Money Talks News: Secured Credit Card Myths

It's a vicious cycle: you need credit to get a credit card, but without a credit card, how are you supposed to build credit? One solution is a secured credit card.

If you can fog a mirror, you can pretty much get a secured credit card.

That's because you have to put up some paper, in the form of money, to secure that plastic.

For example, here's $500. You can put that up and get a $500 credit line. But as simple as these things are, people misunderstand them.

For example, one myth about secured cards: They're only for bad credit.

They do help people with bad credit rebuild, but they're also for people who want to control their spending, or newbies to the credit scene, like students. Myth two: Because you put up money, you don't need to pay. Well, no.

You still need to pay it, including the interest. It functions just like any other credit card.

Myth number 3: These cards only come from predatory lenders. That's not true.

Most of the major banks in America offer secured credit cards. Now they do have different interest rates and fees, though, which is why before you pick one, you go shopping.

Myth 4: Secured cards are the same as prepaid or debit cards. Truth is, they're not. Prepaid and debit cards won't build credit, some secured cards will.

Also, debits and pre-paids don't offer the same legal protections. Myth number 5: This is the only card you'll ever carry. Not true. Prove you're responsible with secured, and offers for regular plastic won't be far behind.

Bottom line... Secured credit cards look and act just like any other credit card and people use them for lots of different reasons. Now what you need is to know how to shop for these cards and we can help you with that.

Just go to and search for "credit cards." For Money Talks News, I'm Stacy Johnson.