The best secured credit cards are those that suit your needs, really. If you are wondering what a secured card is then you might have less than perfect credit and that’s okay. You certainly are not alone. But you do want to do something about it and a secured card could be just what the financial doctor ordered to help you rebuild.
So don’t just sit around and wonder what a secured card is all about. Read these 5 frequently asked questions – and answers – and get your secured card today!
When it comes to a credit card for bad credit history a secured card is often the way to go. In fact, they are definitely the most easy credit card to qualify for. A traditional credit card is just that, a card where you are extended credit, based on your promise to pay and your credit history, without requirement of collateral to secure the loan. However, when you don’t have sufficient credit for a bank to issue a traditional card you can get a secured card. With a secured card you give the bank a certain amount of money to “secure” your loan. That money is held in savings for you, and usually is returned to you or applied towards your balance at some point in the future. Unless, of course, you default on the credit card in which case the bank keeps the money.
The costs of a secured card vary from bank to bank. But as a general rule you will have to deposit anywhere from $50 to $200 with the bank to get a card. Your credit line will be at least equal to the amount you deposit, sometimes more. Often, with the best secured credit cards, you can deposit more if you wish to have a card with a bigger limit. Likely, your secured card will also have an annual fee of anywhere from $29 to $79. If you are looking at a card that has more fees than this keep on looking because you can probably do better.
Once you have your secured card you need to use it, at least a bit. In time you, with some usage and on time payments, you will build a credit history. Eventually, the company will probably raise your credit limit, which will improve your credit score. This can happen in as little as three months, but sometimes takes a year or more – it depends on the bank and your usage. Many banks will eventually return your deposit, or credit it to your account, once you establish yourself as credit worthy. If this possibility is important to you ask the bank if this is their policy before you apply for the card.
No, the best secured credit cards look just like a traditional card. It won’t say secured on your card or even on your statement. Nobody but you and the bank need to know.
A variety of different banks issue secured credit cards. Not every bank offers a secured card, but a number of banks, including some of the big, brand name banks. So applying for a secured card is the same as applying for any credit card. You can check out a website such as creditcards.com and browse their section on secured cards to see which fits you best as far as terms and required deposit. Then, you can either apply right there, call the bank directly, or go to the bank’s website to apply. Once you are accepted the bank will instruct you how to fund your secured account and after you have done so they will issue your card.
Advertiser Disclosure: The credit card offers that appear on CreditCardIdeas.com are from credit card companies from which this site receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This site does not include all credit card companies or all available credit card offers.
Editorial Disclosure: The editorial content on CreditCardIdeas.com is not provided by any bank, credit card issuer, airlines or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.