There are 2 types of credit cards: secured and unsecured. This article will explore some of the issuesof secured credit cards.
What is a secured credit card?
A secured card is a credit card that needs you to deposit a particular quantity of cash into a savingsaccount, money market account, or certificate of deposit. The minimum amount typically varies between $200 and $500 however this will differ from one business to another. Your depositis considered your security and some card issuers will even allow the deposit to earn interest.
The amount that you transfer into the account is your credit limit. You should understand that sometimes the limit will be for the total that you put into the account however with some business your limitation might be a percentage of the total amount that you transferred.
A secured credit card is not a debit card. This is essential to understand due to the fact that if complete payments are not made each month, interest will becharged on the impressive balance.
Who should think about using secured credit cards?
If you have no credit rating at all, using asecured credit card can be a excellent way to beginestablishing your credit. Lots of youths whoare just starting might choose thisas an option.
If you have bad credit, you might want to utilize a secured credit cardto help you enhance your credit score. In addition, a secured credit card may be the only source you willhave for obtaining a credit card. There are some transactionsthat require making use of a credit card. This mightinclude car rentals or hotel appointments. If you need to make those kindsof transactions and can not get an unsecured credit card, this might be the onlyway you can get a true credit card.
What to try to find in a secured credit card:
Rate of interest: Do not be fooledinto thinking that since you have no credit rating or a bad credit report that you need to choose outrageous rates of interest. Make it a point to search for the lowest rates that you qualify for prior to you look for a secured credit card.
Costs: Pay close attention to any charges that will be charged to you or to your account once it isopened. There are some business that will charge unbelievably high costs that will minimize yourinitial deposit before you even use the card. Stayaway from those business. Try to find business that have no charges whatsoever or for those companies that charge a little one-time fee to set upthe account. Annual costs for appealing secured cards normally range from $20–$35.
Scams: It is sad to state that there are companies outthere who are in the business of ripping people off.They take advantage of the vulnerability of those who might bein a credit crunch. A few of the things theydo include pledges of getting you “quick credit“for a price. Another popular rip-off is to ask you to call a 900 contact number for “ tricks“ to getting a creditcard or credit repair work. Your telephone company will chargeyou a high rate for utilizing a 900 number and you never ever get theinformation that was provided.
The very best advice to avoidsecured credit card scams is that if it sounds too great to be real it is. Use your good sense and do not be taken by these criminals.
Credit Improvement Issues: Even with a great payment history on yoursecured card it can takes numerous months before you start to see improvement in your credit record. You have to bepatient when fixing bad credit. You also have to be wise. Make certain that the company thatissues the secured credit card to you will report your good payment history to the 3 big credit reporting firms. Not all companies report and if they do not report you are merely wasting your time.
Remember that they will also report your badpayment history if you do not pay on time. Be careful and make yourpayments on time each and every month.
News on Consumer Opportunities…