In this case, the security is in the form of a 2-yr CD at today's standard absurdly low rate. The value of your CD is your credit limit. I have been familiar with the concept of secured cards for a long time, but it never occurred to me that there would be an APR on them if you ran a balance. You are borrowing your own money. There is zero risk to the bank, and I suspect the administration of having to collect on a bad debt isn't anywhere near 9.9%, not to mention they are still making money off of your CD depositIsn't the CD used as collateral in the case of a person defaulting and not paying on the credit card? For the normal user, they would put charges on the secured credit card, make a payment, and possibly carry a balance. If they do carry a balance on the card, the 9.9% interest rate is the cost of the financial institution loaning money to the secured credit card user. The CD has little to do with the interest rate. It is being held as collateral in the event the person defaults. 9.9% is a decent rate, so I'm guessing the financial institution is giving a discount on the credit card interest because they do have the collateral if something goes south.
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