Cashback Debit VS. Secured Credit: Which is Better?

In today’s video, we look at debit cards vs. secured credit cards. Some people think that secured credit cards are better than debit cards because they can build credit while eliminating the opportunity to go into credit card debt. Here’s what I think about secured credit cards.
Secured credit cards are very similar to normal credit cards in several ways. You can build credit and even get some rewards. However it’s different in one major way: secured credit cards have a security deposit. The security deposit is to protect the issuing bank, just in case the user isn’t able to keep up with the credit card payments. If you apply for a secured credit card, the security deposit is taken out of your account prior to getting to use the credit card.
The security deposit actually becomes the credit limit for the credit card. That way the user can never purchase more than what the security deposit could cover. However, just because there’s a security deposit doesn’t mean that you’ll never pay interest on the balance of a secured credit card. Because they have a payment date just like every other credit card. If you neglect to pay the minimums on the balance, between 90-180 days later, the issuing bank will use your security deposit to cover your balance and return what’s left.
Ultimately, secured credit cards are better than normal credit cards because they’ll never allow you to spend more than your security deposit so there’s no chance of getting into massive amounts of credit card debt. However, I still don’t think they’re as good as debit cards because having a secured credit card means that you’re still trying to build credit so you have the opportunity to borrow money if needed. The problem is it continues the belief that you need a credit score to live. My wife and I are proof that you don’t need to because we’ve not used a credit card in over 6 years. You can live without a credit score and without debt!
Timestamps:
0:00 - Intro
0:21 - What is a Secured Credit Card?
0:51 - How a Secured Credit Card Works
2:00 - Is a Secured Credit Card better than a Debit Card?
#calebbale #securedcreditcard #debitcard
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[@1FrostySlime]

One correction. You quote the "Nearly $8,000 in credit card debt" figure. However, this figure is based on the ending statement balance at the end of the month that the credit card companies report to credit bueraues. I, as someone who uses credit cards but always pays them off, have whatever I spend every month as this figure, despite never having any "debt" that I didn't pay off before being charged interest on. So I think this is an extremely misleading figure to use.

[@CalebBaleFinance]

I certainly get that and appreciate the comment. According to Nerd Wallet's actual report, however, they specify the difference between "revolving" credit card debt (that which is carried from month to month) and "transacting" credit card debt (the amount paid off every month). They have amounts for both, understandably transacting is much higher at about $18K which includes revolving debt. Then the revolving credit card balance is listed at a little over $7800. So ultimately, I disagree that this is misleading unless the information that Nerd Wallet is communicating is not correct. But regardless, I still appreciate the comment, the perspective, and the heads up that this can be misunderstood if not properly communicated!

[@asoggyburger479]

Just to add to your comment Caleb. Various sources like Yahoo Finance, Nerd Wallet, and JD power have articles stating that Americans who pay off monthly and Americans who don’t is about 50/50. 50% of Americans carry debt on credit cards and are accruing interest. Pretty crazy that many people carry a balance of any size!

[@CalebBaleFinance]

Thanks for the extra input! Yeah that's insane.