Credit Cards Articles

Using Secured Credit Cards

Secured credit cards can be used to build up an individual's credit worthiness when a history of bad credit or no credit exists. Repairing credit can be a long process, much longer than the time it took to get your credit in that shape.

What Are Secured Credit Cards?

Secured credit cards are those that have a sum of money placed upon them as a security for the credit card. In the event that the holder of the account defaults on it, the money can be used to cover the payment. Not all lenders will use the money on the initial default, but most will in an effort to provide the card holder with a reason to act responsibly with the account.

Most secured credit cards have a minimum amount that must be placed on the card as well as a maximum amount that can be placed on the card. With some credit card companies or banks, this deposit can earn interest while it is sitting there. Since this isn't true with all lenders, it is important to ask before obtaining the secured credit card.

What Is the Limit with Secured Credit Cards?

Although the amount of the deposit does have something to do with the limit imposed on a secured credit card, it most cases, the limit is either slightly higher or slightly lower. If the credit card holder has fair or good credit, then the limit is likely to be somewhat higher than the deposit. Likewise, if the credit card holder has bad credit, then the limit is likely to be somewhat lower than the deposit.

The Need for Credit Cards

The sad truth is that cash no longer holds the same status that it once did. Many businesses now require the customer to have a credit card in order to make a purchase or rental. Airlines, hotels, and car rental agencies are only a few of the establishments that insist upon a credit card to complete the transaction.

What Are the Costs Associated with Secured Credit Cards?

Similar to unsecured credit cards, secured credit cards typically carry an annual fee to hold them. In some cases, an application fee as well as a processing fee will be assessed to the customer in order to obtain a secured credit card.

How Do You Get Secured Credit Cards?

Secured credit cards can easily be obtained online with a brief application that is safe to complete. Taking only a few minutes to fill out, the online application leads to almost immediate decisions regarding your ability to obtain one.