Secured Credit Cards

It is almost impossible to function in today’s society without at least one credit card. Try booking a rental car or a hotel room without a credit card and you will see what I mean.

There is an option available for those who are unable to get a regular credit card because they have poor credit, bad credit or no credit history.

Secured Credit Cards for No Credit

Secured credit cards are designed for people who because of their credit history are not capable of being accepted by the mainline banks and credit card companies for their credit cards. Some lenders have come to understand that there is a huge untapped market for credit cards that is being underserviced by the mainstream financial institutions.

What is a Secured Credit Card

Secured credit cards works just like a normal credit card however one of the requirements for issuing a secured credit card is that the applicant opens a deposit account with the card issuer. The credit limit of the secured credit card will be equal to the amount of money lodged into the deposit account that will secure the credit card limit.

Basically the secured credit card issuer will have you write them an e check for $200 to $500 and once the e check has cleared they will issue the secured credit card with a credit limit equal to the e check.

Who Accepts Secured Credit Cards

A secured credit card will be accepted anywhere a normal credit card will be accepted. However it is really important to remember what your credit limit is because if you exceed you limit you will incur charges and fees that will eat into your limit and available balance.

In most cases an over limit charge of $35 to $50 will apply so it really makes sense to ensure that you do not go over your limit.

Also it should be remembered that if you make late payments or miss a payment a similar charge or $35 to $50 will apply. Consider a secured credit card with a $200 balance and 2 over limit fees and two late payment charges. The entire balance of the deposit is wiped out and the card is virtually useless.

Build a Credit History with Secured Credit Cards

Before you apply for a secured credit card make sure that the insurer of the card will be reporting your account to all three major credit reporting agencies. If this card issuer is not reporting keep looking until you find a secured credit card that will report your account to the credit bureaus.

By making sure that you do not exceed your credit limit and by never missing a payment or being late with a payment you will find that within 6 months your credit score will have increased to a level where it may be possible for you to get an unsecured credit card.

Things to Check for with Secured Credit Cards

• Will your security deposit be returned in full if you decided to cancel the account.
• What is their fee and charge policy, what will you be charged for going over limit or making a late payment.
• Do they report to all three major credit reporting bureaus.

A secured credit card is a great vehicle for a person whit no credit or even bad credit to get a credit card and in most cases to help build or rebuild a credit score.