Chase secured credit card is one of the many secured credit cards offered in the US. Although Chase is one of the top banks who initially offered a secured credit card among its services, for some reason, it was discontinued back in 2005.
What is a secured credit card?
There are 2 types of credit card – the unsecured and the secured credit card. Unsecured credit cards are those commonly used when purchasing goods/services from different merchants. This is a credit/loan given to qualified individuals without the need for a collateral. It is not being backed up by a savings account. On the other hand, a secured credit card is one wherein the account holder uses his savings deposit as a collateral. The amount used as a security deposit is equivalent to his card’s credit limit.
The Pros of Getting Secured Credit Cards
- Secured credit card is your best option if, for some reason, you do not qualify for an unsecured credit card.
- A secured credit card can assist you in building up your credit report, or repairing any damaged credit records.
- The bank uses your security deposit, in case you default on your monthly payments. You can always replenish the amount used.
- You may also earn interest on your deposit.
The Cons of getting Secured Credit Cards
- You have to shell out an initial amount as your collateral.
- There are other fees charged aside from the application and annual fees, making the overall cost of having a secured card higher than regular unsecured credit cards.
- Secured card comes with higher interest rates.
Similarities between secured and unsecured credit cards
- A secured credit card can be used just like the unsecured credit card wherein each purchase you make decreases the available credit limit.
- Minimum monthly payments have to be made on the credit balance.
- You can avoid finance charges by paying in full every month.
- You pay an application fee and an annual fee.
- Late payments are penalized.
Differences between secured and unsecured credit cards
- There are more fees charged to secured credit cards.
- Some banks charge monthly account fees and credit limit increase fees.
- Accounts of secured credit card holders are subjected to review, and can be upgraded to an unsecured account if qualified. This can be done by making timely payments and keeping the balance low.
As mentioned, Chase secured credit card is one of the pioneer secured credit cards offered in the market for consumers. Chase bank allowed their clients who have low to zero credit rating to build their credit score from scratch.
Based on the amount deposited, the account holder is given a credit limit equivalent to 50-100% of the deposited amount. Upon receiving his card, he can use the card to purchase goods or services from any qualified merchants.
If you are a newbie with no credit history, or someone who has a bad or low credit rating, having a secured credit card will help you build/rebuild your credit. This is because the way you handle your account is being reported to the 3 main credit bureaus. As time passes and with the regular payments you make, your credit history will improve.
Reasons Why Chase Secured Card was Discontinued
It is worth noting, however, that financial analysts believe that it is unlikely that Chase will bring back their secured credit card. For the simple reason that the bank has always favored above-average to very good credit history among their clients. Most of the time, people apply for a secured credit card because they have problems handling their unsecured credit card.
At the same time, paying interest for deposit money of $500-5000 is no longer enticing for the bank. There are certainly better investment opportunities elsewhere. The Chase brand has become synonymous to premium cards, hence, having secured credit cards may only dilute the common perception.
Other financial institutions, however, do offer secured credit cards. If you are looking for something similar with Chase secured credit card, you can apply for the Capital One Secured MasterCard, Citi-Secured Mastercard or the Wells Fargo Secured Visa Card.