May 24th, 2007

When To Consider a Secured Credit Card

By David Weliver

If you have bad credit because of past late payments or charge-offs, a secured credit card is the best way to rebuild credit. Why? It will protect you from yourself.

Marketers of unsecured credit cards for consumers with poor credit give secured credit cards a bad rap. They try to make you think that unsecured credit cards are superior. In fact, if you have poor credit and can qualify for an unsecured credit card of any kind, the credit card company is going shake you upside down for every penny you have.

There are application fees, approval fees, annual fees, monthly fees, and not to mention 30% interest rates and the chance you could get in over your head again. Haven’t you paid creditors enough?

Secured credit cards, on the other hand, allow you to rebuild your credit score without the risk of racking up more debt.

That’s because secured credit cards have credit limits tied to how much cash you actually have in a bank account. They are similar to prepaid, rechargeable debit cards, but not exactly the same.

Secured credit cards can be used to reserve things like hotel rooms and rental cars when often times debit cards and prepaid cards cannot be. Additionally, using and repaying a secured credit card will rebuild your credit. Using debit cards and prepaid cards will not!

In this way, having and using a secured credit card is actually better for those with bad credit than using cash only. Yes, you will pay some interest and sometimes fees for using your secured credit card, but if you use it to make normal purchases each month, your credit score will be updated showing you paid on time. You can never go over limit or get in too debt because you can’t charge more than you have. It’s a win-win.

If you need to rebuild your credit or have been using cash only to the determent of your credit score (even somebody with good credit needs to use a little credit to keep their score healthy), get a secured credit card today:

Applied Bank Secured Visa Card — This secured credit card allows you to set your own credit limit up to $5,000 and has a low fixed 9.99% APR that won’t go up even if you’re late, plus lower fees than most secured cards. There are no credit or income requirements for this credit card, and this card reports to all major credit bureaus to help you build credit quickly. Apply now »

New Millennium Bank Platinum Visa — This card has no credit check, provides a secured credit limit of up to $10,000, and reports payments to all three credit bureaus to help you build credit quickly. This card provides a higher secured credit line than the Applied Bank secured card, but carries slightly higher interest rates and fees. Apply now »

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1. Does Your Debit Card Have a Daily Spending Limit?
2. 5 Questions to Ask Yourself Before Transferring a Credit Card Balance
3. Avoid Credit Card Foreign Currency Transaction Fees
4. Current by Discover Prepaid Card Review
5. For the Lowest Credit Card Interest Rates, Look to Small Banks

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2 Responses to “When To Consider a Secured Credit Card”

1. » Carnival of Credit Card #14 | Credit Card Lowdown says:

   May 29, 2007 at 4:35 am

   [...] David presents When To Consider a Secured Credit Card posted at Money Under 30. If you have bad credit because of past late payments or charge-offs, a secured credit card is the best way to rebuild credit. Why? It will protect you from yourself. [...]
2. Unsecured Loans Now says:

   December 8, 2007 at 1:18 pm

   There are benefits to credit cards despite its high interests; it depends on whatever one’s financial situation dictates. Online financial services of this kind seem ubiquitous nowadays, so credit cards are much more accessible. Thanks for the info!