Secured Credit Card to Rebuild Bad Credit
http://creditfederal.com/article/articles/703/1/Secured-Credit-Card-to-Rebuild-Bad-Credit
By CreditFederal.com - A good or bad credit personal loan, auto and mortgage financing, and credit card resource.
Published on 10/26/2009
Can't get approved for an unsecured credit card because of your credit score? You can get a secured credit card to rebuild bad credit.
Get Instant Approval with a Secured Credit Card to Rebuild Credit
There was a time when a credit card was purely a luxury. Now; however, it's becoming a necessity because many businesses require credit cards, even if you plan to use cash for the purchase. Satellite providers, utility companies, hotels, car rentals, and airlines are prime examples.
If you have no credit; or bad credit, it may be difficult to get an unsecured credit card. In these situations, a secured credit card might be the best way to establish or to rebuild credit.
Secured credit cards are legit, but as with any product or service you need to make sure it fits your needs, and budget. Here are questions you should get answers to:
What are the costs? Like many regular credit cards, secured credit cards have costs. Some of the most common costs include application fees, processing fees, and annual fees. Find out the fees for the secured credit card before applying. Stay away from cards with high fees that use most of your security deposit.
How much is the deposit? Secured credit cards are secured with a deposit that's held in an account and used when you default on your payments. Many secured credit cards have minimum and maximum deposit limits. Some secured cards place deposits in an interest-bearing account. Find out if your deposit will earn interest and if so, how much.
In what situations is your deposit used? Some creditors only use the deposit in cases of severe delinquency, e.g. 5-6 months past due. Others use it for a single late payment. Knowing the situations that the creditor will draw from your deposit can help you be more disciplined, especially if you're concerned about getting your full deposit back.
Are there eligibility requirements? Income and age restrictions might apply to some secured credit cards. Even though you're willing to put down a deposit for a credit limit, card companies still have requirements in place. Many secured credit card lenders require borrowers to have a checking or savings account with their bank before extending secured credit.
What will your credit limit be? Your credit limit isn't always the exact amount as your deposit. It can be some percentage of your deposit, making your credit limit less than the deposit. Ideally, your credit limit is an amount equal to or greater than your deposit.
What is the APR? The APR, or annual percentage rate, is the interest rate applied to balances that you carry beyond the grace period. The higher the interest rate, the higher your finance charge will be when you carry a balance.
Are timely payments reported to credit bureaus? If you want the credit card to help establish or re-establish credit, your payments must be reported to the major credit bureaus. Secured credit cards that don't report to bureaus won't help your credit rating. Make sure the card isn't reported in a way that reveals it as being a secured card to prevent bias from future lenders.
Can the card be converted to an unsecured credit card? The best secured credit cards allow you to convert to an unsecured after a period of timely payments. Unsecured cards often have lower fees (or no fees at all), a lower interest rate, and fewer restrictions.
If you have no credit; or bad credit, it may be difficult to get an unsecured credit card. In these situations, a secured credit card might be the best way to establish or to rebuild credit.
Secured credit cards are legit, but as with any product or service you need to make sure it fits your needs, and budget. Here are questions you should get answers to:
What are the costs? Like many regular credit cards, secured credit cards have costs. Some of the most common costs include application fees, processing fees, and annual fees. Find out the fees for the secured credit card before applying. Stay away from cards with high fees that use most of your security deposit.
How much is the deposit? Secured credit cards are secured with a deposit that's held in an account and used when you default on your payments. Many secured credit cards have minimum and maximum deposit limits. Some secured cards place deposits in an interest-bearing account. Find out if your deposit will earn interest and if so, how much.
In what situations is your deposit used? Some creditors only use the deposit in cases of severe delinquency, e.g. 5-6 months past due. Others use it for a single late payment. Knowing the situations that the creditor will draw from your deposit can help you be more disciplined, especially if you're concerned about getting your full deposit back.
Are there eligibility requirements? Income and age restrictions might apply to some secured credit cards. Even though you're willing to put down a deposit for a credit limit, card companies still have requirements in place. Many secured credit card lenders require borrowers to have a checking or savings account with their bank before extending secured credit.
What will your credit limit be? Your credit limit isn't always the exact amount as your deposit. It can be some percentage of your deposit, making your credit limit less than the deposit. Ideally, your credit limit is an amount equal to or greater than your deposit.
What is the APR? The APR, or annual percentage rate, is the interest rate applied to balances that you carry beyond the grace period. The higher the interest rate, the higher your finance charge will be when you carry a balance.
Are timely payments reported to credit bureaus? If you want the credit card to help establish or re-establish credit, your payments must be reported to the major credit bureaus. Secured credit cards that don't report to bureaus won't help your credit rating. Make sure the card isn't reported in a way that reveals it as being a secured card to prevent bias from future lenders.
Can the card be converted to an unsecured credit card? The best secured credit cards allow you to convert to an unsecured after a period of timely payments. Unsecured cards often have lower fees (or no fees at all), a lower interest rate, and fewer restrictions.