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Secured Credit CardsIf you do have problem credit, there is a way to get a legitimate credit card and start rebuilding your credit. It’s known as a “secured credit card.” Like a loan on a house or car, these cards are considered “secured” because you provide some collateral. In this case, it’s in the form of a security deposit. Basically, you send the credit card company a check, and the company sends you a credit card with a limit based on the amount you deposit. The credit limit usually is from one to three times the amount of the security deposit—so you might provide a $99 security deposit to secure a card with a $200 limit.
Sometimes, after you’ve built up a good relationship with the credit card provider, the security deposit will be returned to you, along with any interest it earned. Don’t rush into a secured credit card. The cards usually require application and processing fees and come with a higher interest rates than unsecured cards. But many issuers, including the biggest names in the industry, offer secured cards. Comparison shopping can save you a bundle. These cards clearly are not the best deal available, but they are a good first step toward rebuilding your credit. Your goal should be to step up eventually to an unsecured credit card with better terms and a higher credit limit. Next: Conclusion |
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