The popularity of secured credit cards continues to grow as more and more people strive to rebuild their damaged credit history.
In this post, let’s talk about some of the most important points that you need to know about secured credit cards.
What is a secured credit card?
Secured cards are offered to people with no credit or bad credit history. Since no credit check is required, Issuers make up for the risk by requiring cash deposit. The security deposit may range from a minimum of $200 to $500 or more. There are secured cards that offer $1,000 up to $5,000 of credit in exchange for the same amount of deposit.
Just like a regular credit card, a secured cardholder will incur an interest rate cost if he/she fails to pay off the full balance by the due date. There is also an annual fee which can range from $30 to $60 or higher, depending on the Issuer.
As can be expected, some secured cards charge higher rate than non-secured credit cards. Nevertheless, if you do your research well, you can find secured credit cards with promotional zero interest, no annual fees, and reasonable terms.
Why Get A Secured Credit Card
If you have never established credit history, then a secured credit card is a great way to start. The application process is easy so you won’t have to worry about getting rejected. You also have the option to choose our own credit limit, for as long as you can submit the required amount of deposit.
Are you struggling with bad credit history? If you are on the process of rebuilding poor credit, a secured card is just the thing you need. Since most Issuers require good to excellent credit, your only chance to qualify is to apply for a secured credit card. As soon as you get one, you can begin repairing your credit history one step at a time.
Keep Your Spending in Check
Some people may dislike secured credit cards because of the limited credit. If your problem is not having enough cash for a deposit, then why not start with a low limit? Generally, the minimum security deposit required is at $200 which provides the cardholder with a $200 credit line each month.
Instead of complaining about the low limit, why not use it to your advantage? For most people, their bad credit history has been a result of overspending or poor financial management. A secured card will surely help keep your spending in check.