These are closely related to your personal checking or saving accounts. They are also pretty much same as those of unsecured credit cards with only a few differences. In place of the creditor giving you a prefixed line of credit, you can identify your own credit line with accordance of your savings account or checking list. Your bank account also used as collateral. If you fail to pay your bill on time the minimum amount will be deducted straight away from your account.
You might be thinking how does this help you. So if by any reason you are not able to pay your bill on time than banks and creditors are not going to give you credit. At the same time if you get a secured card, you will be proving you trust worthy and eventually the bank or creditor offer you the same traditional credit cards.
You don’t have to worry about the debt while dealing with such cards. The credit line would depend and available to you on what you have into the special savings account. Keeping the bill paid will ensure that the credit line remains at the same point and at a comfortable range for your budget.
Everything has disadvantage so the secured credit cards have as well. Suppose if you fail to make timely payments you will have to deal with their high rates of interests and other many late fees as well. The result would be the interest would continue to rise and finally leaving you with no option but to fall back on. So it is clear that every credit card’s fate is in ultimately final bill payment on time.
This can be a best option for the ones who are looking to repair their credit and build their credit. These cards are the first step to financial freedom and eventually a credit worthy life.
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