If you are looking for information that will allow you to distinguish a secured credit card from other traditional card programs, then look no further. In the succeeding paragraphs of this short article, we have identified four of the most common factors which can help you differentiate a secured credit card from all of the other card accounts offered by banks, credit unions and card companies these days.

Four Factors that Differentiate Secured Cards from Traditional Card Programs

1. Provision of security. As what their names imply, secured credit cards require the provision of security. Generally speaking, such security comes in the form of an initial deposit. The deposit requirement in this bad credit-credit card program actually serves two important functions. First, it serves as the guarantee for the use of the plastic card. Should a cardholder fails to keep up with his credit payments, the card company can tap on the initial deposit that he has provided to settle all his unpaid charges.

Second, the initial deposit determines the spending limit that will be set on the secured credit card account that will be given to a prospective cardholder. The borrower can use his bad credit-credit card in making purchases as well as in settling his bills and other expenses as long as he does not spend beyond the limit set on his plastic card.

2. Ease of credit card application. Unlike traditional card programs, secured cards are very easy to sign up for. What could be the reason behind this? Well, card companies which issue these accounts do not normally run credit checks on their card applicants. So even if a prospective cardholder has less than perfect credit standing, his request for a bad credit-credit card can still be granted.

3. Source of credit. Secured credit cards are designed in such a way that they will be linked to the existing savings or checking accounts of cardholders. Meanwhile, traditional credit card programs, like bad credit-credit cards take funds from the checking accounts that borrowers have in their respective banks, credit unions and other financial institutions.

4. They are used for rebuilding credit profiles. One of the best features of secured credit cards is that they can help individuals regain their credibility as borrowers. This is because most companies that issue secured cards as well as other bad credit-credit card accounts usually provide timely payment reports to the three credit bureaus Equifax, Experian and TransUnion. In so doing, they are able to provide accurate reports regarding the responsible credit habits displayed by their cardholders. This can in turn help credit consumers cause gradual improvements in their respective credit profiles until such time that they are able to thoroughly repair their credit history and recover their overall financial health.

We hope that this short article helped you recognize several factors which will help you distinguish secured card programs from other card accounts. We also hope that this article helped you gain a deeper appreciation of the excellent features and characteristics of secured credit card programs.

So little Johnny or Janie is about to go off to college – yes? And you’re worried about how they’ll manage their money (that is to say, your money) and you want to get them some plastic to give them some financial freedom and control and to give yourself some security. So what should you choose then – a student debit card or a student credit card?

Let’s start off by understanding the difference between your basic debit card and credit card.

When we say a student debit card, we mean a prepaid debit cards designed just for students. This is a card that you “load up” with money before hand. You choose the amount and you add it to your card – that simple. Then, you use the card to buy whatever you want because the card is actually a Visa or MasterCard product and so it can be used all over the world just like any other Visa or MasterCard.

You use it to purchase magazines, clothes, airline tickets, groceries, etc.

Then, when you’ve spent all the money you loaded onto it, you either forget about it or you load it up with more money and continue as before. The key point to remember here is that you spend only the money you’ve already loaded.

Now a student credit card on the other hand may look identical to the student debit card but here the key point is turned around. With the credit card you spend credit (think of it as money that you haven’t loaded yet). And you simply “load it” later.

So what’s the best choice?

Well, speaking as a parent of a near college age child (and someone who’s weathering the current financial storms) the choice is an easy one. I choose the college student debit card – hands down. Here’s why.

I’ve learned the hard way over my life that it’s best to save for things and then spend the money instead of spending it now and paying for it later.

That’s because when you pay for it later you also pay interest charges unless you’re in that tiny, tiny fraction of consumers that actually controls their spending with an iron fist.

Most young people aren’t disciplined enough to control their spending impulses with a credit card. Their emotions will get the better of them and they’ll splurge on something or another and soon end up making minimum payments and pay gobs and gobs of interest charges which effectively make everything you bought with the credit card in the first place much more expensive. And you end up having less financial freedom, not more because you’re tied to the payments and you have less credit to use.

So when it comes to a college-age kid, I think it’s best to have a little discipline built into the card and that’s just what a student prepaid debit card does. It forces youngsters to pay attention to the cost of things and how much money is left in their balance because if they don’t, they’ll find out what it’s like to have their card declined and that’s an unforgettable and unsavory lesson in finance.

Oh, and the other great thing about student debit cards is that you (the parent) can purchase them in the first place and thus be able to keep track of every purchase your child makes even if they go to college in another country. You’ll also be able to load the cards up rather quickly in case of an emergency (from wherever you live) which is something you can never do with a credit card that’s reached its limit.

So in the end, it’s really no contest. Pick the credit card with the most inherent risk and ultimately the least amount of flexibility? Or do you pick the student debit card that has the least amount of risk and the most flexibility? It seems simple to me.