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What is a ‘secured balance transfer credit card’?

Secured balance transfer credit cards are another very popular breed of balance transfer credit cards. Secured balance transfer credit cards, as their name suggests, are secured. Well, they are secured for the balance transfer credit card provider, really. Secured balance transfer credit cards require you to open an account with the balance transfer credit card provider and maintain some cash balance in that account. This cash balance acts as a security for the provider of secured balance transfer credit card. Your credit limit is dependent on the amount you hold in the account that you have started with the provider of secured balance transfer credit card. This is generally between 50 to 100% of your account balance. So in that sense, secured balance transfer credit cards are not really balance transfer credit cards (since they don’t offer you any credit really). For this reason, the secured balance transfer credit cards are sometimes also referred as debit cards.

Why is the concept of secured balance transfer credit cards so important?

As we know, balance transfer credit card debt is a raging problem which is caused by improper usage of balance transfer credit cards. Such people end up spoiling their credit rating to an extent where they cannot get another unsecured balance transfer credit card (that is what we call the commonly used balance transfer credit cards). Even after they have paid off their dues and cleared their debt, their credit rating still haunts them. For such people, secured balance transfer credit cards are a boon. Secured balance transfer credit cards present them with an opportunity to not only get a balance transfer credit card in the first place but also to improve their credit rating by using the secured balance transfer credit card in a disciplined way (paying their dues in time, controlled spending, utilizing a maximum of 70% credit limit etc etc). As they continue with these good habits, their credit rating gradually improves over a period of time. Hence secured balance transfer credit cards provide them with the means of rectifying their mistakes (credit rating).

It’s not just the people with bad credit rating who go for secured balance transfer credit cards. Some people go for secured balance transfer credit cards because they don’t want to bother themselves with the bills etc for balance transfer credit cards. They don’t like to even fill-up application forms for unsecured balance transfer credit cards.

Then there are some who just don’t like to borrow money (even if it means borrowing from a balance transfer credit card provider by using their balance transfer credit card). However, such people are very rare to find.

Some people just go for secured balance transfer credit cards because they have heard a lot of horrifying stories on balance transfer credit card debt – maybe someone from their family or one of their friends was devastated by balance transfer credit card debt and they don’t want to repeat the mistake. So they decide to go for a secured balance transfer credit card.

Whatever be the reason for going for it, the secured balance transfer credit cards are surely popular too.