Secured Credit Card Guide for Consumers

Secured credit cards are wonderful tools for people with bad credit and no credit history. These special credit cards can help a person build-up and rebuild credit. In this article, let’s discuss facts about secured cards and everything you need to know about them.

What is a Secured Credit Card?

A person who wants to open a secured credit card account must first make a deposit in his/her savings account. This will serve as a guarantee in case the cardholder fails to pay charges on time. The security deposit required varies, depending on the issuer.

The cash deposit will also determine the value of the cardholder’s credit limit. Some issuers will match the exact value of the deposit while other issuers may offer a slightly lower or higher limit than the amount of deposit made.

Take note that secured cards are different from prepaid debit cards. Thus, if you fail to pay off your monthly balance in full, you will incur the additional interest rate charge.

Why Apply for Secured Credit Cards?

A secured card is recommended for people who yet to establish credit history. Application and approval is easy as long as you can submit the required security deposit. On the other hand, if your credit rating has been damaged, you will need a secured credit card to rebuild it.

What about those who have just filed for bankruptcy? If you have a record of bankruptcy, you may have to wait until it has been discharged before you can apply for a secured credit card. Nevertheless, as soon as you are discharged, a secured credit card is the perfect tool to re-establish your damaged credit history.

Aside from quick approval, one great advantage of using a secured credit card is that it can help keep your spending in check. Because exceeding your credit limit is not option, the cardholder can become more conscious about his/her expenses.

Of course, secured credit cards can be used for payment or purchase anywhere regular credit cards are accepted. No one even has to know that you are using a secured account. That fact is only be between you and your credit card company.

Shopping for the Right Secured Credit Cards

The ideal secured credit card should have minimal fees. Most secured cards do carry annual fees so pick out one with an acceptable annual fee charge. Avoid credit cards that require miscellaneous or hidden charges.

Secured cards are also expected to have slightly higher interest than unsecured cards. By doing comparisons, you should be able to find one with a reasonable APR.

Spend time reading the fine print. You should clearly understand the Terms and Conditions of your chosen issuer before signing up. In addition, make sure that your payments will be reported to the major credit bureaus as it is the only way you can build/rebuild your credit history.

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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