Secure Credit Cards

By: Anne Durrell

Secure credit cards can be ideal for anyone who has poor credit or even no credit at all. The idea behind secure credit cards is that you need to deposit an amount of your own money into the account. The amount you deposit becomes your available limit.

The bank keeps your deposit in an account as a "stand-by", which can be used in the event that you can't make your repayments. You will receive some interest payments on your deposit amount, the same way you would with any other savings account.

One of the benefits to using secure credit cards for many people is that the banks don't care what your credit score is. They don't even care if you have no credit. The reason they're willing to extend credit to you is that they have your own money in the account as security.

When you do use secure credit cards to make purchases, be sure you begin making your repayments right away. Pay down your balance if you can. If you can't, then pay any amount you can afford as often as possible. Keep in mind that you're not supposed to withdraw the security money you have deposited with the bank.

If you do this regularly, you'll find that the bank will report your activity to the credit reporting agencies. Doing this means your secure credit cards will help to establish credit for those who are new to credit and can help raise your score if yours is particularly low. When you've established a bit of a payment history with that bank, then some banks will happily begin to increase your credit limit a little.

Be aware that different banks have a range of different fees and charges associated with secure credit cards. The interest rate is going to be a little higher than a traditional credit card and you may find that most banks will charge an application fee, a processing fee, card insurance costs and in some cases, an annual fee as well.

As with any other financial product, it always pays to shop around and compare your options before you submit your application. Always ask plenty of questions and if you see something in the fine print that you don't understand, ask to have it explained. After all, it's your money. The bank might see these terms every day, but you don't and you do deserve to understand how your money is being treated.

Secure credit cards can be an excellent way to help build or rebuild your credit, but always keep in mind that they are intended to be a temporary solution to help you during your time of need. Once you have your credit score high enough to qualify for regular credit products, you should consider shopping around once again for other credit options with reduced fees and rates.

Secure Credit Cards

secured credit card information

Secure Credit Cards

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