Secured credit cards are often used to build new positive items on individuals credit report. These credit cards are designed for those folks, with a less than perfect credit history.
They’ll often offer guaranteed approval, and it will report monthly to all three major credit bureaus. Your card will be issued as Visa or MasterCard, it’ll be accepted everywhere you see the logo displayed.
What Is A Secured Credit Card?
Secured credit cards are just like unsecured credit card. You will be responsible for making monthly payments and are going to be charged an APR% or interest rate. The big difference is with secured credit cards you must first make an initial deposit with the bank. This deposit is fully refundable.
As long as you keep your account in good standing and don’t stop making your monthly payments. The deposit is typically between $200 – $5,000. It is FDIC insured and if you’re looking for a credit card to rebuild credit there are two important points:
1. Fixing Bad Credit Is Two Steps
If you are working to fix your credit. It is important to build new positive items on your credit report. But, it is equally important to remove bad credit marks on your credit report. You must focus on both these aspects.
The negative items is what is damaging your credit score. Without a clean credit report, it won’t matter how many positive items you have. You will still be seen as high risk by potential lenders.
2. Check The Fine Print
Take some time to shop around and read the fine print on a few bank secured credit cards. Most of these credit cards will be a Visa or MasterCard and will report to all three major credit bureaus. However, as in every industry there are predatory companies. These companies are looking to prey on uninformed consumers.
We have heard reports from some folks, applying for a card and having to pay steep annual fees, high interest rates, and the credit card did not report to the the three credit bureaus. On a side, aim at keeping your monthly credit card balance at about 30% of your credit limit. This shows that you use your credit and are using it responsibly.
Just by having available or unused credit, your credit score should improve. This is a significant factor when your credit score is calculated. The experts call it your utilization ratio.
Best Secured Credit Card
The best secured credit is going to charge you a low annual fee. You can expect to pay roughly 10% APR. Your account is secured and the bank isn’t really taking a risks by extending you a secured credit card. Thus, you should expect a low and reasonable APR%. Your account information must be reported monthly to all three major credit bureaus.
This way, just by paying your monthly bill on time. You will begin to create a record of a positive payment history on your credit report. The experts claim your payment history is weighted up to 40% when your credit score is calculated. In other words, it is a very important piece of information!
It would be wise to see what prior and current credit card holders say about their experience with that particular credit card. Take these reviews with a grain of salt. Their are negative reviews about every product and service. We suggest looking at a few reviews. This can help give you a better idea of what most card holders have experienced with that particular secured credit card.
Check to make sure your account is FDIC insured. And that your credit card will be issued as a Visa or MasterCard. Secured credit cards work just like an unsecured credit cards. You will be the only person that knows your credit card is secured.
Last, it would be a good idea to see how long the bank or credit card issuer has been in business. There has been a dramatic change in the landscape of credit cards for bad credit. Many new credit cards have hit the market with little known about them. We would encourage you to instead stick with a credit card company that has been in business for a number of years, with a good reputation.
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