GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Secured Credit Card


Synonyms:collateral for credit, credit agreement, guaranteed, secured credit
Filed Under: financial-banking
Tags: banking, credit, credit card
 

Definition of secured credit card

secured credit card
1. A type of credit card that is secured with a savings deposit from the cardholder. The deposit acts as insurance against the outstanding balance if the cardholder defaults on his or her payments. This type of card is often beneficial to those with little or no credit history, or to those who want to rebuild poor credit.

Related Terms and Acronyms:

  • bad credit   Someone who carries a higher credit risk.
  • bankruptcy (BK)   A court action under the Federal Bankruptcy Code by which a debtor's debts may be discharged, usually by transferring assets to a trustee, or rescheduled.
  • card holder agreement   A written agreement or contract between a credit card holder and the credit issuer that details the terms and conditions of a credit card account. This agreement must include the Annual Percentage Rate, the monthly minimum payment formula, the annual fee if applicable, and the cardholder's rights in billing disputes. Changes to the agreement can be made at any time by the issuer with prior written notice.
  • collateral   Any property pledged as security for repayment of a debt.
  • credit card (CC)   A plastic card with a coded magnetic stripe that, when signed, entitles its bearer to a revolving line of credit, with a credit limit and interest rate determined by the borrower's income and credit report.
      ➥  A payment card that gives customers access to a revolving line of credit.
  • credit limit   The maximum amount of charges a cardholder may apply.
  • grace period   If the credit card user does not carry a balance, the grace period is the interest-free time a lender allows between the transaction date and the billing date. The standard grace period is usually between 20 and 30 days. If there is no grace period, finance charges will accrue the moment a purchase is made with the credit card. People who carry a balance on their credit cards have no grace period.
  • no credit history   To have no record of an individual's credit worthiness.
  • penalty rate   Several percentage points higher than a card's current annual percentage rate, which goes into effect after two late payments. On some cards, a single late payment triggers a penalty rate.
  • standard card   The basic card offered by issuers. Customers with higher incomes and good credit reports can qualify for the higher-limit gold and platinum cards.

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