What is a Secured Credit Card?

A Secured credit card is a credit card that is collateralized with cash. In order to get a secured credit card, you’re going to need to have to put up money as collateral. However, much money you apply as collateral will become the amount you are allowed to borrow and will also become your effective credit limit on the credit card. Besides that, secured credit cards are just like regular credit cards. They are essentially credit cards without the borrowing.

Why Do Consumers Get Secured Credit Cards?

There are many benefits from using credit cards but some consumers prefer to take an alternative approach to fines. Consumers get secured credit cards since they provide a much-needed benefit for many by allowing an easy way to boost up a credit score and demonstrate good payment history. This won’t boost your credit score overnight, but over the course of a few months you should notice an improvement in your credit score (dependent on where your score is now and what kind of credit history you currently have).

Secured Credit Cards Help Establish Good Payment History

Approximately 35% of your credit score is calculated based on your payment history. So just establishing a good secured line of credit will provide tremendous benefits to consumers looking to improve their overall credit worthiness. This factor alone is the most significant in terms of all your credit reporting and will do the most to improve your score, especially if you have any missed payments.

Can You Convert a Secured Credit Card into an Unsecured Credit Card?

Yes, most secured credit card offerings give you the option of converting your secured credit card into an unsecured credit card later down the line. Consumers are usually allowed to convert into a regular card about 6-9 months after demonstrating positive payment history. After this period, you can expect a regular credit card with your deposit returned.

When you close or convert your account into a standard credit card, you will receive your deposit back as the card will no longer be secured (if this is something you so choose to do).

Best Secured Credit Card?

For the most part, all secured credit card offerings are more or less the same. They all provide consumers with a low-cost option to improve their credit worthiness by showing they can responsibly manage credit with a collateralized credit card. The choice is really up to you on which card you prefer. At The Debt Relief Company, we usually recommend our clients get the Discover It Secured Credit Card, however you can feel free to go to bankrate.com and compare the options available to you for secured credit cards.

Secured credit cards could be a great way to boost your credit score once and for all and get you out of that credit funk!