How Secured Credit Cards Helps In Getting Car Loans?

Credit cards have no fixed payment period like auto loans. The minimum payment is the portion of the outstanding balance. Cardholders can pay off the total amount carrying over the balance to the next month that might result in the additional interest charges.

Do you know both the traditional and secured credit cards work this way? The only difference between them is that, with a traditional credit card, the issuer extends credit to the account holder. With a secured credit card, the amount of credit extended depends on the funds deposited in the savings account of the holder.

If we consider this aspect, a secured credit card behaves much like an auto loan. When you take out a bad credit auto loan, the car is collateral for the loan. When you open up a secured credit card account the funds in your savings account serves as the collateral.

So, why the borrowers with bad credits does not apply for a debit card? Well, the experts say that a secured credit card just like a loan has their monthly payments reported to the credit bureaus. This not only establishes the revolving credit of the account user but also raises his credit scores.

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