Secured credit cards are designed for those of us with less than perfect credit who want to make an improvement in your credit history. It’s called secured because you make a deposit in a savings account that is attached to your credit card. If you default on the payments the savings account is used to pay the bill. It is much easier to obtain a secured credit card it is to get an unsecured card. Even if your credit history is poor or non-existent because the card is secured it is relatively easy to get. Your credit limit is generally the same amount as the deposit you have for security. This stays on account until you decide to close the card or you graduate to and unsecured card. Because secured cards are relatively easy to get they make an excellent tool for improving your credit history. People with poor credit or no credit at all can get a secured card. The issuers of these cards report your credit habits to the credit reporting bureaus after eight to twelve months of prompt payments you can generally graduate to unsecured credit cards. Use your secured credit card just like any other major credit card and you’ll build your credit.
If you need a secured credit card it will be necessary to do some research. Check around for banks and credit card issuers who handle secured cards. When you find one you think you like read their fine print. If you still like them you need to contact them and find out what their procedure is. Generally you will open a savings account or CD account in their bank in the amount of the credit line on your card. Usually the deposit is around $300 to $500. Then they will issue a card to you good for the amount on deposit. Banks and credit unions have secured credit cards. You can look at the list of secured credit cards. Look through the list of institutions and read the small print, the dues and fees and restrictions.
Along with the security deposit there may be other fees. The first month payment will generally cover those, then you are free to go. Different companies have different requirements for applicants. Some will be fine with just the secured deposit, some may want a minimum income requirement, and some have bank account requirements and want credit reports. It’s important to remember that repairing your credit will take time and discipline. Pay all your bills on time and pay off your credit balance in full each month, borrow only small amounts and don’t get over extended. It will take about 12 months of good credit reviews on your secured credit card to improve your credit history. At the end of that time period you may qualify for unsecured credit or a larger credit line.
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