A secured card can help you qualify for unsecured cards, mortgages, and other types of loans. They typically have low limits that match the cash deposit amount.Īs you pay off your balance each month, the credit reporting bureaus see that you’re trustworthy and able to pay off your debt. If you default, the lender will keep the collateral to recoup their loss. With a secured credit card, you put up collateral (typically a cash deposit you put down upon opening the card) as a guarantee. The lender will lose money if you run up a large balance and don’t pay it off. Most credit cards are unsecured, which means there’s no collateral for the lender to fall back on.
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