A protected credit card is a real credit card, but it’s one that’s backed, or secured by an upfront cash deposit. A secured card allows a bank to offer credit to consumers who’ve poor or non existent credit scores. By having the client make a deposit that’s equal to the credit line, the bank is protected if the consumer doesn’t pay. Sounds great for the bank, but what is in it for the consumer? From a consumer’s perspective, a secured credit card can be worth it if you cannot get credit anyplace else. Paying the bill on time each month will enable you to improve your credit history, and many secured cards might be converted to regular revolving credit cards following a period of on time payments.
You’ll also be capable to use your secured card anywhere that accepts a traditional card, for on-line purchases, or for plane tickets and car rentals, so long as you do not exceed your credit limit. Where do you find a secured card? Some credit card issuers offer secured cards. Should you apply for a regular card and are declined, you might be offered a secured card instead. You may also check with the local bank or credit union some offer secured cards to clients and members.
How much money do I need to come up along with to open the account? Most issuers look for a deposit of $100-500, with about $300 being the average. There can also be some fees involved, so be sure you read the agreement carefully. What will my credit limit be? You credit limit can differ. It’s usually the amount of your initial deposit, however it can occasionally be a little higher-so if you deposit $300, you can get a credit line of $300, or $500, dependant upon your bank and the terms of the card.
How can I get the limit increased? Time and cautious management will assist increase your limit. A year or so of on time payments will assist, as will pay attention not to go over your limit. Making a little purchase each month, and paying it off completely is the ideal way to handle any credit card, including a secured one. So long as you pay on time, your deposit is held in a savings account, and will be released when your card is unsecured, or whenever you cancel the card. In case you’ve not paid your bill, the payment will be deducted from your deposit, reducing your possible refund. A secured card can be your best bet if you’re attempting to rebuild poor credit, or if you simply cannot get approved elsewhere. Many secured accounts have better terms than sub prime regular credit cards do, so it’s a worthwhile avenue to pursue if you’ve credit problems and the money to deposit. Aubrey Clark is an Author and editor for Direct Banc, a low interest rate financial directory.