When To Consider a Secured Credit Card
May 24th, 2007 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!
Here are some of the better ones:
| The Orchard Bank Secured MasterCard reports to all three credit bureaus monthly and provides instant online application and account funding. Orchard bank is affiliated with HSBC, a widely respected international bank. |
 |
The UltraVX Visa is a unique secured card that offers high credit limits, instant approval, and a rewards system redeemable for major airlines and hotels without restrictions. |
|
The New Millennium Bank Visa guarantees a credit limit up to $10,000, reports to all three bureaus, and allows you to get cash at over 740,000 ATMs. |
Related Posts
- Q&A: Will My Credit Score Go Down if a Credit Card Company Closes My Account for Non-use?
- How Credit Card Usage Impacts Your Credit Score
- Q&A: What kind of credit score do I need to get approved for a balance transfer credit card?
- How to Use a Credit Card Responsibly
- Q&A: How Can I Close Credit Card Accounts Without Hurting My Credit Score?
On Dec 8, 2007, Unsecured Loans Now said:
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!