Reasons to Apply for a Secured Credit Card
Secured credit cards are credit cards that are supported by a money deposit of about $200-$1000 paid upfront. This amount is used as collateral for issuers and usually equals to the future credit line. This type of card can be extremely welcome if you are a beginner at credit issues or for some reason have to rebuild your credit almost from scratch.
But why should you actually apply for a secured credit card? Here are some catching points:
- Apply with No Credit Score
Secured cards are specially designed for people with no, limited or bad credit history. Of course, the lack of credit history makes you look like a dark horse for issuers. But a security deposit that you put in your card before usage protects banks making your approval less risky for them. In case you suddenly fail to pay, issuers will simply take the money they were supposed to lose from this deposit. Therefore, secured cards are much easier to qualify for than all other kinds of credit cards. Such cards are suitable for students, or immigrants, or people who have come through bankruptcy. - Build or Rebuild Credit History
The main secured credit cards difference from prepaid or debit cards and the main reason why people apply for them is the opportunity to build or rebuild their credit history. Most secured cards report your account activity to the three major credit bureaus – Experian, Equifax, and TransUnion. Thus, you have great chances to improve your credit and make your credit reports signal to issuers you’re a reliable borrower. Surely, this advantage makes sense only if you keep your balance in good standing and don’t miss payments. Otherwise, you tend to only do harm to your score. - Get Benefits
Despite the fact that secured cards are considered to be starter credit cards, they still can bring multiple benefits and perks. For example, some cards may come with cash back at different locations or/and a sign-up bonus. - Grow into an Unsecured Credit Card
One more asset of secured cards is that they allow you to switch to an unsecured one in some period, typically 8-12 months. Some issuers take care of this process on their side and notify you when the switch is available. While with other issuers, you will need to request such an upgrade by yourself. Anyway, it is possible in most cases, provided you have been a responsible cardholder.
Bottom Line
If you cannot qualify for an unsecured credit card, but still need a card to establish your credit, a secured credit card will totally do. Especially since it may come with not worse features. Just compare secured credit card offers from our partners and choose the right one for you.
Latest Secured Credit Card News
Are you new to finance and want to find out what to start building your credit history with? Or maybe you’ve had hard times under your belt and now have to rebuild your credit score bit by bit? Then, probably you’ve already stumbled on some information about secured credit cards and prepaid cards.
Secured credit cards have been increasing in popularity over the last several years, and for good reason. For folks who have no credit history, limited credit history, or a poor credit score, a secured card offers a path toward financial wellness and a healthy credit score.
Anyone with a credit card, debit card, prepaid card, or secured credit card will be able to pay for transit tickets in London and other major cities without having to deal with paper tickets or cash, thanks to innovative new payment solutions from Visa.
Young people often get a bad reputation for being irresponsible with money, but a recent survey shows that in fact, today’s young folks may actually be savvier and more responsible with credit than their parents.
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 saying that Millennials aren’t being getting paid enough to achieve basic goals like buying a home and paying off student debt, there is no end of opinions about how the 18-35 demographic is faring financially.
