Page 5 - What Momma Didn't Teach Us - Credit Edition

Secured Card

When building credit many often suggest getting a secured

credit card. While this is an avenue, this route can take more

time than others. The process usually looks a little like this, a

visit is made to the bank, you tell the banker you’d like to open

a secured card, they ask the amount you’d like to deposit to

open the card. Once you complete the application process,

whatever the amount of the deposit equals the line of the

secured card. For example, if you made a $300 deposit then

the amount available for spending is $300. Your money is held

as collateral against your spendings. If the monthly payment

or the amount spent on the card isn’t paid, the bank will

subtract your spending from your deposit and report late
payments to your credit report after defaulting 30, 60, 90, +120

days delinquent.

However if you use the secured card responsibly and make the

payments as agreed, the bank may offer to unsecure the card,

which means they will return your deposit and continue the

line of credit. If payments are made on time for a period of 6

months or more it is possible the bank may even consider

increasing the limit to higher amounts. After months of timely

payments, low utilization and normal activity, your credit score

will increase.

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