Using a Secured Credit Card to Rebuild Credit

Friday, April 18th, 2014

Secured credit cards can be your second chance or first credit opportunity. Don’t disregard them when looking for a credit card to improve or build your credit.

The emergence of prepaid cards has made it easier to get some benefits of plastic but established credit still matters. The purchase of a house or a car is good demonstration of how important it is. If you have bad credit or no credit, your loan application will be denied or if not, interest rate will frustrate you.

This is where secured credit cards come in. Secured cards are a tool to practice on and demonstrate your ability to manage a bigger credit line. Unlike unsecured credit cards, the secured cards typically require a minimum cash deposit to establish a credit line. The minimum deposit is obligatory and anything you put above will increase your credit limit accordingly. Say, you put down a $300 deposit, you’ll have a credit limit of $300, add $100 more to the deposit and you will get a $400 credit limit. Remember that the down payment is not used to pay off monthly charges, you will still need to pay all monthly bills. This initial deposit is the bank’s insurance in case you do not pay your bills.

The best, and the most important, thing about secured credit cards is that the issuers report your payment behavior to the three main credit bureaus – Equifax, TransUnion, and Experian. This means that paying your bills on time can, over time, raise your credit score. That is the value of a secured credit card. But it should be emphasized again and again, that you should be consistent and timely in paying your bills.

However, there still are things you should pay your attention to when applying for a secured credit card. Make sure that secured credit card you choose will, in fact, report to the three main credit bureaus. If it does not, you are wasting your time because your goal is establishing good credit. Now check the fees. Not all secured cards have the same fees, so you may want to shop around. Interest rates also vary from lowest to highest.

It would be smart to know the security deposit terms as well. The credit card issuers have different policies regarding returning your security deposit when you close the account.

Be careful to avoid secured cards that do not have a payment grace period. Without this grace period you will pay interest on any charge you make from the moment your card is swiped. You won’t be able to avoid paying interest without grace period.

All these cautions are not meant to scare you away from using a secured credit card to rebuild your credit. On the contrary, it gives you the knowledge to avoid potential problems and to safely move on towards perfect credit score.

Latest Secured Credit Card News

Wednesday, September 28th, 2016
There’s been a lot of talk lately about young people and money. Whether people are claiming that the Millennial generation is entitled and doesn’t want to work hard, or they’re ...
Saturday, February 6th, 2016
Sam’s Club shoppers have a new way to pay for their purchases. As of February 1, 2016, the warehouse store will accept Visa credit cards.
Sunday, September 6th, 2015
If you have a secured credit card, chances are you’ve had trouble with credit in the past.
Wednesday, May 27th, 2015
Many of us start building their credit histories with the help of a secured credit card.
Sunday, June 24th, 2012
Low interest rates are useless to the millions of consumers with less-than-outstanding credit scores. They end up paying a high premium when applying for credit cards. This ...
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
Pacific Credit Group Emporium Black Card
Copyright © 2001-2016 All Rights Reserved.

* The webpage is a free service and an information resource for credit cards and financial products and services available to eligible United States consumers. 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 website are property of their respective owners. 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 may be compensated by the credit card issuers when the readers apply for a credit card through this site. 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. 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.