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Jul 6 2017

What Is a Guaranteed Credit Card? #where #to #get #free #credit #score

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Definition

According to the financial institution Capital One, a guaranteed credit card is a credit card account secured, or guaranteed, by funds the cardholder deposits in a special account at the issuing institution. When a borrower gains approval for a guaranteed credit card account, the lender may require a deposit of funds equal to the card credit limit in order to secure the account.

Benefits

In its promotional material, Capital One describes guaranteed credit cards as a way for borrowers with poor or no credit to establish a positive payment record. In addition, the credit cards come with typical benefits like rental car protection and access to the lender’s cardholder services.

Considerations

In a 2004 USA Today article, financial columnist Sandra Block observed that guaranteed credit cards typically carry very high interest rates and may carry additional high fees. The initial deposit requirement may also deter some cardholders with limited funds, and many guaranteed credit cards have low credit limits.

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