While ideally we are all looking for credit cards that offer low interest rates, no annual fees and no money down, unfortunately that is not always an option. If your credit has taken a down turn during this economic down turn, then secured credit cards are an option that may be worth examining. It's important to know the cons and also the benefits of a secured credit card. Secured credit cards are also a consideration for those who have not yet established a credit.
How is a Secured Card Different from Other Cards?
The name tells the tale. The security is really for the credit extender but extends to you the cardholder as well. The reality is that these lenders offer cards to users that are considered a "high risk."
To obtain, the applicant must make an upfront payment that is sometimes equal too, or sometimes less than the credit limit.
These may be of interest to those who have no or less than perfect credit including:
-These with damaged credit
-These with no credit
-These who have declared bankruptcy
What fees can you expect?
-You can expect a higher than usual interest rate, at least 20% or more.
-You can also expect an annual fee of at least $ 50.00 or more.
In general, everything about this card is something that most of us want to avoid. However, if you are in one of the uncomfortable situations listed above, it can be good to know that there credit options available that help you to rebuild your credit.
Strategies for building credit with a secured card:
You'll have to pay to play but if you play the game right then you can win by building positive credit.
1. You'll have to use it to build credit.
2. Make all payments on time by mailing at least 7 days before the due date of your payment.
3. Avoid going over the limit.
It's not for everyone but if you need one, a secured credit card can help you rebuild credit and also help you to gain money management skills that will benefit you in general. If you can not obtain a traditional loan or credit card, then check out secured options and as always read and follow all of the fine print to ensure that a secured credit card helps you rather than hurts you.