Secured Credit Card: How To Use It Right

Friday, March 1st, 2019
Updated: March 1st, 2019
The content is accurate at the time of publication and is subject to change.

Sometimes people with bad credit history are at a dead end and are looking for a way out. There are several options for people in a quandary. There are different types of credit cards. Here we want to show you the most common.

A secured credit card may be the best option for people who want to build or rebuild a credit history. This type of cards is good for those who are improving their credit. If you are approved, you will need to pay a security deposit to receive your card. The secured credit card deposit is usually around $200 and it will give you an equal line of credit. You also will be able to increase the limit by paying in time.

On the one hand, there are fees including startup fees, monthly fees and/or activation fees; high APRs and it is best not to carry a balance from month to month on a secured card because of the high interest rates. But on the other hand, the limited or damaged credit histories are not obstacles to get them, so they will help you improve your credit score and rebuild your credit history.

You can consider secured credit cards as training, a way to add stability to your credit habits, while at the same time proving that you are responsible and striving for financial independence.

Below are simple ways a secured card can help you repair your credit.

When you are rebuilding your credit score, you can’t afford late payments. Since the most important point is exactly a payment history, which has influence on your credit score and makes 35% of your FICO score.

  • It would be better if you make multiple payments, while you are using your card. The large balances can increase your debt to limit ratio, and that can put a small dent in your credit score. You might as well show good reputation, since the lender reporting to the credit bureaus is unpredictable.
  • Using a credit card for multiple smaller purchases can help you pay off at the end of the month. The lower your balance, the better. If you charge no more than 30% of your credit limit, you will be able to keep your balance at a reasonable level.
  • You should minimize any other applications for credit and keep your secured credit card as your primary credit card for a half of year to a year before applying for an unsecured credit card, as for the credit card issuers is important how many credit applications you make. The three credit bureaus—Equifax, Experian and TransUnion will be reported your monthly payments.
  • It is very important to read the terms and conditions of the offer you apply for and contact the issuing bank if you have any specific questions.

To improve your credit history and end up with debts choose your secured credit card properly. Pay attention to the minimum/maximum security deposit, interest rate, reporting to the major credit bureaus, credit card issuer.

Below you can see the best secured cards at the current moment:

1) Discover it® Secured – The card has no annual fee, cardholders are able to earn cash back, and can build a credit history with the three major credit bureaus. Customers can establish their credit line by providing a refundable security deposit from $200-$2500 after being approved. This card can be upgraded to an unsecured card, automatic reviews start at 8 months to see if it is possible to transition the cardholder to an unsecured line of credit and return the deposit.

2) OpenSky® Secured Visa® Credit Card – The credit check is not necessary to apply for this card. OpenSky believes in giving an opportunity to everyone. The refundable deposit cardholders provide becomes their line of credit on the Visa card. They can choose it themselves, from as low as $200 and up to $3000*. They will be able to build credit quickly. OpenSky reports to all 3 major credit bureaus. 99% of OpenSky customers who started without a credit score earned a credit score record with the credit bureaus in as little as 6 months.

3) Green Dot primor® Visa® Gold Secured Credit Card – Credit lines of the card are available from $200 to $5,000. The card has super low fixed 9.99% interest rate on purchases – with no penalty rate. There are no minimum credit score requirements. There are also no processing or application fees. The issuer promises to help strengthen your credit with responsible card using.

4) First Latitude Platinum Mastercard® Secured Credit Card – The card has no annual fee. It can help build up a credit with responsible card use. The Platinum Mastercard® Secured Credit Card will be reported to all 3 major credit bureaus monthly. The credit line is secured by cardholders fully-refundable deposit of $200 – $2,000 that should be submitted with application.

5) Applied Bank® Secured Visa® Gold Preferred® Credit Card – The card requires no credit check or minimum credit score. The bank reports credit activity to all three National Credit Bureaus. The card has 9.99% low fixed APR and customer’s rate won´t go up even if they are late.

You will be eligible for credit cards with lower fees, low APRs, and higher limits, when your credit is on the mend after using one of these cards responsibly even for a time. The deposit you make on your secured credit card is fully refundable. So, you do not have to worry about that. The deposit helps you to get the bank approval and start the credit history improving.

We hope, the information will be useful for you and you can rebuild your credit history with secured credit cards.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

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