If you have poor credit, or less than perfect credit, you may be excited by offers in the mail for credit cards that appear to be designed specifically for you. They promise no credit checks, excellent interest rates, no annual fees, and if you have bad credit, it's ok! But are these credit cards all that they are cracked up to be? The truth is, many of them are scams because their introductory rates go away after a period of time and you are left battling insane interest rates, finance charges, late charges and other incredibly worthless fees that only drag your credit score down further. There are some credit cards out there that are advantageous if you are looking to build your credit back up again, and here is one such example: Secured credit cards.
A secured credit card is just like a regular credit card, except that rather than get the credit card based on your credit score or report or some other merit, you are approved on the basis that you must secure the card against something of yours. Some secured credit cards require collateral like a car, just like secured loans require collateral like a property. Other secured credit cards require that you deposit money into the account first to prove your credit worthiness, and then you gain actual credit later once you have proven yourself.
Sometimes you have to deposit up to the amount of the credit limit or even twice the limit must be deposited into a secure account in order to make sure that you have the financial stability to handle such a credit card. Secured credit cards essentially act as a way for you to prove your creditworthiness again, which is especially useful if you have bad credit from past mistakes.
These secured credit cards more often than not will feature incentives or programs which will allow a deposit of less than $500, but it really depends on the company offering the card and the credit status of the card holder. Just like with a regular card, the user must make regular monthly payments and must pay off any accrued interest, but if they default, they have the option of applying the deposit to the balance if there is still a deposit left when this happens. This enables people with little to no credit to own a card and start building good credit.
If you have poor credit and are looking for a way to start building your score back up, checking out secured credit card options may be wise. Just weigh your options and do some research on each before you buy into any specific offer because some are less than legitimate.
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Originally posted 2009-02-16 05:14:11. Republished by Blog Post Promoter
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1 comment so far ↓
Wow, I didn’t even know there was such a thing as a secured credit card. I’m sure there isn’t here in New Zealand and I don’t remember them being in the UK, though maybe times have changed.
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