Secured Credit Cards

There are many ways to rebuild your credit. Often, when we have a stroke of bad luck or a down turn in our life finances can suffer. There are ways of obtaining credit by means of secured credit cards. A security deposit made by the borrower backs most secured credit cards. Secured credit cards are vital to re-establishing a good credit history and can help pick your score up by just making payments on time.

Depending on the financial institution, secured credit cards do come with some restrictions. You will need to open a saving account. Usually most minimum balances are no less than $100. Once the borrower has invested the minimum requirements they receive the secured credit card. The amount of credit available on that card is a direct match with their savings account. So if the borrower invests $300 their credit line is $300. In the past, some companies have matched at 200-300% intervals higher. So a $300 deposit would be worth up to $900 in credit.

Once the card is provided and the deposit made, once a charge is made against the secured credit card it is paid by the borrower out of money that is not secured against the card. Should the borrower only be able to pay the minimum requirements, they will be subject to the interest rate, which could possibly exceed 25%. The interest rate is commensurate with the credit history of the borrower. Should the credit be better, the interest rate will decrease.

Upon successfully keeping this card paid on time for 6 months your account will be under review for unsecured increases. Usually in one year's time with timely payments and healthy credit rating, your deposit will be returned along with any interest that has been accrued over the past year. This card will be deemed unsecured and is like a regular credit card. Your credit rating should be reported monthly to the three main repositories; Equifax, Experian and Trans Union.


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