A credit card is simply a line of credit that is issued from a financial institution. Other added benefits of a credit card include purchasing protection. Customers are often protected when making purchases. In the event that you have been a victim of fraud or some less egregious slight by a seller, the credit card companies will allow for a dispute process to hash out the differences. Another benefit that credit cards offer over a standard line of credit is convenience. The major credit cards (Mastercard, Visa, American Express, Discover) are widely accepted, so card holders can pay for purchases quickly and easily without having to carry cash or personal checks. While the benefits of having a credit card are numerous, not everyone is able to obtain a credit card so easily.
People with bad credit will find it much more difficult to obtain a credit card due to their substandard credit history. Banks are under no obligation to issue credit cards to their customers, and if a customer has demonstrated an inability or unwillingness to pay their debts and on time, a bank may determine that the customer is too much of a risk to extend credit in the way of a credit card. In such a case, people with bad credit are still able to pursue a credit card through other financial entities so that they too might reap the benefits and protections of all credit card account holders.
Credit cards for people with bad credit are often required to be secured by a deposit. Secured credit cards are much less risky to the issuing bank because the card holder must first deposit an amount equal to the spending limit on the credit card. If the customer should default on their credit card payment, the issuing bank will be able to satisfy the outstanding balance with the deposit.
Secured credit cards are also viable means for improving your credit score. Many times, a person seeking to repair their credit rating will pay the deposit to receive a secured credit card, then diligently spend with the card and repay the balance faithfully to establish a history of good credit habits. While the secured cards require an upfront deposit and commonly charge higher interest rates on outstanding balances; a secured credit card holder is afforded many of the protections that a standard credit card holder enjoys.