What can Secured Credit Cards do for me?

Major problems in life affect the credit records of people. A recent job loss, divorce, accident and illness can inflict damaging effects on people’s credit history. This is because during these unavoidable situations, people usually resort to borrowing funds. And sometimes, they find it difficult to pay back whatever amounts were owed. This inability to pay off creditors is the main reason why people receive bad credit records.

Do you also worry about bad credit? But do you want to re-establish your credit history? Well, worry no more, because this article will discuss what you can do to rebuild credit. This can be achieved by applying for secured credit cards.

What Secured Credit Cards Are

Secured credit cards, also known as credit cards for no credit, is a credit program offered to individuals who are yet to establish their credit history and to those who may have histories of bad credit.

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Prepaid Credit Cards – Plastic Money for All

The use of plastic money or credit cards has increased dramatically over the years. Compared to cash or check, credit cards are considered to be safer and more convenient way of payment. However, not everyone can qualify for a regular credit card so easily.

Many issuers require good or excellent credit history before granting approval. If you have no credit or bad credit, does that mean you cannot get a credit card at all?

Prepaid Credit or Debit Cards for Everyone

A prepaid debit card is the perfect option for people who do not want to go through a complicated approval process. Whether you have no credit or bad credit history, you can get a prepaid debit card with no hassle. All you have to do is open a debit account, make a deposit and you’re approved.

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Secured Credit Cards: Frequently Asked Questions

For people with low or bad credit scores, it can be difficult to qualify for a traditional credit card. This is the reason why credit card companies thought of offering secured credit cards. Below are some frequently asked questions about this type of credit card:

What is a Secured Credit Card? Unlike a traditional credit card, a person who wants to apply for a secured credit card is required to deposit a certain amount of cash that will serve as guarantee for the debts.

The security deposit will also determine the value of your credit limit. For instance, if you submitted $500 in your account, you may be given a $500 credit line. You may submit a higher amount than the minimum required deposit if you want to enjoy a higher credit limit.

After a few months, the bank may reward you for your good payment and raise your credit line without asking you for additional deposit.

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Secured Credit Card Guide for Consumers

Secured credit cards are perfect for people who want to establish credit or rebuild damaged credit history. What benefits can you get by using a secured credit card? How can choose the right secured card for you? And how can you use it build or rebuild credit? Let’s answer these questions one at time.

What is a Secured Credit Card?

To open a secured credit card account, the applicant must make a deposit in his/her savings account. This serves as a guarantee that in case of default, the credit card issuer can use the cash deposited to pay the unpaid charges. Hence, the value of your security deposit will also determine the amount of credit limit you can enjoy.

Some issuers will match the value of your deposit while other issuers may give a slightly lower or higher credit limit than the value of the security deposit. However, unlike prepaid debit cards, a secured cardholder can be charged with interest rates each time the outstanding balance is not paid in full.

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Tips Before Signing Up for a Secured Credit Card

Secured credit cards can be ideal for those with bad credit and who never had credit before. Before signing up for your own secured card, consider the following pointers:

• Check your lifestyle and your need for credit. First of all, you have to know your spending style and how you will be handling your monthly payments. A secured credit card can be used for rebuilding bad credit but only if you can keep up with your payments.

To make sure that you can pay off your debts before the due date, do not spend more than what your budget permits.

• Understand the terms and conditions of the card company. You need to read and understand the fine print in order to avoid unpleasant surprises later on. Check the credit limit, possible charges, grace period, interest rate, and other details of the offer.


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