A secured credit card works exactly like a regular credit card, the only difference is that a deposit is placed upfront that would be used as collateral for a credit limit in the same amount. The deposit would not be used to pay on the balance, you still would have to pay either the minimum balance, or the whole amount in full, on time every month. The deposit would only be used if the account became delinquent where it would be closed and then it would be used to pay the balance. A good advantage with secured credit cards is that the credit limit can be increased by adding to the deposit, and also the deposit gains interest while you're building up credit. Usually it takes 9-18 months for the card to change over to a regular card, providing you've paid on time every month, and used the card lightly my making small purchases on the card. I've posted links to several secured credit card companies, including Bank of America which Scotty had mentioned. Citi also has a very good secured card where you can gain interest on a certificate of deposit at a very good rate.
Link(s) to secured cards:
· 1 decade ago