Secured Credit Cards
Mortgage Dictionary -> Secured Credit Cards
Credit cards - little pieces of plastic small enough to put in your wallet, and yet so powerful. Many daily routines like renting a car or making hotel reservation require credit card, but you can't always get one. If you have no credit history, or you have had credit problems you might not be able to qualify for a normal credit card. If that's the case don't despair, you can always apply for a secured credit card.
Secured credit cards are strange mix between line of credit and regular credit card. The banks that offer secured credit cards require the borrower to put a security deposit, so in a sense you are not really borrowing, but using your own money. The banks usually approve secured credit cards with limits between $500 and several thousand dollars. The security deposit will depend on credit card limit and usually is 100% or more of the credit limit. This means that if you put a deposit of $2,000, you can expect to be approved for a credit limit between $1,000 and $2,000. The deposit for the secured credit card is held in special savings account and the card issuer can use the deposit if you fail to pay off your credit card for extended period of time. Apart from the deposit requirement and sometimes higher interest rates, a secured credit card is exactly the same as a regular, unsecured credit card.
Secured Credit Cards are very useful for building your credit history. Make sure that you pay your secured credit card on time, and you'll be on your way to a better credit score.