Let’s face it. Now and then, credit cards make life easier — from quick, cashless purchases, to the expense of unexpected emergencies. But don’t consider yourself out of luck just because you don’t have the kind of credit you need to qualify for an unsecured credit card. You can reap some of the same benefits from the next best thing — secured credit cards.
Secured credit cards are:
1) Easy to get, regardless of your credit. That said, keep in mind they do come with annual fees and high interest rates. Plus, there is the “secured” nature of the card, meaning the “credit” you are extended is drawn from the deposit you make to the account. The key is to shop around for the best deal, as in the lowest annual fee and interest rate you can find.
2) Generally accepted where major credit cards accepted. Whether your credit card is secured or unsecured matters little to merchants. You should have little if any trouble at all using your secured credit card anywhere and everywhere major credit cards are accepted.
3) A great way to rebuild your credit. Secured credit card lenders report your account activity to the credit bureaus. So as long as you use your card regularly and make on-time payments, you should see your credit score climb with responsible use.
One word of warning about secured credit cards.
The last thing you want is to carry any lingering bad credit card habits into your secured credit card experience. Make it a rule to pay off your balance before the end of the month, meaning you should never use your card to make purchases you cannot afford to cover with cash you have on hand. The only exception is in an emergency situation, of course, in which case you should make it a priority to pay off the balance as soon as possible. Failing to do so not only racks up interest fees, but also hurts your credit utilization ratio.