When To Get A Secured Credit Card

2007-03-08 10:33:40

( Financial )



Let’s face it, one time or another you would need a credit card. You might need it when purchasing plane tickets or resort reservations. Responsible credit card owners also build up a good credit rating so when they are applying for a loan, lending institutions are comfortable lending them money.

Sadly, not all people are responsible credit card owners. Not all people have good credit histories. If you are one of these, the next best choice would be getting a secured credit card or a secured loan.

Getting a secured credit card will require you to put up cash usually in a savings account with the same institution as collateral. The amount in your savings account is the amount of your credit limit. You may add to your savings account to up your credit limit but sometimes if the company sees a good payment history, they may increase your credit limit without requiring additional funds.

In terms of fees, it would be good to do your research. Most companies that issue secured credit cards have annual fees. Some waive the application fees. Make sure you read the fine print.

The initial deposit for a secured credit card may vary from bank to bank. The same goes for your credit limit. Sometimes your limit is the amount you deposit. Sometimes it is a set percentage higher.

Bear in mind that the bank wants to keep you as a customer. So if you have a good payment history within a specified amount of time, usually a year for most banks, the company will inform you that you are qualified for an unsecured credit card.

When you apply for a secured credit card, you should pay off the full amount each month, every month. Secured credit cards carry higher interest rates than regular cards. And this will get you an excellent credit rating.


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