10 questions before getting secured credit cards

You need one to make a hotel or plane reservation, or to rent a car, even if you plan to pay cash. Many stores require a credit card to accept your check. Responsible use of a credit card builds a good credit rating, too, marking the owner as mortgage-worthy.

But people who have never had credit or need to repair a poor credit history may not qualify for a regular credit card. For them, a secured credit card may be the only way to establish, or re-establish, credit.

If you're in that boat, here are the answers to the top 10 questions about secured credit cards.

1. What is a secured credit card?

A secured card requires a cash collateral deposit that becomes the credit line for that account. For example, if you put $500 in the account; you can charge up to $500. You may be able to add to the deposit to add more credit, or sometimes a bank will reward you for good payment and add to your credit line without requesting additional deposits.

Meet the Greek Escrow Account and the Securitised Target2 Balance: the loan where you get to pay interest for the privilege of borrowing from your own collateral.

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