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Secured Credit Cards

Written by Kathleen Gagne
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In certain circumstances, it makes sense to use secured credit cards. They might be the only kind of cards you can get if you have had a recent bankruptcy, of if medical or other unexpected crises have left you with bad credit. Secured cards can help you to get back on track if you are careful and use them appropriately. You have to pay interest on secured cards, and there may also be origination fees, monthly fees, and annual fees.

Knowing what kind of secured card to get and making sure you compare several in terms of interest rate and fees can save you a lot of money in the long run. Shopping for secured cards online gives you the advantage of being able to compare costs and benefits before you choose one. Unlike an unsecured card, a secured card requires that you put money into a savings account with a bank or credit card company that offers secured cards.

How to Get a Secured Credit Card

The first thing you have to do to get a secured card is to find a bank or company that offers them. Note that a secured card is not the same thing as a pre-paid card. Prepaid cards do not help to restore your credit, so make sure that you are getting a secured card. Once you have put your security amount into the account, the company will issue you a regular credit card for an amount up to the amount of money in your account.

Again, remember to look for the best options in terms of fees and interest rates. You should also ask if the company has a policy that will allow you to get back the money you deposited if you make on-time payments on the card for a specific amount of time. Some companies will do so, and some will not. In either case, you should be earning interest on your deposit account. Once you begin to use your secured credit cards, be sure to make all payments on time and, whenever possible, pay more than the minimum amount due or pay off the entire balance.


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