Secured Credit Cards

Credit history is a critical passport in the U.S. economy. Increasingly, organizations require credit checks for various reasons including job applications, background checks, and underwriting for numerous products and services. However, 121 million Americans are credit challenged with subprime credit scores (68 million) or thin or no credit file (53 million).

Our research shows that those without prime credit know the advantages of good credit, but are not sure about how to build it. We know that the secured credit card is an on-ramp to positive credit and a savings tool, but providers have a hard time marketing it and many consumers are not even aware it exists. Providers are missing out on a large portion of the U.S. market because consumers cannot qualify for their products given their current credit score. A secured card can help a consumer to increase their credit score and establish a long-term relationship with a provider.

Why Secured Credit Cards are a Path to Credit for So Many Americans

Credit history is a critical passport in the U.S. economy. Increasingly, organizations require credit checks for various reasons including job applications, background checks, and underwriting for numerous products and services. However, 121 million Americans are credit challenged with subprime credit scores (68 million) or thin or no credit file (53 million). Our research shows that those without prime credit know the advantages of good credit, but are not sure about how to build it. We know that the secured credit card is an on-ramp to positive credit and a savings tool, but providers have a hard time marketing it and many consumers are not even aware it exists. Providers are missing out on a large portion of the U.S. market because consumers cannot qualify for their products given their current credit score. A secured card can help a consumer to increase their credit score and establish a long-term relationship with a provider.

What is a Secured Credit Card?

Secured credit cards combine the flexibility of a credit card with a forced savings mechanism in the form of a security deposit. The security deposit enables issuers to offer a credit card to someone who otherwise has insufficient or poor credit history. The use of the secured card is reported to the credit bureaus, helping the consumer to build a credit score that will allow access to unsecured credit and other financial products in the future.

Reaching Consumers

We pose several segments that are a good fit for the secured credit card: recent immigrants, people of color, those living in rural communities, military servicemembers and veterans. Each segment faces credit-building challenges that a secured card could address and put users on a path to improved financial health.

Secured cards could benefit millions of Americans, especially those with limited or damaged credit:

  • Nearly 10 million Hispanic individuals and 8 million African-Americans who are credit invisible or unscoreable due to lack of sufficient credit history
  • Over 1 million military servicemembers and recent veterans have fair to poor credit scores or lack a credit card
  • 10 million, nearly a third of adult Americans living outside metropolitan areas, have poor to fair credit scores
  • Over 6 million immigrants have fair to poor credit scores or lack a credit card

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Visa’s generous financial and strategic support makes our secured credit card research possible.

 

Secured Credit Cards