You may be wondering what in the world secured credit cards are. Secured credit cards have the same appearance as unsecured credit cards and they offer some of the same conveniences as well. Secured credit cards require you to make a deposit into a savings account or a certificate of deposit as a security. This deposit is made to the company providing the credit card. The average deposit is usually close to $300. Some insurers will offer credit greater than the amount deposited; some other insurers may only offer credit below the deposited amount. Most insurers will pay you interest on the deposit as well. Either way, secured credit cards will help you establish a credit history, or help you regain good credit.
When you decide to sign up for secured credit cards, you may have to pay several hundred dollars in application and processing fees. Make sure you are aware of any hidden fees the company may charge before accepting any secured credit cards. Also be aware of any refund to you if you are denied secured credit cards. Typically, secured credit cards have higher interest rates and require some kind of annual fee.
If you decide to apply for secured credit cards, make sure the company who offers the card reports to a credit bureau. Your credit history is maintained by credit bureaus throughout the country. Credit bureaus collect information from banks, credit unions and other financial institutions to assess your credit score. If the companies that issue secured credit cards don’t report to credit bureaus, you probably don’t want to go through that credit card service. It won’t aid in building or repairing your credit history.
Generally, after you have received secured credit cards, you can get an increase in credit after six months. Most creditors base the increase on a credit scoring system. That system includes, but is not limited to, payment history (this includes payments made on time and payments for more than the minimum amount), over limit history, cash advance history and the number of non-payments while owning the secured credit cards.
Once you have committed to applying for secured credit cards, you can cancel the application at anytime without incurring any kind of penalty. You can also qualify for cash advances with the secured credit cards usually after 90 days. Normally, you will receive a cash advance limit of no more than 10-15 percent of the total credit limit. The cash advance is contingent upon two previous months of payment history with the secured credit cards.
It is simple and easy to apply for secured credit cards. You can easily go to any number of Web sites and apply for them online. The application is electronically submitted and typically, you will receive a response via e-mail. You should then follow the instructions in the e-mail on finalizing the information needed to get you the secured credit cards.
Again, be aware of all the fees associated with the credit cards. You don’t want to get stuck with hundreds of dollars of fees you didn’t know about.
By John Ivie