Finding the right secured credit card can be like finding a needle in a haystack. Consumers are inundated with credit card offers sent through the mail, but it can still be difficult for them to make a determination. Compared to personal credit cards, secured credit cards usually offer fewer options, rewards and benefits, but it still pays to compare them closely before applying.
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On the Internet, many websites and resources that can be used to look up secured credit card options. Unfortunately, many of these websites offer biased reviews or do not have the most complete information. Since students and young adults usually have low or poor credit scores due to a lack of life experience, College Board offers some useful tips that can be utilized by anyone looking to compare secured credit card options.
How do secured credit cards work?
Unlike traditional personal credit cards, secured credit cardholders must make a monetary investment before they are able to use their lines of credit. The line of credit approved by secured credit card companies is equal to the amount of money that is deposited by the cardholder. If the account holder ever wants to increase his or her line of credit, additional monies will need to be deposited on the secured credit card.
Secured credit cards are usually marketed to those that are working to build their credit histories for the first time as well as those that have recently started to rebuild their files. Most consumers use secured cards as a way to become more creditworthy before applying for unsecured credit cards.
Do secured credit cards have the same options as personal credit cards?
Secured credit cards offer some options that are similar to unsecured credit cards, but there are also some major differences. With a secured credit card, you will still be responsible for making monthly payments. Some companies will give you the option of personalizing your credit card or even adding on an authorized user. However, secured cards generally do not offer the same rewards and perks that you would receive with a personal credit card.
Although bonus points might not be offered by secured credit card companies, you still have the option of selecting a credit card issuer that wants to help you put your credit back on the right track. The most important option that your secured credit card company should offer is reporting to the three credit bureaus. This feature will help you to raise your score quickly and improve your chances of being approved for loans and credit cards in the future.
The FTC website features comprehensive information and resources for consumers looking to better their credit reports.
How can you get a secured credit card?
While receiving a secured credit card is much easier than being approved for an unsecured card, there are still some requirements that you must meet. Income, employment, and age verification is necessary before most secured credit card companies will approve an application. Many consumers end up responding to pre-approval letters that they receive in the mail for secured credit cards. The Federal Reserve lists the type of credit card offers you might have sent to your home. A paper application can be sent through the mail or a toll free phone number can be called in order to get the required information to your secured credit card issuer.
Filling out an online application for a secured credit card is also possible. As long as you meet the minimum requirements and send in your deposit, you can expect to be approved for a new secured line of credit.
What happens if you don’t make payments on your secured credit card?
Even though most people that get secured credit cards work hard to improve their credit ratings, sometimes a change in finances can cause them to fall behind on payments. The reason for secured credit card companies requiring a deposit is that they need to have assurance that they will be paid in the event that this high-risk credit group defaults.
Within your secured credit card agreement, you will find information on what happens do your deposit if you fail to make payments on time continuously. In most cases, the secured credit card would simply be closed, the deposit would be kept, and the credit card company would begin collection activities.
- What websites will allow me to compare secured credit cards?
- Dupage Credit Union Visa Credit Builder Secured Credit Card
- Are there any secured credit cards for bad credit?
- Justice Federal Credit Union Secured Visa Classic Credit Card
- Anheuser Busch Employees’ Credit Union Secured Visa
- What are some unsecured credit card companies?
- Amegy Bank of Texas Visa Secured Credit Card