Which term describes a credit card secured by a deposit such as a certificate of deposit?

Which term describes a credit card secured by a deposit such as a certificate of deposit?

• A. Reward Card
• B. Debit Card
• C. Convenience Checks
• D. Secured Card

Answer: (D)

A secured card is a credit card backed by a cash deposit. The deposit acts as collateral and usually sets the credit limit, lowering the issuer’s risk and making it possible to obtain credit even with limited or rebuilding credit. If you use the card responsibly and pay on time, your payment history can improve your credit, and you can eventually move to an unsecured card and get your deposit back. The other terms don’t describe this arrangement: a reward card is about earning rewards, a debit card uses funds from your bank account rather than extending a separate line of credit, and convenience checks are checks you can write against a credit line rather than a deposit-backed card.

A secured card is a credit card backed by a cash deposit. The deposit acts as collateral and usually sets the credit limit, lowering the issuer’s risk and making it possible to obtain credit even with limited or rebuilding credit. If you use the card responsibly and pay on time, your payment history can improve your credit, and you can eventually move to an unsecured card and get your deposit back. The other terms don’t describe this arrangement: a reward card is about earning rewards, a debit card uses funds from your bank account rather than extending a separate line of credit, and convenience checks are checks you can write against a credit line rather than a deposit-backed card.