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How To Get The Best Secured Credit Card for Bad Credit |
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Written by Liz Roberts
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Secured credit cards are wonderful option for people who can't qualify for a standard credit card because of the status of their credit. The best cards especially those that come with rewards usually require good to excellent credit. If your credit score fails the criteria, owning a secured card can be your tool in improving your credit.
What are secured credit cards? These credit cards for bad credit require its holder to submit a deposit money in his account. The security deposit may amount from $200 to $1,000 depending on the issuer. The amount of deposit often determines the credit limit that will be given to the secured credit card holder.
Why is there a need to submit a security deposit? Apparently, this gives the company an assurance that in case the holder fails to keep up with his debts, they can use the security deposit as payment. This makes up for the risk having bad credit.
In turn, by submitting payments on time and keeping within the allotted credit limit, a secured credit card holder gets the chance to rebuild his credit history. However, not all secured credit cards report to the credit bureaus so you need to be very particular about this feature when choosing a secured credit card. Make sure that it will report your payments to the credit bureaus and that you have the option to upgrade your card into an unsecured one after a year of timely payments.
Features to Look for in a Secured Credit Card
Watch out for secured credit cards that promote very low interest rates for a short time but charge you with excessive fees to keep your card active. Remember that although you'll want a card with a low interest, you still need to weight the other fees associated with that card.
The best cards come with no miscellaneous fees (such as the annual fee, application fee, activation fee, etc) that can burden you. If there is an annual fee, make sure that it is on a reasonable level. Don't forget to compare the rates and all other costs of each secured credit card you consider.
Of course, a secured credit card does have its restrictions compared to a standard credit card. For instance, your credit limit will be low and you can be charged with penalty fees for exceeding your credit or submitting late payments. Therefore, you need to be very aware of your obligations as a holder.
You still have the option to carry over your balance from month to month and pay only the minimum but it is wiser to pay off your monthly balance completely so you can avoid the interest rate altogether. Keep in mind that your goal for getting a secured credit card should be to improve your credit score and this can only be achieved by staying away from unpaid card debts. Copyright © 2009 Liz Roberts
New Horizon Business Services, Inc NHBS, Inc has been providing consumers and business owners with financing since 1989. Join our mailing list for Free Tips on Rebuilding and Repairing Credit. Click here bad credit personal loans for cards that suit your needs. |
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