Credit Cards for Secured Credit | An Expert Guide
If you've had trouble getting approved for an unsecured credit card, then a secured credit card might be a good option for you. These cards require a cash collateral deposit which serves as a credit line for the account. With secured cards credit issuers will report your payment history to the credit reporting agencies, allowing you to build or improve your credit history if you make on time payments to all of your creditors and keep your balances low relative to credit limits. Click on the images below to get specific advice about secured credit cards from our experts.
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What To Look For When Applying
If you are looking for a secured credit card, then you need to find a product that helps you rebuild your credit. First, look for a card that has a reasonable annual fee and competitive interest rates. Thankfully, there are several products available that have annual fees under $50 and interest rates under 25%. Other valuable features can include rental car insurance, emergency card replacement, as well as travel and emergency assistance services. Finally, it can help to get a secured card from a bank that also offers standard unsecured cards so that you can upgrade after a year of making on-time payments.
What To Avoid When Applying
First, you will want to make sure that you do not have any pending bankruptcy proceedings, or your application will not be approved. Once you have any bankruptcy agreements fully discharged, then you can apply for a secured card. You will want to be aware of the total costs of secured cards that have very high interest rates and fees -- for example, cards that charge a monthly fee rather than an annual fee, or do not offer an interest-free grace period. Secured cards without a grace period ensure that cardholders will always be incurring interest on their charges, with no opportunity to avoid interest by paying their statement balance in full.
Should You Apply For More Than One?
If you have a limited or troubled credit history, then it's ideal to focus on having a single secured card to begin building or rebuilding credit, and those who have had credit problems should not try to manage multiple accounts. In addition, having multiple secured cards will require you to submit multiple security deposits, which can be expensive. The best strategy is to acquire a single secured card and carefully ensure that each month's payment is received on time. In addition, you will be better off avoiding interest by paying each statement balance in full.
When Is The Best Time To Apply?
Secured credit cards offer you the opportunity to open a credit card account regardless of your credit history. With most secured credit cards, the only qualifications are that you prove your identity, and that you have had any bankruptcies fully discharged. So once any bankruptcy proceedings are closed, you can begin to shop for the secured credit card offer that best meets your needs. It will ultimately benefit you to find the best terms from a reputable bank before applying for a secured card. Otherwise, the sooner you apply for a secured credit card, the sooner you can enjoy the security and conveniences of a credit card while rebuilding your credit through keeping your debt level low relative to credit limits and making on time payments to your creditors.
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