Secured Credit Cards for Improving Bad Credit Score

Secured credit cards are the right credit cards for you if you have no credit or need to repair a bad credit history. These cards have some other names related to their purposes, such as bad credit card, bad credit credit cards or even no credit credit cards.

If you have bad or no credit you may not qualify for a regular credit card. You will need a secured credit card to purchase goods and services as well as to build or to rebuild your credit. During a certain period, usually about a year, if you can make all payments on time you can qualify for an unsecured credit card.

How Secured Credit Cards Work

A credit card for people with poor credit is linked to a collateral savings deposit, which allows a credit card company to deduct payment from that account if the card holder fails to pay. To get a secured credit card, a consumer must deposit a few hundred to several thousand dollars, which is usually he or she can get interest on the deposit.

Most secured credit cards companies will give you a credit line equal to the amount you deposited. However, some will only give you a certain percentage of your deposit, but then others will offer you double what you deposited. If you want to feel a bit freer to make purchases using the card you can add more money to that deposit.

Costs and Benefits of Bad Credit Cards

Bad credit credit card issuers sometimes charge an application fee. But they all charge an annual fee, which vary dramatically, and in a certain case it can reduce your credit limit even before you use the card. In addition, the interest charges of the cards are usually higher than regular, unsecured credit cards.

Some companies will increase your credit line without requiring you to add another deposit, but only if you’ve paid your monthly balance, correct and on time for several months. You can see this as a bonus or incentive for keeping within the rules that you signed up for.

However, be cautious with this benefit because it sometimes has its own cost. Some companies will even charge you a fee when they increase your account. You may miss this agreement if you don’t read the fine print.

Secured Credit Cards for Improving Credit

If you want to build or re-build your credit history no doubt you’ll need a bad credit card. To build a credit record, apply for a charge card at a local lending institution. Alternatively, if you’re a credit union member, consider applying for a debit card with your organization because they usually charge lower interest rates and waive annual fees.

Whichever the lending institution you choose make sure the company reports transactions to all three major credit bureaus. If they do and if you pay off your bills in full every month you will build a good credit history. This way can also help you get an unsecured credit card once your credit rating qualifies for such a regular credit card.

As a secured credit card is more expensive than an unsecured card, make sure that you understand the total fees and whether they will be refunded if you’re denied a card. And once you are sure that secured credit cards are for you compare many credit card offers and apply online for a secured Visa or MasterCard credit card today.

Secured Credit Cards for Improving Bad Credit Score was last modified: April 12th, 2014 by Paul Sarwana
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