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Saturday, July 17, 2010

Secured Credit Cards

Secured credit cards issued by a variety of banking institutions.  Secured cards look and operate the the same as other major credit cards (only you know it is secured).  The only difference is that in order to be approved you have to open a savings account that is equal to the line of credit desired which acts as collateral for the line of credit. 

The required minimum initial deposit varies by bank, some require as little as $300 to open an account, others up to a $1,000 or more.  The amount of your credit card limit usually matches the amount in your savings account. 

Consumer's can initiate credit line increases with additional deposits made to the savings account tied to the credit line.  Some banks require credit line increases to be requested in $50-100 increments, but deposits can be made in any amount. 

The typical maximum credit line is $5,000.00.  But I have found maximum limits as low as $500 and as high as $17,500.00. 

Some banks will allow a secured card to "graduate" to unsecured status after a period of timely payments (usually between 12-24 months).  But this policy varies by bank and consumers will need to research this during the application process.

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