Secured Credit Cards – When You Should Prefer Them
What is a Secured Credit Card?
If you need to build credit, a credit card is a sure method. But sometimes it’s hard to get a credit card having not so good credit score. That’s where secured credit cards come to the rescue.
Secured credit cards are very similar to general unsecured credit cards, except for one thing. To get a secured card, you will need to put a cash deposit on it. Such an operation is necessary to protect an issuer since having bad or even no credit at all doesn’t characterize you as a reliable applicant. The deposit is refundable and is typically equal to your credit line. For example, if you put $200, you will get a card with a $200 limit and if you put $1,000, you will have a $1,000 to spend.
After some period of responsible use of a secured credit card, it is much easier to get an unsecured credit card. Some issuers can check and offer you to change your credit line for unsecured even without your assistance. Thus, a secured card is a kind of launching pad before an unsecured card.
Who are Secured Credit Cards for?
- Young people who have recently graduated from school and just begin to lead a self-dependent life. They never had a credit card or a loan before and a secured card can help them enter the world of credit.
- The same may apply to immigrants who are new to the United States and have to establish their credit history from the very beginning. For these people, a secured credit card can become a good start on the road to a financial independence.
- People who need to rebuild their credit history. Sometimes there are situations when the credit score falls to fair or bad. Then you must prove to the bank again that you are a dependable cardholder and are ready to fulfill your credit obligations. A secured credit card is a good solution in this case as well.
- People who came through bankruptcy. It is not that easy to retrieve the situation after such a serious thing as bankruptcy. A secured credit card may be a reliable assistant in putting the credit back on track.
Top 3 Secured Credit Cards
If you fall under one of those categories above, it remains only to choose the right card. To make this task easier for you, BestCreditOffers.com experts have compiled a list of the best secured credit cards:
- The Discover it® Secured credit card. This card is our number 1, and no wonder. Not only it comes with a $0 annual fee, but it also allows you to earn extra money since it offers a 2% cashback bonus at gas stations and restaurants on up to $1,000 every quarter and unlimited 1% cash back on all other purchases. Moreover, Discover automatically matches all the cash back new cardholders have earned at the end of the first year. Starting at 8 months, automatic reviews will occur in order to check if there’s a possibility to switch you to an unsecured line of credit.
- The OpenSky® Secured Visa® Credit Card. This card makes no credit check and requires no checking account. It has an annual fee of only $35 and is available for any credit including no or limited. Besides that, here are some extra perks from OpenSky like providing credit tips and a dedicated credit education page on their website to support you along the way.
- The Applied Bank® Secured Visa® Gold Preferred® Credit Card. The main advantage of this secured card is the fixed purchase APR with a rate as low as 9.99% that will not increase even if you miss a payment. The card is also suitable for any credit type, as it has no credit check or minimum credit score required. Its annual fee is $48.
Note that not all secured cards offer guaranteed approval for everyone, even though applicants can afford to pay a security deposit. Be sure to read all the terms of your chosen card carefully before applying.
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