Secured Cards – 7 Tips To Help You Find The Best Secured Credit Card For You

In today’s world it is very important to have a good credit rating, and having at least one major credit card is practically essential. Depending on your credit history and credit rating, you may be eligible for either unsecured cards (no collateral is required) or secured cards (a deposit is required which is held for collateral). A credit card is required for booking hotel and airplane reservations and also car rentals. A good credit rating is needed for major purchases such as a car or housing (either rental or home purchase) and can even affect your eligibility for some jobs.

Unsecured credit cards have several advantages over secured cards. Unsecured cards almost always have lower interest rates, fewer restrictions, and lower or no fees. However, for individuals without credit history or with bad credit, secured cards may be the best option to establish or rebuild credit and have a major credit card to use for purchases. Secured cards will require you to place a cash deposit in a savings account, money market account, or CD with the bank issuing the card. Your deposit will be held as security and used to pay if you default on your credit card payments.

To find the best secured cards, you will want to compare several to get the best deal. You can search for secured card listings by doing an internet search or contact local banks and also credit unions. If you belong to a credit union they may offer lower interest rates and may not require an annual fee.

Secured cards can vary a great deal in terms of eligibility, fees, deposit requirements and other factors. Here are 7 tips to help you find the best secured credit card for you.

Tip #1 Compare the Eligibility Requirements

Find out what the eligibility requirements are for the various secured cards. Some may have age or income restrictions and may require you to have a certain type of account with the bank issuing the secured card such as a savings or checking account.

Tip #2 Compare The Fees

The fees secured cards charge can vary widely, so you will want to read the terms carefully. Almost all secured cards charge an annual fee. There also may be application fees, processing fees, and other charges. Be sure to review the terms thoroughly and compare the different secured card offers before making your final decision.

Tip #3 Know What The Deposit Amounts and Requirements Are

Most secured cards will require a certain minimum deposit and may have a maximum as well. They typically range from $300-$500. The deposit is held in an account with the bank issuing the credit card and serves as collateral. Your deposit can be used to pay your balance if you do not make timely credit card payments.

Tip #4 Determine the Amount of Interest Earned On Your Deposit

Find out if your deposit will earn interest and what the rate and also deposit requirements are. This is another area where secured cards can vary widely, so when you are shopping you will want to look for the best interest rates and most flexible deposit requirements. Your deposit may be held in a savings account, money market account or a CD with the bank.

Tip #5 Compare The Credit Limits

Your credit limit is not always the same as the amount of your deposit. Your credit limit may be the same, or in other cases less or more than your deposit amount. You will want to compare the different secured cards on this feature.

Tip #6 Make Sure The Secured Card Reports to all 3 Major Credit Bureaus

If you are trying to establish credit or rebuild your credit rating it is very important that the card you choose reports to all 3 major credit bureaus: Equifax, Experian, and TransUnion. If the credit card company does not report to all 3 bureaus it will not help you build your credit rating. You also want to be sure that your card is not flagged as a secured card on your credit report.

Tip #7 Check To See if You Will Have The Option to Change To An Unsecured Credit Card
Find out if you will have the option to switch from a secured card to an unsecured card if you make consistent, timely payments to your credit card company, and ask how long it will take for you to be eligible. Unsecured cards almost always offer lower interest rates, have fewer restrictions and lower or no fees, so it will be in your best interest to switch to an unsecured card as soon as you are eligible.

Secured cards are a good way to help establish credit history or help to rebuild your credit rating. You should use secured cards to help improve your credit rating and not to incur debt. You should make regular purchases on your card but also pay off the balance each month. This way you will build your credit without incurring debt.

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