Secured Credit Cards
Secured Credit Cards
You can begin to reestablish credit with positive payment information reported to credit reporting agencies. Should you not be accepted for an unsecured credit card, you can apply for a secured credit card.
What is a Secured Credit Card?
At the checkout secured Visa and MasterCard credit cards look and work just like unsecured credit cards. Banks issue secured credit cards to borrowers with low credit scores and negative payment histories. Secured credit cards are secured by collateral typically in the form of a CD (certificate of deposit) or a savings account that requires a minimum balance.
Secured credit cards are not necessarily for individuals who need to borrow money, instead are method to rebuild credit using your own funds as collateral. Make sure the issuing bank reports positive payment history to credit reporting agencies as some lenders only report negative payment information. Secured credit cards that offer reasonable interest rates with low fees are an effective method to reestablish credit.
Make sure review credit cards offers completely to obtain the best terms of credit. The best terms of credit typically are low or no annual and application fees, high credit limits with low interest rates. Additional criteria to review and evaluate secured credit cards can be found below.
Evaluating Secured Credit Cards
Card Fees, Annual Fees, Application Fees and Restrictions
Collateral Amount
Form of Collateral, CD or Savings, Interest on Collateral
Seizure of Collateral
Collateral Return Upon Account Closing
Credit Limit
Card Interest Rates
Use Caution When Applying for Credit Cards
When selecting secured or unsecured credit card offers from banks make sure to have a clear understanding of the interest rates, fees and restrictions. Use caution when deciding which credit card to apply to. Credit Card offers are full of fine print with a lot of restrictions and requirements. Take your time to fully review the application and the offering to determine what offer is best for you.
