secured credit cards

Secured Credit Cards at a Glance

Secured credit cards are a type of credit card that banks issue to people having either bad or no credit. The issuing bank usually requires the card holder to "secure" his or her credit card by depositing a chunk of cash into a savings or deposit account. The amount of money required varies from bank to bank but it is common for new secured credit card customers to have to front from 100 to 200 percent the amount of credit they are applying for. If you are trying to build or rebuild credit pre-paid cards won't help, but secured credit cards that report to consumer credit reporting agencies will indeed help out a lot. Just be sure the card you choose does report, because some don't.

Differences between Prepaid and Secured Credit Cards

The main difference between prepaid and secured credit cards is how they use the money you are required to front up when you acquire the card. Pre-paid cards are very similar to a bank debit card, only they have a wider acceptance since they could be used almost anywhere a regular credit card is accepted, with a few exceptions (for example: some hotels and some rent a car agencies won't allow you to use pre-paid cards as collateral). But in reality, a pre-paid credit card is not a real credit card because no real credit is issued. People simply pay for what they buy beforehand. On the other hand, secured credit cards do extend "real" credit to the card holder.