Why should you go in for secured credit cards?
Answered on Monday, October 4th, 2010 by
Amy Miller

You might have heard about secured credit cards, but if you haven`t heard about it, don`t panic. This is an option that is given by a limited number of banks across the country. The trend seems to be shifting away from this option, mainly because financial institutions don`t consider it to be a particularly lucrative option anymore. So then, before delving into why you need one, it makes sense to know what it is all about. The secured card option is for those individuals that want to get credit cards but are unable to do so due to a recent credit record.

Hence, for the creditors to provide any card there is a need to collect some sort of collateral from the individual. The credit card will then be issued based on the provided collateral. In many instances, this collateral will be any value between $300 and $500. Subsequently, the individual can make use of the card only for these particular amounts. The rate of interest will generally be lower, but payments will most likely need to be done within a shorter period of time. This is because creditors want to minimize the risks associated with these cards.

Now, as one might imagine, secured credit cards do have a number of disadvantages. Top of the list would be the paltry amount that you are allowed to spend using this particular credit card. Hence, if you want to increase your limits, the only other option would be to go in for an unsecured credit card. This too, can be quite problematic mainly because the cards are only for those with a decent credit history to offer. Additionally, these secured credit cards are quite strict in terms of repayments. Hence, if you are unable to make the payments on time, then this is definitely not the card that you would want to consider.

The other disadvantage with secured credit cards is that not all companies will offer them. Consequently, the people that do want these cards should carefully look around and seek out the banks that do offer them. Even with this, there might be certain situations when the banks might screen individuals and decide on who could qualify for the cards. The acceptance rate is quite low, in order to restrict the people from misusing these cards. Therefore, unless you feel the unsecured credit cards are not worth going in for, you ought to think twice before opting in for such a credit card. It can severely restrict your ability to spend money.

Other Popular Secured Credit Card FAQs

Before you start choosing a credit card, we would recommend you to check your credit reports first. Make sure you do not have errors on your credit reports and all personal information is up to date. Then you can apply for a credit card. Since it is your first credit card, you have two options […]

Continue »

 Secured cards require an upfront security deposit to be paid. The credit limit on a secured credit card will be equal to the deposit you pay. The deposit is usually fully refundable. The issuers of secured credit cards can report them to credit bureaus as unsecured credit accounts. The unsecured credit cards do not require […]

Continue »

  1. What is your question?
  2. Please, enter your question and contact information so that we can send our answer to you by e-mail.
  3. (valid email required)
  4. (required)
  5. Captcha
 

Best Credit Offer
Check off the cards you want to compare. Then click the Compare link to go to the comparison table.
Consumer Rating: 4 / 5
Copyright © 2001-2016 BestCreditOffers.com All Rights Reserved.

* The BestCreditOffers.com.com webpage is a free service and an information resource for credit cards and financial products and services available to eligible United States consumers. BestCreditOffers.com.com does not offer any warranties and is not a direct service. There are no guarantees for approval or offers when applying for a credit card. Please refer to the application if you would like more information on each credit card. When you click "Apply" for a particular credit card, please take the time to review the terms and conditions of the product/service at the issuer's website. All logos on the BestCreditOffers.com.com website are property of their respective owners.

BestCreditOffers.com makes every effort to keep information up to date and accurate. However, the information regularly changes and is presented without warranty. Therefore, we strongly recommend all our readers to visit the credit card application page by clicking "Apply Online!" button to review the detailed credit card's terms and conditions. Note that BestCreditOffers.com may be compensated by the credit card issuers when the readers apply for a credit card through this site.

BestCreditOffers.com is an independent, advertising-supported website which receives compensation from the credit card issuers and companies whose offers appear on the site. Compensation may impact how and where products appear on our site, including, for example, the order in which they may appear on the site pages. BestCreditOffers.com does not review or list all available financial or credit offers.

User Generated Content Disclaimer: These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.