Secured Credit Cards
By Devin Gilliland
Credit card owners, the merchants or banks; everybody needs to be sure that every transaction is secure. For merchants, credit card transactions are becoming more secure than any other form of payment because the transaction is made a few minutes after the account verification. The reverse part of this payment modality is the penalty that the merchant can receive when there too many transactions are cancelled.
A credit card is secured when there is a deposit in an account that belongs to the cardholder. The deposit must have 100% or even 200% of the total value of the desired credit. This means that if the card owner puts down $2000, he will receive a credit in the range of $1000 - $2000. Many credit card issuers are offering incentives on their secured cards portfolios; this fact leads to a required deposit significantly smaller that the credit limit. The percentage can be 10% of the credit limit. This kind of deposit is held in a savings account.
The purpose of this savings account is to recover the cardholder's payments when there is not enough left on the card to pay for a transaction. In this situation, the credit card issuer can recover the purchase's cost out of this savings deposit. Even if the purpose of the security account is to be able to recover the event of default by cardholder, the savings account will not be credited in the case of one or two payments. The savings deposit is usually used when the account is closed. It is used too if the client is requesting to close it or due to delinquency between 150 and 180 days. In this case, the account will accrue fees and interest and the resulting balance will be much higher than the actual credit. The total debit may exceed the deposit and the owner can have an additional debit.
The cardholder knows these conditions from the agreement, which he signs when the account is opened. Those protections are taken when the person who requires a credit card has a poor credit history. The secured credit cards are also used when someone wants to rebuild their credit. Popular credit card logos can be visible on the secured credit card. The services charges and fees for ordinary credit cards are cheaper than the services and fees for secured credit cards. People in special situations, such as people having a history of delinquency on debits or having no credit history, can find the secured credit cards more advantageous than the common ones.
The security deposit can even be an even less expensive solution than the cost of the unsecured credit cards. Many advertising spots are presenting the credit cards use as a way to enjoy the wonderful moments of its user's life. These are some famous credit card brands that provided worldwide acceptance and an attractive suite of offers. The credit cards design and logo are also really important. The credit cards inaugurate a new era in the electronic technology of payment.
About the Author
This article is written by Devin Gilliland publisher for credit-wisdom and jetclient.com
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