A security deposit protects credit card companies from the risk of not being paid back. This allows them to offer nearly guaranteed approval and charge fairly low fees. So while it may scare off some people, the security deposit required to open a secured credit card is actually quite helpful. In fact, it’s the main reason why the riskiest applicants even get a second crack at credit to begin with.
Placing a refundable deposit has other perks, too. Since your monthly spending can’t exceed the amount of your security deposit, you’ll be far less likely to spend beyond your means. Furthermore, most unsecured credit cards for bad credit charge nearly as much in non-refundable fees as a secured card’s minimum deposit. And all you typically get in return is a bit more than $100 in additional spending power.
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