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Secured credit cards
Monday, February 26, 2001 By Caryn Bilotta
Secured credit cards are ideal for consumers with no credit history or with previous credit problems.
A secured credit card works just like a regular credit card. There are some differences, however. You are required to make a deposit to use as collateral to secure the credit line. Usually, your deposit equals the credit line you receive.
Ask the issuer if your deposit will be put into an interest bearing account. The funds you deposit are not accessed unless you seriously default on the account. When you decide to cancel the account, you will receive your deposit plus any interest that was earned on your deposit while you held the account.
Secured credit card issuers may charge higher interest rates than on unsecured credit cards and they will charge you an annual fee. Most people need a secured credit card for only one or two years to re-establish credit. If you are looking to establish or rebuild credit, you may want to consider a secured credit card.
Caryn Bilotta is education director for Consumer Credit Counseling Service of Western Pennsylvania. For more information, call (888) 511-2227 or visit its Web site at www.cccspa.org.
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