What Is A Secured Credit Card And Why Should I Apply For One?

When you are trying to decide what credit card is the best for you, don’t rule out secured credit cards. In fact, many people are finding secured credit cards to be the best option if they have bad or no credit history. Some people choose a secured credit card when they have had credit problems in the past or have no or and credit and obtaining a traditional credit card would be difficult if not impossible. Secured credit cards are great options for teaching you about how to be responsible with your finances and spending habits. Secured credit cards help control your spending in a way because you are required to send a security cash deposit to the bank that is issuing the secured card and you cannot charge more than the security deposit amount. Be careful though, some banks charge an over limit fee if you go over somehow. Traditional credit cards, otherwise know as unsecured credit cards, do not require cash deposit as collateral but they do have a credit limit established. The unsecured card is more risk for the bank since no collateral is taken, thus making the approval guidelines stricter.

TO APPLY FOR A SECURED CREDIT CARD CLICK HERE

So, you may be asking why bother with a credit card at all, if you have to have the cash available to fund your secured credit card. In our modern times, it is becoming increasingly difficult to do certain things without having access to a credit card. Have you ever tried renting a car, purchasing online, or purchasing an airplane ticket without a credit card? Ever tried booking a hotel room without a credit card?

With a secured card, you send a deposit to the bank that issues the secured credit card, and that becomes your spending limit. When you have made purchases that reach the amount of money you deposited, you have to deposit more money in order to continue using the card OR simply pay down the balance and you can use the card again. Keep in mind, you don’t want to max out your secured cards, or that an hurt your ration of credit limits versus credit card balances, aka your credit utilization. A general rule of thumb is to not use more than 15 to 25% of your total credit line.

Advantages of using a secured credit card, other than the obvious advantage of not spending more money than you actually have, include the fact that its easier to get approved for a secured credit card. Now, that doesn’t mean its guaranteed to get approved for a card. There are several reasons why you might get denied a secured card. Some are:

• You must be 18 years old.
• Your monthly income is less than your monthly expenses.
• Your ID check didn’t match and you didn’t provide proof if identity
• You have an undischarged bankruptcy on file
• There are other reasons as well but the above are the most common.

Your personal financial history and credit score is not something that typically matters with a secured card.

Other advantages of a secured credit card versus a traditional credit card are that you have ability now to use a visa or Mastercard®  just like a regular credit card. No one will even know that its secured. Secured cards allow you to make purchases online when you would not be able to if you didn’t have a traditional credit card.

The main disadvantage to using a secured credit card in place of a traditional credit card is the fact that you have to have the money in advance for any purchase you want to make. While this is an advantage when considering your credit score and the perfect way to avoid getting into debt too deep for you to handle, it is also a disadvantage in the event of an emergency situation. If your car breaks, or your home’s furnace dies and you don’t have the cash available, a traditional credit card would come in handy. Perhaps without ever using traditional credit cards however, you will be able to save enough money to cover emergency instances and not need to rely on credit to bail yourself out of the emergency situation.

Secured credit cards may be the best option for your credit card needs if you have no credit history. They allow you to travel conveniently, make purchases by phone or the internet, and without the dangers of falling into financial desperation!

Who Might Want To Apply For A Secured Card?

People with no credit or bad credit might want to consider applying for a secured credit card.

College students are great candidates for secured credit cards. Naturally, when one moves out of the house, it is expected that he stands on his own two feet. A majority of college students have part time jobs in order for them to maintain their keep. This is also when they start applying for credit cards.

Mature college students know that in order for them to get approved for a loan or credit card, they must maintain their good credit card history. Continuous over-spending and paying the bill late may result to a negative credit card history and these can easily strain their chances of getting a loan approval. Thus, those students who are wise and mature enough to understand the benefits of having a secured credit card or even a student credit card, do their very best to limit their expenditures and learn to use a secured card responsibly.

So if you are ready to be responsible with credit, consider starting with a secured credit card offer. You can apply for a secured card on our website HERE: https://creditcardbroker.com/all-cards/

You should always understand the credit product you are applying for. When Applying for a secured card, be sure to be aware of the following:

• Offer Terms and Conditions
• Annual Fees
• Interest Rates
• Payment Due Dates
• Credit limits
• Security deposit ranges ex: $200 to $2000
• Other application fees
• Other features

If you would like to learn more about why you would want to build a credit history read this useful article: Why Would I Want To Build A Credit History ?