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(These cards differ from prepaid credit cards, where there is no bank account that secures the card. With prepaid cards, the money is actually “loaded” onto the card itself. Your card has a limit of however much cash you gave them when you purchased the card. These cards may be “reloaded” for repeated use, but they are generally considered to be debit cards and do not help you establish a credit history, although there are some exceptions to this.)
Having applied and put up a deposit to secure the account, you will have a financial tool that you may use just as anyone else might use one. The card is otherwise indistinguishable from any other “normal” account. You will receive monthly bills, and as long as you pay them on time, you will be earning credit in your name and building your FICO credit score. You may continue to use this card for as long as you like, but at some point you will probably want to try to obtain an unsecured credit card.
Unsecured cards tend to have lower interest rates than do secured ones. Plus they are less likely to include an annual fee for their use. And of course, they don’t tie up some of your cash in a bank account that you cannot touch. For anyone who needs to establish a financial history, a secured account is the way to go, but you do not want to keep using one any longer than is absolutely necessary. They are just too expensive.
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