What is a Security Deposit?


Secured card are the best thing to build or repair credit. However, in order to get a secured credit card, you will open a savings account that will be connected to your card. This savings account will stay in effect as long as you have the card.

The bank may have a minimum requirement of $200-$300 for the savings account however they may allow you to put more on deposit. Your credit limit will be related to the amount on deposit.

The deposit is there to protect the lender. It will not be used unless you default on the amount due on your credit card. However, since your purpose in getting a secured card is to rebuild your credit history you won't do this, will you?

Make sure the bank offers interest bearing savings account for your security deposit. After 10-12 months of good repayment habits you should be ready for unsecured cards. Request one from the bank that helped you get this far, as long as their fees and charges are fair. Usually they will be happy to accommodate you.

When you move to unsecured cards it's a good idea to keep your savings account open anyway keep adding to it and create good savings habits along with good spending habits.



 
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