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What is a Secured Credit Card?

By Contributing Author

Everybody knows that there are two major types of cards: debit and credit ones. Credit cards can be used for different purposes: traveling, everyday shopping, etc. However, most cardholders don’t have any idea about the differences between unsecured and secured credit cards, while it is extremely important to know what distinctions they have. A secured credit token can provide numerous benefits to the cardholder.

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How Does It Work?

To get a usual credit card, a client should open a bank account. The pre-approved limit for him/her will be determined on the basis of prior banking history. However, if a new client doesn’t have such a history, it looks suspiciously. Fortunately, to get secured cards, no credit check is needed, and you may expect to be approved for the card in most of cases. The absence of credit reputation can be a solid reason for a bank to turn down an application for credit. On the other hand, this rejection will be shown in your banking history as well. It may also cause further rejections when you try to get the credit once again. It is like a vicious circle! To get a loan, you should have a perfect credit history, but if you get no history, all banks will refuse your requests for a credit.

A secured card is a good solution to this bank trap. Secured credit cards, unlike unsecured ones, need no good banking history. You may even have NO credit history at all, but still get a secured credit card for your needs. The main difference of this bank product is that all financial resources given to you by a bank will have a kind of insurance in the form of a cash deposit you have to make upon opening the account in this very bank.  Certainly, it is a very nice solution to such a problem because you will have an excellent opportunity to create a perfect banking history. The sum of cash deposit may vary, as well as the credit limit. Usually, the sum of deposit starts from $200-500.  Most banks offer such credit tokens with a limit equal to the sum of deposit, but it all depends in every specific case.


When the bank account with an appropriate deposit is opened, you can use your secured credit card as well as the unsecured one. A secured credit card has many advantages:

  • It is possible to use this card for online payments if you want to buy something on the Internet.
  • You can build a good banking history, or rebuild it if you had some problems with it earlier.
  • You don’t have to incur interest if you have any debts in this regard.

If you want to build a perfect banking history (which is very important if you are going to move abroad, for example, to the USA), put this credit token to good use!




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