A secured credit card is a type of credit card that is backed by collateral, such as a savings account or a certificate of deposit (CD).
Here are some examples of secured credit:
- Secured credit cards: These cards require a security deposit, typically equal to the credit limit. This deposit acts as collateral, ensuring the lender that they will be repaid if you default.
- Secured loans: These loans are also backed by collateral, such as a car, a house, or other valuable assets. If you fail to repay the loan, the lender can seize the collateral to recover their losses.
Secured credit options are often used by individuals with limited credit history or poor credit scores. They can help build credit by demonstrating responsible borrowing habits.
