Secured Credit Cards

Q

What’s a secured credit card? — K.D., Garden City, Idaho

A

If you’re having trouble getting approved for a credit card, it may be due to having a bad credit record — or perhaps no credit history at all. You’re not out of luck, though: You can apply for a “secured” credit card instead.

Secured credit cards require their holders to fund an account with cash, which serves as a

kind of security deposit and works like a credit limit. If you’ve deposited $1,000, you can charge up to that amount, pay the bill when it comes due, and then resume charging again, up to that amount. Secured credit cards can let you build a good credit history, eventually helping you qualify for a regular credit card.

Q

Is a company having a lot of cash on its balance sheet a good thing? — O.S., Franklin, Tennessee

A

It can be good or bad. A lot of cash on hand means the company can act on opportunities that arise, such as buying another company. Some companies also store cash so that they will be able to cover taxes due if and when they bring home profits generated abroad. Excess cash can be used to reward shareholders by spending it on dividends or on repurchasing shares. (It’s generally only worthwhile to buy back shares when they’re undervalued, though.)

However, a lot of cash just sitting around — especially when interest rates are low — isn’t being put to productive use, so many companies try not to keep too much on hand. If they need more cash at some point, they assume they can borrow it

or issue more shares of stock.