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Here’s Why Secured Credit Cards Are So Popular Right Now

[Thursday, November 29th, 2018]

Over the past several years, secured credit cards have enjoyed a boom in popularity. And yet, some people still don’t know what they are, or how they’re different from other types of credit cards. So what’s the reason behind the newfound status of secured credit cards?

First, let’s go over what a secured card actually is. A secured credit card is similar to any other credit card, in that consumers can use it to pay for purchases anywhere that accepts the issuing network. (For example Visa, Mastercard, American Express, or Discover.) But while someone can get a regular, unsecured credit card simply by applying and supplying information about their income, address, date of birth, and Social Security number, when folks apply for a secured credit card, they need to put down a lump sum as a deposit. This deposit guarantees the line of credit. Essentially, it acts as collateral.

Once a customer has been approved for a secured credit card and given a line of credit equal to your deposit, they can use their secured card just like they’d use an unsecured one—to buy things, pay bills, and pick up the tab at dinner.

Why a secured card?

The reason some people prefer a secured credit card over another type of card is that they may not be able to be approved for an unsecured card because of limited credit history, or a poor credit score. Using a secured card is an excellent way to build or repair credit, and virtually anyone can be approved for a secured card, as long as they can put down the required deposit.

The current generation of younger adults, Millennials, has historically been reluctant to carry debt. Many of them did not apply for a credit card until they realized that not having one was detrimental to their credit score. When they realized they had limited credit, and therefore limited options for things like taking out a mortgage, or getting a low interest rate on a personal or business loan, they suddenly wondered how to go about establishing a credit history.

Secured credit cards, once unknown to a large percentage of the population, are now used more than ever before. With low fees and sometimes even rewards programs, the popularity of secured credit cards is easy to understand.

See also

Q: 3 Steps To Getting Your Credit Back On Track

Having bad credit can feel like you’re in a sinking ship without a life jacket. It’s a scary feeling, and it can be very isolating. The shame associated with having poor credit doesn’t help; you may feel guilty, and that you’ve done something wrong. But this may not be the case at all. Many people’s credit suffers through no fault of their own.

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Q: Why Secured Cards Are The Hottest Trend In Credit

Once upon a time, not many people had heard of secured credit cards. And even those who had heard of them weren’t so clear on what exactly they were.

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Q: The Best Cards for Improving Credit

If your credit has suffered due to a job loss, a divorce, illness, or any other circumstance, you might be wondering whether you’ll ever be approved for a credit card again.

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Q: Two Cards for People Who Can’t Get Credit Cards

If your credit is poor and you find yourself getting turned down for credit cards again and again, you may worry that there is no way you will ever be able to get a credit card. Maybe a divorce, an illness, or unemployment left you with a bad credit rating. Or maybe you are young and don’t have any credit history.

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Q: What Makes a Secured Credit Card Secure

Many people may not be familiar with the term secure credit card. If it’s your first time stumbling on secured credit cards, you may wonder what they are.

more ››
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