What Is a Secured Credit Card?
Secured Credit Cards: Fact vs. Fiction
You see the ads in the papers, on the web and in magazines -- ads promising you the credit card that you deserve regardless of your credit history. But are these ads for real or are they just another way to scam you out of your hard-earned money?
Be Wary
While it’s true that secured credit cards may be a great way to rebuild your credit, some of the companies that market these credit cards do not have your best interests in mind. In fact, many of these advertisers use deceptive practices in their marketing techniques. So how do you protect yourself? Knowledge is power.
What Is a Secured Credit Card?
To understand whether or not a credit card offer is legit, you first need to understand what a secured credit card is. With a traditional credit card, you are offered a line of credit and can make charges against the card up to your credit limit. You make a monthly payment and the amount you pay goes towards what you’ve charged (plus interest if you don’t pay your balance off in full each month).
A secured credit card works much in the same way that a traditional credit card works, but you put money into an interest-bearing savings account and that money is used to secure the credit card. The credit line you are issued is typically fifty to one hundred percent of the amount of your security deposit.
What to Check For
The first thing you want to look at before applying for a secured credit card is the fees involved with the credit card. When it comes to fees, the bottom line is this -- you’re probably going to have to pay an annual fee and even a processing fee to get a secured credit card.
However, that doesn’t mean you should have to pay hundreds of dollars in fees to get your credit card (although you will have to pay hundreds in a security deposit). If a company is asking for astronomical fees for a secured credit card, look elsewhere for your credit needs.
Reporting to Credit Bureaus
The whole point of getting a secured credit card is to reestablish your credit history. The only way this will be done is if the credit card company reports your payment history to the three credit bureaus. If they do not, they’re not going to be able to help you reestablish your credit as they promise. Make sure that they report your payment history or go elsewhere for your secured credit card needs.
To apply for secured credit cards, visit these websites:
This website has a number of secured credit cards to apply for.
This website offers bad credit credit cards to help you rebuild your credit history.
Comments
Max, Due to a suspicious email I recv'd I came upon this site while researching on the web. While I believe your posts are very informative I thought you might find the following info interesting concerning one of the credit cards you recommend though a link on the first page of these credit card tips. This would be in regards to the HSBC card you list. Would you please visit:
http://householdwatch.com/
I would appreciate any feedback .. thx
Posted by: Mike | January 18, 2006 8:40 PM