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Secured Credit Cards 101

February 5th, 2016 · No Comments · Credit Cards

by Staff

Hand Holding Credit CardWhile secured credit cards can be a great financial tool, they’re only as helpful as you are knowledgeable of how to get them and use them right. This collection of basics and best practices can help.

What is a Secured Credit Card?

A secured credit card requires a cash collateral deposit that becomes the credit line for that account. For example, if you put $500 in the account; you can charge up to $500. You may be able to add to the deposit to add more credit, or sometimes a bank will reward you for good payment and add to your credit line without requesting additional deposits.

3 Very Good Reasons for Secured Credit Cards

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.

Shopping Around for a Secured Credit Card

We’ve compiled here a list of secured credit cards that you can compare by fees, interest rates, and more. There are also plenty of credit card comparison sites for you to check out, most notably CardHub, NerdWallet, Credit Karma, and Bankrate.

3 Steps to Using Secured Credit Cards to Rebuild Credit

By putting down a cash deposit with a credit card company, you can secure a line of “credit” that gets reported to the major credit reporting agencies. Utilize the card to your best advantage and it’s pretty much guaranteed to help improve your credit score. Here’s how to do it right.

Prepaid vs. Secured Credit Cards: What’s the Difference?

When you’re shopping around for a credit card to help rebuild your credit, be sure you know the difference between prepaid cards and secured credit cards. They sound very similar, but only those that are secured report your payment history to the bureaus. That said, prepaid cards have their own advantages too. Find out the difference, including pros and cons of both.

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