Uk Secured Credit Cards

Written by Ingrid Chen
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Credit is the creation of a loan or debt extended to the consumer in order to cover purchases. From small purchases such as groceries to far greater ones such as an automobile, credit is a vital means of financial management in our everyday lives. While it is easy to establish credit, the trick is to maintain a healthy credit history. Over a period of time, one's credit record comes into play more than many individuals may think.

One way of making sure that your credit record says healthy and positive is by keeping a close eye on any rates or fees that will apply to the credit card. Some individuals with a poor credit rating may chose to take steps towards repairing their credit scores. Applying for a secured credit is one means of credit repair.

How Secured Credit Cards Work

The credit limit of a secured credit card is equal to an amount of money you deposit in a savings account at a bank. For example, if you deposit 1,000 pounds in a savings account as collateral for a secured credit card, the amount of credit you receive is the same as the deposit, or 1,000 pounds. In some cases, particularly where a credit rating is especially poor and the individual is a higher debt liability, the credit limit may be anywhere up to 50 percent of the initial deposit.

While this may seem like a redundant step to take, it can actually be an effective means of proving past credit mistakes presently inaccurate. By showing that you can be fiscally responsible and liable with a credit card, your credit rating can increase in score. It may be a slow process, but can prove highly successful in turning around bad credit history.

Be on the lookout for several things when applying for secured credit cards. There will be an interest fee that applies to the secured card, as well as a possible application and processing fee. Make sure these fees are not extraordinarily high by comparing cards between banks. Also, before handing over a large sum of money as a processing fee, check to see if your fee will be refunded if you are refused credit. Even if your credit is bad, don't forget to watch out for the deal that is the most advantageous towards you.

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