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What Should You Make Sure About Secured Credit Cards Before Getting It?
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Secured credit cards offer a lucrative opportunity once again to bad credit holders to correct their poor money spending and repayment habits by proving to be responsible credit borrowers.
The secured credit cards are easier to open because you are providing a cash security against the credit limit that you would be offered through this particular card. However, although it doesn’t have a lot of requirements to fill, you must make sure that there are no other glitches involved. So, here are a few questions relating to secured credit cards that you should be asking yourself before getting the card.
How does a Secured Credit Card Work?
You would be asked to deposit a cash collateral first which would be forwarded to a savings account; most of the times it is an interest based account so that you can even build up on your savings. Commonly this deposit will be your credit line; for example, if you are depositing $500 into the account, then your spending limit would also be $500.
Sometimes, the credit limit is only a percentage of the deposit made. For instance if it is 50% of the deposit, then for the above given example, your spending limit would be $250. The purchases that you make will be liable to monthly repayments. If you fail to make repayment on time, then the interest will start to accrue on the balance.
Should I Compare the Rates of Secured Credit Cards as Well?
Secured credit cards, though different, are still credit cards and just like all other cards and loans, you will have to pay back with an interest. An interest is always a percentage of the amount borrowed and can be different from one institute to another. Therefore it is always better to compare the rates before finalizing a decision, even if it is for secured credit cards.
How Much Money Should I have to Make the Deposit?
The exact answer is likely to differ from one card provider to the next. But roughly speaking, the amount usually varies between $300 and $500. Similarly, the percentage amount of the deposit which will be set as the credit limit is also going to vary.
Do All Banks Have Secured Credit Cards to Offer to Consumers?
No. All banks are not currently offering secured credit cards to consumers. Although they were at one time, now the general trend is going towards unsecured credit cards that have high interest and high fees. Some banks, on the other hand, offer secured credit cards, but not to everyone; their scheme is only for those who are new to credit.
Are there Extra Fees and Charges Involved in Secured Credit Cards?
Besides, application fee and annual fees, there can be many other extra charges involved in secured credit cards. If you are in the habit of shopping to compare rates, then you will be able to save a lot of money which would otherwise be spent in fees and charges.
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