It is a kind of credit card which is offered by the bank or other financial institutions in exchange for the deposit or collateral. To acquire a standard credit card one should have an average or good credit score but these secured cards can be obtained by any individual with even no history or poor credit history. This article will educate you on what is a secured credit card and how to use to for credit rebuilding. So read on.
Why secured credit cards are so popular
Secured credit card is one of the best ways to build or rebuild your credit history. Anyhow this secured credit card is not just like all other unsecured credit cards. It differs in many ways. But same as unsecured credit cards here too you have annual fee and interest rates.
Many secured credit card providers do an employment check and age verification to offer their secured credit cards for you. If you sign up with the best secured credit card your credit card company after seeing your timely payments and credit loyalty they will promote your secured credit card to unsecured credit card. It is suggestible to compare many secured credit cards before commit yourself with any particular credit card provider.
What are the requirements?
To sign up with the secured credit card, credit card applicant should provide a deposit amount to the credit card issuer. This deposit will be used as a credit card security against your all unpaid obligations. After receiving the deposit your creditor will issue the secured credit card. They will fix your credit line anywhere between 50 to 100 percentage of your initial deposit amount. For instance, let’s say your credit card company provides 50% credit limit from your deposit then if your deposited amount is $500, your credit limit will be $250.
There are some companies exist they will reduce the charges like annual fees, finance charges, and application fees from your deposit amount. If this is the case, better to stay away from that company. Because if the company starts to impose high charges on your account from the beginning itself it will drastically reduce your deposit amount in the near future too.
There are some good credit cards companies who will give you interest on your deposit from the first working day itself while others wouldn’t touch your deposit until you defaulted with your payment due. Some may use your deposit to avoid the single one time late payment. Go through some secured credit card reviews and uncover the truth.
How these secured credit cards can help you in credit repair?
Even though most of the credit card companies report credit behavior to the major credit bureaus some will not do this. So if you sign up with these companies then you rebuilding your credit history will become impossible. If your creditor reports to the credit bureau as them will they mention as a secured credit card. If so there are high chances in which your other lenders will not consider by seeing such information.
If you truly want to rebuild your credit history by means of secured credit cards never make big purchases. Only make the affordable purchases which you are confident to repay. Make sure your spending habit is not going to ruin the chances of getting an unsecured credit card.
Secured credit card reviews
Internet is a great resource for those who want to get started their journey on any types of credit card. Watch out through secured credit card reviews and find out which is the best secured credit card to rebuild your credit very quickly.
If you are lucky enough and never made late payments your credit card company can promote you to obtain an unsecured credit card. They will return your credit card security deposit too.