Credit unions and banks tend to offer the best secured credit card rates. While many of the major credit card issuers that are not affiliated with a bank also have good secured credit card rates, their APR is typically higher than that of credit unions and banks. Finding decent secured credit cards is a matter of carefully shopping around and considering the different options available.
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As you are shopping around for secured credit card rates, consider the actual rates being offered on such cards, as well as the fees. Typically, these cards have very high fees. However, some are more reasonable than others are and rates should not be excessively high when compared to other insurers. You should also check to make sure the company offers credit limits as high as you want.
Understanding Secured Credit Cards
Essentially a secured credit card is a credit card that works almost exactly like any other credit card. There is a credit limit, APR, grace periods, fees and more. The use of such cards including payments and usage ratios are reported to the credit-reporting bureaus.
The major difference with such credit cards is the fact that the amount of the credit limit is secured by a cash deposit in an account that the cardholder cannot access.
A secured credit card is an excellent way to rebuild or establish credit. It is a tool that will allow you to have a higher credit limit on your credit card than if you were to opt for a poor credit rating credit card. Between this aspect and the fact that good secured credit cards report monthly to the credit bureau, it is a good choice for your financial future.
Increasing Numbers of People Need Secured Credit Card Rates
Since the economic decline, increasing numbers of people have been struggling with their financial obligations. More and more of them are declaring bankruptcy, going into foreclosure and simply having to rely heavily on credit cards while they are out of work. What this means is that more and more people need to rebuild their credit and end up turning to secured credit cards.
If you have poor credit with a score under 600, a major credit issue like bankruptcy or foreclosure or if you have no credit, you will find that you are ineligible for good credit card rates. What this means is that the majority of credit card issuers on the market will not approve you to carry their card and you will have no choice but to look at secured credit cards or bad credit credit cards.
It is important to know your own credit before you start shopping around for your next credit card. You can check your credit history free once a year by contacting one of the major credit bureaus: TransUnion, Experian, or Equifax.
You may discover that there are errors on your credit report that are dragging down your credit score. If this is the case, there are steps to follow to clean up your report. If you find that you are indeed a poor credit risk, taking the steps to rebuild your credit is wise. This includes making timely payments, avoiding having a high debt to income ratio, and opting for wise credit repair tools such as a secured credit card.
Things to Know When Getting a Secured Credit Card
If you want to get a secured credit card, it is important to know when, how and if it converts to a traditional credit card. This type of card is simply a tool and not one that you want to keep around for the long term. You should also investigate if you need to deposit an exact amount as your limit or if a percentage will do.
You should also know which bureaus the credit card issuer reports to and how often.
If the company is not doing what it is supposed to be doing to improve your credit rating, it is not worth your time and effort.
Check out companies before making your decision by finding out how organizations like the Better Business Bureau rates them. Start shopping around and carefully compare the different companies that offer secured credit card rates, in the same way you would compare any credit card.
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