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Secured credit cards: Get beyond these Top 5 myths

Often derided as tools for consumers with horrible credit, secured credit cards can be a great credit-building tool. Here are five myths debunked to help you understand how to use secured credit cards to maximum advantage. 

4. Myth: Debit cards and secured cards are the same

LM Otero/AP/File
A Visa debit card in a wallet in Richardson, Texas, is pictured. Debit cards are not the same as secured credit cards. Only transactions with secured credit cards will be reported to credit bureaus, allowing you to build your credit.

  • By Daniel I. Tulbovich Contributor

Don’t let the fact that you are using your money as backing fool you. Unlike a debit card or prepaid card, when you swipe your credit card the money you've set aside isn't touched, unless you default. You still make monthly payments with a secured card. More importantly, your spending and payment activities will be reported to the credit bureaus. Not paying your bill on time – or at all – will hurt your credit just like a regular card. By contrast, the spending activity on your debit and prepaid cards are not reported to the credit bureaus.

But you have to be careful. Not all lenders report payment activities on secured credit cards to the three major credit bureaus. Credit unions, for example, are less likely to report than major banks. So when applying for a secured credit card, it is important to check the terms and conditions to be sure the prospective lender reports to the credit bureaus. 

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Mark Sappenfield
Editor

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

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