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NewCreditWarehouse.com Featured Article
Secured
Credit Cards 101
By Jim Jameson
We all know having a good credit score is a necessary
thing in life. Having a good credit score means you have
an easier time with buying a new home or buying a new
car and many other major purchases you may make. But
attaining that good credit score and keeping it isn't
always very easy, and if you've got a low credit score
from previous mistakes you might have made, getting
another credit card to use to rebuild your score can be
quite difficult.
One solution is what is known as a secured credit card.
This is a type of card that is basically meant for
people with low credit scores who are therefore
considered high risk. When opening a secured credit card
account, you will put down a deposit, which the credit
company will hold as collateral in the event you default
on your payments. In other words, the card issuer will
use that deposit to try to recover their money should
you not make the payments necessary to meet your
obligations.
Secured credit cards have credit limits like "regular"
cards, and they vary from program to program. It is not
unheard of for your limit to be the same as the deposit
you've put down, meaning if you deposit 200 dollars to
open the account, then your card's limit will be 200
dollars. Other programs may allow you to have a limit
that is more or less than the deposit amount, depending,
with people with higher credit scores getting the higher
limits as opposed to the lower limits people with worse
credit scores may get.
If you're considering getting a secured card to help
repair your credit, make sure you read all of the fine
print before opening the account. Though you will be
required to put down a deposit that is ostensibly there
to act as collateral if you default, card issuers often
only go ahead and use that deposit when the account is
closed completely. This means that if you are late on a
payment, the card issuer may not take the payment from
your deposit, and instead charge you late fees and
interest for a while before they use your deposit. In
this way, you can manage to end up with even more debt
than you started with if you are not careful.
As long as you remain vigilant about making your
payments and carefully inspect the terms before agreeing
to open up an account, a secured credit card may be a
good option for you if you're looking repair past credit
mistakes or have no credit to begin with. Just bear in
mind that they are easier to acquire than "regular"
credit cards because they can often land you in more hot
water later due to their fees and restrictions.
Author Bio: You can get the best
secured credit card online or
visit my blog
to read more personal finance tips. |
