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Comment by Nifty3929 | Hacker News Reader

Seems like this will force credit card issuers to reduce their business with people who are likely to default, especially on small balances and spending patterns.

So basically lower income people will have less access to credit cards. Possibly better for them TBH, but I still don’t like it.

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Secured credit exists for a reason. You can get one within your means and the collateral is what you put forward on it. When I was a young adult I got myself a secured credit card.

The premise has always sounded ridiculous. You're paying the bank so that you can loan money to yourself.

To be more accurate, you're paying the bank so that they can be a witness to you loaning money to yourself.

The sole purpose of that insanity is to increase your credit score, is that correct?

Yes, they're commonly used as "starter" credit cards, to increase credit score. I presume they also come with the other benefits of a credit card, such as the amount of security deposit required when renting a car, as well as fraud and chargeback liabilities and timelines.

I've never used a secured credit card, and I'm with you that it seems ridiculous.

But I think a more honest question is: Why do people do this?

I'm willing to give folks the benefit of the doubt for being smart and rational. So genuine question we should be asking ourselves (or them): What is the appeal of a secured credit card? Is it really just about the credit score?

It is just for improving very low credit score, for people not eligible for regular credit cards.

I did this when I first moved to the US, and had zero credit history (which the system considered to mean "high risk"). The entire point is to improve your credit score.

It makes sense as exactly that. You show the bank that you can manage a float. When you’ve demonstrated you have the executive function to do so, your score goes up.

You get the money back upon closing the account.

With no interest, and they typically take months to give the money back. They get to invest the money for that time, and you don’t. It’s an outright scam, but you have to have a credit score so whatcha gonna do about it?

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