Secured credit cards are becoming quite popular. There seems to be several reasons for this popularity – from rebuilding credit to helping people in these tough economic times to helping a younger generation learn sound and practical spending habits.

Secured credit cards are like unsecured cards, except that secured cards require the cardholder to maintain a deposit amount on the credit card in order to use it. By requiring this deposit, cardholders may vclubshop only spend what is deposited. Their deposit becomes their credit limit. So, instead of being given a line of credit which then turns into a debt once used, the deposit a cardholder makes is an amount the cardholder can “afford” to spend since it is already placed up front on the card and pays for any purchases the cardholder makes. The deposited “credit limit” differs, but the typical initial deposit is $500.

A benefit for the younger-than-21 generation is that it has the ability to obtain a credit card without the requirement of a co-signer.

The deposit is held by the card company and is only returned when the account is closed, providing the account has been managed properly. In the event of a default, the deposit is not returned.

In most other respects, a secured card is very similar to an unsecured card. The cardholder can use the card to pay for purchases and services, purchase items online, and make ATM withdrawals, provided there are funds available on the card.

Additionally, most secured card companies report to the three major credit reporting agencies. This allows cardholders the opportunity to begin to rebuild their credit. This feature makes a secured card attractive to people who need to repair their credit as well as young people who need to begin a credit history of their own.

A Summary of Secured Credit Cards

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