Fees
Deposit Requirements
Do Secured Credit Cards Affect Credit Credit Score?
Secured Credit Cards vs. Unsecured Credit Cards
Pros and Cons of Secured Credit Cards
Getting a Secured Credit Card
Can you use the card anywhere or will your options be limited? Some “closed-loop cards” can be used only at specific stores or for a certain family of brands. If the card offers cash back rewards, miles or points, how do you earn them, how quickly can you earn them and how difficult will it be to redeem them? What kinds of extra perks come with owning the card, and are they benefits you’ll really use? How much will the benefits cost? Paying an annual fee to get a card based on the rewards may only make sense if what you get exceeds what you’ll pay for the opportunity. Does the credit card issuer offer unsecured credit cards? And do you have an understanding of what you’ll have to achieve (for example, making on-time payments for a year) in order to earn an upgrade? How likely are you to be approved for the card? Secured cards are typically easy to get, even if you have a low credit score, but you still may want to look for a card issuer that offers preapproved secured credit cards. Though there’s no guarantee you’ll get the credit card until you actually apply, some companies use a prescreening process to show consumers which cards they’re more likely to receive based on a soft credit pull that doesn’t affect their credit scores.
Using a Secured Credit Card: Tips and Tricks
Keep Monthly Bills Manageable
Watch Your Limit
Set Payment Alerts or Enroll in Auto-Pay
Don’t Skip Payments
Secured Credit Card Alternatives
Debit Cards
Payment Platforms
Unsecured Subprime Credit Cards
Student Credit Cards
The Takeaway
About the Author
Kim Franke-Folstad is an award-winning journalist with 30 years of experience writing and editing for newspapers, magazines and websites. Her work for SoFi covers a range of topics related to personal finance, including budgeting, saving, borrowing, and investing.
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