I Do not confuse secured credit cards with
the debit or check cards. Debit cards directly access or debit a designated checking or savings account.
I The funds which you deposit with a secured
credit card bank are not touched unless you default on the credit card account.
I In most cases, your deposit will accrue interest. I Most secured card issuers will review your
payment record at the end of the first full year.
An Educational Message from
A Garden State Consumer Credit Counseling Organization
Secured Credit Cards
I Some issuers will return your savings deposit
and turn your secured account into a regular unsecured account.
I Some issuers will raise your credit limit. I With some banks you may have to request
the increase of your limit.
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If you have bad credit or no credit at all, it can be very hard to obtain an unsecured credit card. You may qualify for a secured credit card. “Secured” means the card issuer requires you to make a deposit into a special savings account to collateralize the credit line. Therefore, secured credit card issuers will approve the majority of applicants. A secured credit card can offer many of the same benefits as an unsecured credit card.
Candidates for Secured Credit Cards
I Secured Credit Cards are ideal for
consumers who are establishing credit. If you have never had any type of credit (credit cards, car loans, etc..) it is very difficult to qualify for an unsecured line of credit.
Finding The Best Secured Credit Card For You
First, decide what features are most important to you: I application fees I annual fees I finance charges I accrued interest on the deposit I available line of credit I minimum savings deposit Once you have been accepted for the credit card, you are required to make a deposit into a special savings account. The minimum deposit required can range from $100 - $500. Secured credit cards provide the same charging privileges as an unsecured credit card. There are no visible differences between a secured and unsecured credit card (only you and the credit card issuer will know) Interest rates and annual fees may be higher on a secured card.
Re-Establishing Credit With a Secured Credit Card
I It is a good idea to carry a balance on your
secured credit card for at least several months
I Carrying a balance and making regular
consistent monthly payments will show your ability to use credit properly
I Students, divorcees, widows and
immigrants are often denied for credit for “no credit history” or “insufficient credit history”.
I Do not go over your credit limit I Do not make late payments I Do not pay with a bad check I Try to pay a little more than the minimum
payment each month
I Consumers with previous credit problems
are often denied credit.
I Many secured bank credit card issuers will
consider your application, even if your credit history shows liens, charge-offs, repossessions, or a discharged bankruptcy (as long as the problems are under control and in the past).
Some issuers will accept applicants with a deposit as low as $100, most require $300-$500 deposit. This should help you contain your debt to a healthy level. Consumers with unsecured debt (not including automobile or home loans) exceeding 20% of their annual gross income are considered ‘risky’ by most lenders.
I Secured credit cards offer the opportunity
to build a meaningful credit history that future lenders can rely upon.
I Establishing a good payment history with a
secured credit card, over a period of time, could open up many other credit options for you.
I Demonstrating responsible use and the ability to make payments on time can give you another chance in the credit world.