How do secured credit cards work?

[Sabelina]

Hi,
Do you know how do secured credit cards work?
The idea behind secured credit cards is fairly simple. Once you deposit funds, collateral, into a savings account your line of credit is equivalent to the amount of your deposit. Secured cards are rarely easy to understand. The following outline explains how secured credit cards work.
• After choosing the best secured credit card for their situation, a person
applies for the secured credit card. Usually all secured credit cards gh
require an application or processing fee. This is paid along with the
deposit, in order to complete the application.
• Once you submit the application, you must deposit fees. you will
receive your secured card in the mail.
• You are now able to use your card up to the credit limit.
• The credit card issuer will then bill you monthly for any purchases you
have made.
• Once your have established a reliable payment history, your creditor
may offer you an unsecured credit card.
• As long as you do have not failed to make prompt payments on the
account, you will receive your deposit once you close the account and
it is paid in full.

[Jerlene]

Quote:

Do you know how do secured credit cards work?

A secured credit card is a type of credit card secured by a deposit account owned by the cardholder. Typically, the cardholder must deposit between 100% and 200% of the total amount of credit desired. Thus if the cardholder puts down $1000, he or she will be given credit in the range of $500–$1000. In some cases, credit card issuers will offer incentives even on their secured card portfolios. In these cases, the deposit required may be significantly less than the required credit limit, and can be as low as 10% of the desired credit limit. This deposit is held in a special savings account. Credit card issuers offer this as they have noticed that delinquencies were notably reduced when the customer perceives he has something to lose if he doesn't repay his balance. Read more over at Wikipedia.