Q&A: What is a good secured credit card?
It’s time for another question/answer. I know a lot of you like these so here we go. This one comes from
I am trying to get my credit in good standing and I dont have any credit cards right now. I dont want to go applying for everything because that will look bad on my report. I was told that a secured card will help me build up my creditIs that true?Are there easier ways to go about this task?I can not get a card from my bank because I dont not have a bank right now
Answer: Are you coming from a damaged or new credit perspective?Credit cards that most people carry around are unsecured loans. They have nothing but your good word and credit history to prove you will pay the loan.Secured credit cards have cash collateral to back up in the event you default on the loan. It makes the bank more willing to issue credit to a person with a damaged or new credit history. Their stakes are lower.With secured cards, you of course pay them an amount to hold for a given credit line. They wont touch your deposit unless you default (dont ever pay) on the credit card. Many banks will dump this into a Savings account.As you pay the balance off, it is reported to the credit bureaus like any normal credit account and over time with good management your score will increase. In the future you may be eligible for a normal, unsecured credit card and I believe you get your deposit back.As with normal credit cards, secured cards have many options to chose from. I went to bankrate.com and pulled a list of cards out there as well as some of the bigger banks. See what the fees and deposit requirements when choosing a card that’s best for you.If you are building credit, don’t go beyond your means. Pay the thing off every month if you can or go way beyond the minimum payment.Good luck on building an excellent credit history!
Tagged:Credit
Category: Secured Credit Card
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