Secured Credit Cards
We have all heard of credit cards, so what is a secured credit card? If you are a credit card holder and you have a deposit account then this credit card will be secured by your deposit account. If you desire a credit then you will have to deposit a full amount or more than the full amount of the credit desired.
Just like a regular credit card, you will be expected to make regular payments and not default on the repayments. Incase you default then the bank who has given you the card has an option taking out the money that you have spent out of your deposit account. Do not worry as the bank will not take out the money for one or two missed transactions, however they will take out the money out of your deposit account if you have a severe delinquency. Most companies will report out regularly to major credit bureaus that may work to your advantage if you have a bad credit history or no credit history at all. This way you will end up building a positive credit history.
A secured credit card will be offered to you with a primary motive of improving your poor credit history and it will help you rebuild your credit. These secured credit cards are available with visa and master card logos.
A few of the advantages of using a secured credit card are -
- The credit boundary will be ascertained by the money that you deposit, so the credit limit can be as high as you want.
- Since you own the deposit account, if you keep your account updated it will act as your usual saving account for your future.
- If you have a good payment history then the bank will increase your credit limit ahead of your deposit and will even give the deposit back to you after a period.
Therefore, if you have a bad credit and want to repair it, applying for a secured credit card is the best option available for you. Check with your local bank on more details and interest rates and do not forget to ask them about the time it will take to repair your credit.
