Secured Credit Card

Definition

  • A type of credit card that is secured with a savings deposit from the cardholder. The deposit acts as insurance against the outstanding balance if the cardholder defaults on his or her payments. This type of card is often beneficial to those with little or no credit history, or to those who want to rebuild poor credit.

Synonyms
collateral for credit, credit agreement, guaranteed, secured credit

Related Terms and Acronyms

  • Bad Credit Definition,
    • Someone who carries a higher credit risk.
  • Bad Credit Loan Definition,
    • A loan taken out by someone with bad credit.
  • Bankruptcy (BK) Acronym, Important,
    • A court action under the Federal Bankruptcy Code by which a debtor's debts may be discharged, usually by transferring assets to a trustee, or rescheduled.
  • Card Holder Agreement Definition,
    • A written agreement or contract between a credit card holder and the credit issuer that details the terms and conditions of a credit card account. This agreement must include the Annual Percentage Rate, the monthly minimum payment formula, the annual fee if applicable, and the cardholder's rights in billing disputes. Changes to the agreement can be made at any time by the issuer with prior written notice.
  • Collateral Definition,
    • Any property pledged as security for repayment of a debt.
  • Credit Card (CC) Acronym, Very Important,
    • A plastic card with a coded magnetic stripe that, when signed, entitles its bearer to a revolving line of credit, with a credit limit and interest rate determined by the borrower's income and credit report.
    A payment card that gives customers access to a revolving line of credit.
  • Credit Limit Definition,
    • The maximum amount of charges a cardholder may apply.
  • Credit Score Definition,
    • Also referred to as a 'Beacon Score' is a number, between 300 and 900, that reflects a person's credit history. Lenders calculate this number using a computer system as part of the process for assigning rates and terms to the loans they grant.
  • Fresh Start Definition,
    • The characterization of a debtor's status after bankruptcy. i.e., free of most debts.
  • Grace Period Definition,
    • If the credit card user does not carry a balance, the grace period is the interest-free time a lender allows between the transaction date and the billing date. The standard grace period is usually between 20 and 30 days. If there is no grace period, finance charges will accrue the moment a purchase is made with the credit card. People who carry a balance on their credit cards have no grace period.
    • A window of time where a policyholder still has time to pay insurance premiums.
  • Minimum Payment Definition,
    • The minimum amount a cardholder must pay to keep the account from defaulting. Some card issuers set high minimums if they are uncertain of the cardholder's ability to pay. Most card issuers require a minimum payment of three to five percent of the outstanding balance.
  • No Credit History Definition,
    • To have no record of an individual's credit worthiness.
  • Penalty Rate Definition,
    • Several percentage points higher than a card's current annual percentage rate, which goes into effect after two late payments. On some cards, a single late payment triggers a penalty rate.
  • Rebate Card Definition,
    • This is a credit card that allows the customer to accumulate cash, merchandise or services based on card usage.
  • Smart Card Definition,
    • A card with an embedded computer chip which stores more information, performs more functions and is more secure than a credit card or debit card.
  • Standard Card Definition,
    • The basic card offered by issuers. Customers with higher incomes and good credit reports can qualify for the higher-limit gold and platinum cards.
  • Zero Balance Definition,
    • What shows on a credit card customer's bill when the outstanding balance has been paid and no new charges have been incurred during the billing cycle.
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