The Differences among Sensible Secured Credit Cards

If you have bad credit, secured debit cards are ideal for individuals having issues with their credit histories. Banks and credit card companies just love people with bad credit because they are forced to pay high APR rates on mortgages, car loans, insurance policies and credit cards. This is very frustrating because many people can afford to pay their monthly credit card bills but banks do not want to approve them with cards. Sometimes there is almost a need to have a credit card for certain purchases such as buying something online. There is hope for those in this situation but it’s going to cost you.

A secured credit card is pretty much the same as an unsecured credit card as far as transactions are concerned. You will receive statements and are required to make payments on the transactions. If you don’t make the payments, the money will be withdrawn from the initial deposit giving you a pretty good incentive to make the payments. These cards are typically more expensive to use than the average card on account of the issuer is taking quite a risk giving a card to someone with poor or no credit score.

A secured card requires that you deposit funds into an account so you can use the card just as a normal credit card. The only people that know it is a secured card is you and the issuer. It is a pretty simple concept; if you put $1,000 in the account, you can use the card for purchases up to $1,000. These cards also help you build or repair your credit score if they are used properly and the issuer reports to the credit bureaus. There are a few different types of secured credit cards.

The Good

There are some good offers out there but hey are few and far between. A good secured card is one that charges low fees with no application fee. This category of cards will also report to the credit bureaus to help you improve your credit.

The Bad

These types of cards have average interest rates, small initial fees, a low interest rate and a minimal monthly service charge.

The Ugly

These cards basically extort you because of your current financial situation. They charge large initial application fees, high monthly service charges and hit you with an outrageous interest rate just to add insult to injury. The fees are so high that they can easily consume your initial deposit before you even to a chance to use the card. Read the fine print and avoid these at all costs.

Secured credit cards should be avoided if possible. But they are available for those in need and there are many people that benefit from these types of cards. Bad things happen to good people and the banks will try everything they can to put you in the spot where this type of card is the only possible solution. Be careful out there.