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Secured credit exists for a reason. You can get one within your means and the collateral is what you put forward on it. When I was a young adult I got myself a

Secured credit exists for a reason. You can get one within your means and the collateral is what you put forward on it. When I was a young adult I got myself a secured credit card.

copperx 3y ago
The premise has always sounded ridiculous. You're paying the bank so that you can loan money to yourself. To be more accurate, you're paying the bank so that they can be a witness to you loaning money to yourself. The sole purpose of that insanity is to increase your credit score, is that correct?
- Riseed 3y ago
  Yes, they're commonly used as "starter" credit cards, to increase credit score. I presume they also come with the other benefits of a credit card, such as the amount of security deposit required when renting a car, as well as fraud and chargeback liabilities and timelines.
- Nifty3929 3y ago
  I've never used a secured credit card, and I'm with you that it seems ridiculous. But I think a more honest question is: Why do people do this? I'm willing to give folks the benefit of the doubt for being smart and rational. So genuine question we should be asking ourselves (or them): What is the appeal of a secured credit card? Is it really just about the credit score?
  - tintor 3y ago
    It is just for improving very low credit score, for people not eligible for regular credit cards.
  - ekimekim 3y ago
    I did this when I first moved to the US, and had zero credit history (which the system considered to mean "high risk"). The entire point is to improve your credit score.
- anonuser123456 3y ago
  It makes sense as exactly that. You show the bank that you can manage a float. When you’ve demonstrated you have the executive function to do so, your score goes up.
- Sparkyte 3y ago
  You get the money back upon closing the account.
  - callalex 3y ago
    With no interest, and they typically take months to give the money back. They get to invest the money for that time, and you don’t. It’s an outright scam, but you have to have a credit score so whatcha gonna do about it?

Secured credit exists for a reason. You can get one within your means and the collateral is what you put forward on it. When I was a young adult I got myself a secured credit card.

copperx 3y ago

The premise has always sounded ridiculous. You're paying the bank so that you can loan money to yourself. To be more accurate, you're paying the bank so that they can be a witness to you loaning money to yourself. The sole purpose of that insanity is to increase your credit score, is that correct?

Riseed 3y ago
Yes, they're commonly used as "starter" credit cards, to increase credit score. I presume they also come with the other benefits of a credit card, such as the amount of security deposit required when renting a car, as well as fraud and chargeback liabilities and timelines.
Nifty3929 3y ago
I've never used a secured credit card, and I'm with you that it seems ridiculous. But I think a more honest question is: Why do people do this? I'm willing to give folks the benefit of the doubt for being smart and rational. So genuine question we should be asking ourselves (or them): What is the appeal of a secured credit card? Is it really just about the credit score?
- tintor 3y ago
  It is just for improving very low credit score, for people not eligible for regular credit cards.
- ekimekim 3y ago
  I did this when I first moved to the US, and had zero credit history (which the system considered to mean "high risk"). The entire point is to improve your credit score.
anonuser123456 3y ago
It makes sense as exactly that. You show the bank that you can manage a float. When you’ve demonstrated you have the executive function to do so, your score goes up.
Sparkyte 3y ago
You get the money back upon closing the account.
- callalex 3y ago
  With no interest, and they typically take months to give the money back. They get to invest the money for that time, and you don’t. It’s an outright scam, but you have to have a credit score so whatcha gonna do about it?