The Low Down On Secured Credit Cards
Secured credit cards are great for those without credit or those with bad credit because they help build back credit ratings. A secured credit card is a card where a deposited is made to secure the card. This deposit can be made to a bank account or certificate of deposit.
The cash deposit you make will become the credit line for that account. In addition, if you do not overspend or otherwise abuse your card, you may become eligible for additional credit without additional deposits. It is a good way to begin rebuilding your credit score.
Outstanding balances on secured credit cards are still subject to interest, so in comparing cards it is necessary to know what the APR is. If the APR is high, carrying a balance or making just minimum payment will cost more in the long run.
Since you will have money holding, some institutions apply interest to your deposit thereby allowing you to earn while you spend. This interest is normally small, but is a good tool to use when comparing secured credit cards.
Like other credit cards, the fees charged to the secured credit cards play a role when deciding on the best card for you. Look out for cards with high charges as this will reduce the amount of your deposit significantly. The first is fees. Many credit card companies will charge an application fee, so it’s important to shop around. In addition, all Secured Credit cards come with an annual fee.
Secured cards can be a relatively easy way of either establishing or rebuilding your credit. Once you start using your secured card you will be rebuilding your credit record. Make sure you use it responsibly and then make payments on time. Making and paying off purchases each month can have a positive impact on your credit report
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Christopher Wright, Financial Cancer Specialist
