Rebuild Your Credit Profile by Applying for A Secured Credit Card Today

The recent financial crisis caused many consumers tremendous financial problems. It made individuals struggle to make both ends meet. It pushed many people to sell out all their properties or assets just so they can avoid paying huge interest charges imposed on their credit accounts. And at some point, it made borrowers finally decide to file for bankruptcy, so that they can partially if not completely discharge their outstanding financial obligations. Yes, we can say with great certainty, that the most recent economic downturn inflicted severe damage to the credit profiles of consumers.

However, now that the economy is gradually improving, more and more consumers are looking for possible ways by which they can restore their credit reputation. They constantly search for programs or accounts that they can manage to gradually rebuild their damaged credit profiles. This way, they can eventually recover their financial health.

One of the most effective tools that a majority of consumers use these days to regain their creditworthiness is a secured credit card. What is a secured credit card? How does it work? And how can this bad credit credit card help consumers successfully re-establish their credit reputation? Allow us to answer these questions in the succeeding paragraphs of this article.

How a Secured Credit Card Works

A secured credit card is a card program that requires the provision of security which usually comes in the form of an initial deposit. Before a consumer will be allowed to use this card, he/she first submit a certain sum of money (in most cases, $250) to secure the account.

Aside from acting as a security for the use of the bad credit credit card, the initial deposit also serves another important purpose. It determines the credit limit that will be given to the account holder.

GUIDE: Three Tips for Secured Credit Card Applicants

For instance, if a consumer provides $300 to his card issuer, then the credit limit that will be imposed on his credit card will most likely be $300. The cardholder can continue charging his purchases, expenses and bills on his card so long as he does not exceed the agreed-upon limit. If he does, the card company will ask him to pay overdraft charges and penalties.

Some issuers of secured credit cards may provide a slightly higher or slightly lower credit limit than the amount deposited into the account. The security deposit gives the issuer assurance that funds are readily available in case the cardholder defaults payment.

Now, how can a secured credit card help consumers regain their credibility as borrowers? Well, it is a widely-accepted fact that secured card accounts provide consumers the opportunity to prove to lenders that they can once again be entrusted with plastic cards and loan programs. If they can manage their card accounts without skipping or making a delayed payment, for sure they can gradually push their credit scores up. And as long as they display good credit habits, eventually they will be able to restore their credit reputation and regain excellent financial prospects.

About the Author
Tara Tiemann is a credit analyst for which has been a resource site for people who want to live debt free. If you are on a budget using prepaid debit cards, prepaid credit cards and prepaid cell phone service 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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