Choosing the Right Secured Credit Card

Secured credit cards are wonderful alternatives for those who cannot qualify for a regular credit card. Perhaps, your desired credit card is only offered for people with good or excellent credit. Or maybe you have yet to establish and build your personal credit history. Whatever the case maybe, a secured credit card can be your tool for building or rebuilding credit.

However, with so many choices of secured credit cards available in the market, which one should you pick? True enough, making a decision can prove to be tough especially if this will be your first time to apply for a credit card. On this post, let’s consider these practical tips on how you can choose the best secured credit card from the rest.

Find a good rate. While credit cards for bad credit are expected to carry higher APR than regular cards, you should not settle with one that has an excessive APR. Rates can range from 14.90% to 19.95% and above. The best way to find the right secured credit card is to compare one from the other.

Check all the fees. Most secured credit cards have an annual fee and some may charge a monthly maintenance fee. Other fees that are common to all credit cards are late fees, over-the-limit fees, etc. The only way for you to get to know the exact fees is to read the fine print. All charges should be disclosed from the Terms and Conditions page so you should not fail to check it out.

Consider the security deposit. How much is the minimum required deposit? This can range anywhere from $200 to $500, depending on the issuer. Some secured credit card issuers demand a very minimal security deposit and yet offer a high credit limit. For example, you may be required to submit only $95 of security deposit and enjoy $300 credit limit. However, the annual fee and other charges can be steep.

You should also find out the secured credit card issuer’s conditions when it comes to your security deposit. How will it be used? Some issuers will only tap into this fund if the cardholder has become delinquent for four to six consecutive months. Others may instantly draw from your deposit if you fail to pay off your balance on your due date.

Will you be able to get a full refund of your deposit? There are secured credit card issuers that will place your deposit in an interest-earning account so by the time you are ready to withdraw, your money has increased.

Check the prerequisites. Some secured credit card issuers have restrictions with regards to the applicant’s age and income bracket. Some issuers do require for the cardholder to have an active checking or savings account in order to qualify. Even if you can submit the required security deposit, your application may still be declined if you do not meet all the criteria.

Ensure credit reporting. Most important of all, your payments and account activities should be regularly reported to the major credit bureaus as this is the only way you can use your secured credit card to build credit or repair bad credit.

About the Author
Tara Tiemann is the credit specialist for  Which is a resource site for people who want to live debt free! If you are on a budget, using a secured credit cards and prepaid debit cards can save you big money!

About Liz Roberts

Liz Roberts is the new credit specialist for Go-Prepaid. If you are on a budget, we can get you discounted cell phone service from Sprint, Verizon and T-Mobile! NO CREDIT CHECK ! Using a prepaid services can save you a TON of money! Follow our blog to find out how!

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