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Are Secured Credit Cards Right For You

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					Are Secured Credit Cards Right For You?
Both unsecured and secured (prepaid) credit cards can be used to purchase goods and services. However,
a secured card requires you to open and maintain a savings account as security for your line of credit. A
regular unsecured card does not. Having a good credit score is necessary these days, particularly as many of
the services we use every day requires this just to able to business with them. You will also have an easier
time making purchases, from something as small as a favourite song online to something really big like new
home for your family. This is where secured of prepaid credit cards can help. However, maintaining a good
credit score is easier said than done, and a lot of people have found themselves with a low credit score
because of poor financial decisions they have made in the past. This is where they end up in a double bind:
in order to improve their credit score they need to be able to take out loans, but they can't do so because of
their poor credit rating. In this case a secured card can be used to rebuild your credit score and help you
regain your good credit standing.



What are Secure Credit Cards.
Prepaid credit cards are very similar to a regular credit card in that people can use these secured credit cards to
purchase products or avail of a service just like a regular credit card. What makes it different is that the credit line is
secured by a cash deposit made by the customer. This deposit has a two-fold purpose: it serves as the security for
the company issuing the credit card and ensures the customer cannot get into debt because they can only use the
card up to the limit of what they have on deposit Hence, a prepaid credit card can provide a means for people to
have a credit card even if they have been denied credit cards and loans in the past, and at the same time, it helps
them rebuild their credit history. This is great for those who are only starting out in life with no credit history or for
those who want to re-establish their credit rating. While the credit available to people with these credit cards
depends on how much they deposit in their accounts initially, it doesn't necessarily mean that their credit limit is
equivalent to how much money is in their account, although this may be the case for some cards. There are some
banks that extend the credit limit by 5-10% higher than the total deposited in their bank account. Having a secured
or prepaid credit card helps teach responsibility in bill paying. Paying the full outstanding balance on the card each
month shows lenders that the cardholder can meet their responsibilities. This goes a long way to improving one's
credit score. Credit bureaus also look at how much credit is available when they calculate a credit score.


Applying For Secure Credit Cards
When looking to obtain this type of credit card there are some questions you need to ask so that there are no
surprises later. Find out if there are any age restrictions and how much monthly income is needed to be considered
for a card. A person may also need to have a prior existing bank account before they can be eligible. However, most
people can usually get approved for these credit cards by paying the application and annual fees plus making the
required security deposit. Depending on how they manage their finances and if their credit score improves, their
prepaid credit card can be upgraded to unsecured credit cards in the future with all the benefits associated with
these cards.

Peace of Mind With A Prepaid Credit Card

Credit cards have become an integral part of everyday life, especially since we are all consumes and regularly have some sort of
purchase to make. Not only are they a safe alternative to cash once used correctly, they are also used to verify identity and to
judge financial trustworthiness (based on one's credit score). This is why for those without a credit card or those with deplorable
credit scores can and should seek to get a secured credit card.

For those initially without one, it opens you up to a wider choice of financial options and enables you to do even some simple
things like book a hotel online or rent a car, for the others it can be an effective measure to rebuild your credit score as it's 'credit'
limit is closely related to how much you deposit meaning that you can spend little more than what you've accounted for greatly
decreasing the length of time you take to repay.

So with secure credit cards you can rest assured that you'll be able to access goods and services from a wide range of retailers
while maintaining and or building a good credit score, which is a great financial decision. Also, another use of prepaid credit cards
is the college scenario. Very often parents save, and send their kids off to college, and then give them a credit card (unsecured) to
take care of the axillary expenses. This plan is a big mistake, as the new college student might not make the best decisions when
weighing wants against needs, leaving the parents with debt they might not be able to repay on time, or at all!

If only they would have opted for prepaid credit card, the spending of the student would be much more manageable. This benefits
both parties, since one learns to budget and the parents aren't drowned in debt. There are many benefits to having a secure credit
card, the best of them, seems to be the peace of mind it offers.



The Advantages of Secure Credit Cards

Once your credit rating has been damaged, life becomes increasingly difficult. A bad credit score can prevent you
from being able to get a mortgage, a car loan - even rent an apartment. Having a credit card, similarly, is important if
you want to be able to rent a car or get a hotel room. So what can you do if your credit has been damaged by
previous bankruptcy, bad debts, or similar problems? If you're working to re-establish your credit, this type of credit
card               may                be               the               answer                 for                you.

The secured credit card is like other forms of credit; with a secured credit card, you pay up front the full amount of
your credit line. The bank then issues you a credit card, which has in effect already been paid for. It doesn't give you
additional credit - i.e., you don't end up with more money than you had - but it does allow you to prove your ability
to keep and handle a credit card. As you make monthly payments on the card in full, you'll gradually re-establish
your          credit         and         you'll      see         your         credit       score          go         up.

If you're someone who's never had credit before - maybe you're a student, or a divorcee whose spouse had all the
credit in their name, or just someone who's never had need for credit until now - you may find it frustrating trying to
get something like a first-time car or home loan. No credit can be as difficult to manage as bad credit, and so for
people who haven't got any established credit rating, a secured credit card is also a good idea.

Banks will give you one; since you won't pose any risk to them, and you can slowly establish your good name by
using the card for a year or two. In short, if you think credit is going to be a problem for you in the future, and you
can find $500 or $1000 to put into a prepaid credit card, it may be a good idea.

				
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