Build Back Your Credit
Secured Visa and Mastercard Credit Cards
Note: Bankrate.com has a useful list of Secured credit card comparison facts.
Secured credit cards are ideal for people who either have no credit history or need to rebuild one. If you want to rent a car or get an airline ticket, the credit card is preferred over debit cards and even cash. A secured credit card gives you the convenience of knowing that you can afford your purchase because the money is already there, and a positive payment history will be good for your credit rating overall. Even people with bankruptcies, foreclosures, and other problems can get secured credit cards, which lets them get on with their lives and shop in the same plastic-friendly universe as everyone else.
Secured credit card processing, from a merchant standpoint, is almost seamless. This is because all of the same processing rules apply in the sense that your credit card terminal (or software) will still authorize the card for the amount in the account. If the amount exceeds the “available credit,” which is in this case a balance, then the card is declined. Therefore, the same security measures are in place and you have the same protections against fraud. This would also be true of prepaid debit cards or “one time” cards that are generated for repayment of additional balances. A popular new feature of tax preparation services involves sending out prepaid bank cards in lieu of checks, since people may not withdraw the full amount on the card or might lose the card entirely. Some cards also have fees that can quickly deplete the value of the cards themselves, but this has no bearing on the merchant environment, since you can accept secured credit cards and prepaid debit cards with the same confidence as all other debit and credit card types.
Notes and Special Information
Special note: Shop around. Not all secured cards are the same, and many have fee structures that are not as friendly as others. As long as you are getting a secured card, you are better off getting one that doesn't soak you.