The Surprising Credit Card Trend That’s Helping People Build Good Credit

Tuesday, October 31st, 2017

It used to be that many people hadn’t heard of secured credit cards. If you said the words “credit card,” folks assumed you were talking about a regular, unsecured credit card, and didn’t even know there was another kind. However, these days secured cards are making a huge splash, and more and more people are signing up for them.

What exactly is a secured credit card, you might be asking. A secured credit card is a card that allows people with poor credit, limited credit, or no credit to get a credit card. Since these people have no borrowing history, or a bad history, lenders might be reluctant to extend them a line of credit. So they ask potential borrowers to put down a collateral payment as a deposit, and then the credit card issuer gives them a credit card with a credit limit equal to the deposit.

By doing this, the credit card issuer is protected in case the borrower defaults. However, the cardholder has a chance to prove that they are creditworthy, by using the card and paying off the debt as scheduled. This behavior is reported to credit bureaus, which will note the regular payment info and therefore cause the borrower’s credit score to improve.

Many uses for secured cards

This is one way that young people with no credit history are establishing credit, as well as a way for people with damaged credit to rebuild their credit score. It can be very difficult to get a credit card if you’ve never had one before, as in the case of a young person, or if you have bad credit because of unemployment, divorce, illness, or another reason.

Having bad credit or no credit is nothing to be ashamed of; many people are in the same boat. Secured credit cards are a useful stepping-stone back to good credit, and more people are taking advantage of them. After a certain period of regular payments, credit card issuers may convert the secured credit card to an unsecured account and release the original deposit into the account as a statement credit.

Latest Secured Credit Cards Guides

The Starter Credit Card For People With No Credit History May 18th, 2017

There are a few reasons why someone might not have any credit history. Young people who have recently graduated from college often don’t have a credit card yet, because they’re just starting out. Recent immigrants to the US also arrive without a credit history. And then there ...
Continue »

Easy Ways To Get Your Credit Back On Track September 9th, 2016

If your credit is less than perfect, you might be wondering how you can ever get it back to where it used to be – or even better than it’s ever been before. A great credit score is helpful in all kinds of situations, including buying a home, a car, getting a business loan, ...
Continue »

How to Bounce Back from Bad Credit December 4th, 2015

Maybe you lost your job. Maybe you got divorced. Maybe you’ve been ill. Or maybe you just got in over your head and spent more than you could afford.
Continue »

How to Use a Secured Credit Card to Build Credit May 20th, 2015

Divorce, unemployment, a death in the family, or just a stretch of bad luck: there are many reasons your credit score might have taken a dive.
Continue »

Smart Tips for Using Your Secured Credit Card November 2nd, 2014

If you have a secured credit card, chances are you’ve had trouble with credit in the past. Whether you’ve had a bankruptcy, a former spouse ruined your credit, or you are simply new to credit cards and don’t have any credit history, you’ll be on your way to a better credit score ...
Continue »

Best Credit Offer
Check off the cards you want to compare. Then click the Compare link to go to the comparison table.
Consumer Rating: 4 / 5
Horizon Card Services Horizon Gold Credit Card
Copyright © 2001-2017 BestCreditOffers.com All Rights Reserved.

* The BestCreditOffers.com webpage is a free service and an information resource for credit cards and financial products and services available to eligible United States consumers. BestCreditOffers.com does not offer any warranties and is not a direct service. There are no guarantees for approval or offers when applying for a credit card. Please refer to the application if you would like more information on each credit card. When you click "Apply" for a particular credit card, please take the time to review the terms and conditions of the product/service at the issuer's website. All logos on the BestCreditOffers.com website are property of their respective owners.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer. Opinions expressed here are the author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. Reasonable efforts are made to present accurate info, however all info is presented without warranty. Consult a card's issuing bank for terms & conditions.

BestCreditOffers.com makes every effort to keep information up to date and accurate. However, the information regularly changes and is presented without warranty. Therefore, we strongly recommend all our readers to visit the credit card application page by clicking "Apply Online!" button to review the detailed credit card's terms and conditions. Note that BestCreditOffers.com may be compensated by the credit card issuers when the readers apply for a credit card through this site.

BestCreditOffers.com is an independent, advertising-supported website which receives compensation from the credit card issuers and companies whose offers appear on the site. Compensation may impact how and where products appear on our site, including, for example, the order in which they may appear on the site pages. BestCreditOffers.com does not review or list all available financial or credit offers.

Disclosure: Not an access card.

User Generated Content Disclaimer: These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.