As a consumer, when choosing the right credit card for you, you need to take into consideration a number of things. For example, do you make your payments on time every month? Or do you need to rebuild your credit? If you have bad credit and thus, poor credit rating, the best option available is a range of ‘secured’ credit cards. Generally, you can improve your credit rating in this way, where the deposit you make into the account, determines your credit.
In the following information I will show why each of the 9 credit cards I am writing about, are good.
If you need to rebuild or establish your credit and you want a low annual fee of $29 where you choose your credit limit, I would suggest the Secured Visa Platinum credit card from the Bank of America.
If you have no constant income or poor credit, the Secured Visa Credit Card from Applied Bank is a good choice, especially if you tend to make late payments. This card’s annual payment rate (APR) is fixed at 9,99% regardless of late payments.
MetaBank’s UltraVX Visa Card approves up to $25 000 cash on demand (patent pending) with loads of rewards, with instant approval regardless of credit rating.
The Black Diamond Visa card from Millennium Bank has quite a high ongoing APR of 19,5%, but you can get up to %100 000 travel accident insurance and you get a special high introductory savings rate. If you want to save some money, this is a good choice of card.
Plains Commerce Bank’s Access Visa Card and Total Access Card both offer 24-hour online account access and excellent customer service. The Access Visa Card offers immediate online decision while the Total Access Card offers you an instant decision, as long as you go directly to the bank itself.
The nice thing about American Pacific Bank’s Secured Visa card is that it offers no application processing fee. The deposit you make is the same as your credit. It is a great card if you need rehabilitation.
U.S. Bank’s SkyPass Secured Visa card offers great bonus miles as a reward, especially when making your first purchase and with renewal. It also offers up to $250 000 in Travel Accident Insurance.
Lastly, for a low annual fee of $18, Wells Fargo Bank’s Secured Visa card does offer higher interest rates, but you get free online access to your account, where you choose your payment due date, and you get free car rental insurance.
Among all introductory credit card offers, no annual fee secured credit card is probably perfect for everyone shopping for it. As a prospective card buyer, you may be a first time user or may be changing over from another card – you should always try and pick up a card with a special kind of offer suited just for you.
As an astute customer, you can get a good deal only if you are up to date with the latest offers being made by issuing companies. Credit cards with annual fees waived off are not mysterious, out of the world, rocket science stuff. Though this concept is laden with heavy financial jargon, no annual fee credit card offer is quite easy to understand, appreciate and of course, use for local super market or at any imaginable business transaction.
Atypical to any other cards, such simplistic cards offer you a world of convenient ways of transacting, either through the Internet, or in your local county. Let us first understand what a secured card is, as a complete understanding of the concept of secured credit card is imperative to demystify various jargon. Such annual card is more like a prepaid card, that is, you get to spend only what you have deposited.
This is a win-win situation for both the credit card company as well as the consumer. A no annual fee secured credit card, just like a normal card, resembles a prepaid history in its functioning.
Secured credit cards are issued against a savings account and the issuing company has the ability to stake claim to such funds in the savings account if the credit card holder defaults in paying credit card bills. This arrangement makes a virtual risk free to any credit company and is opted by consumers who have not so acceptable credit bill payment records, unstable employment record or are not financially stable.
The consumer by virtue of being the credit holder can avail all the conveniences offered by such card benefits in all business transactions. As mentioned earlier- secured cards are preferred by consumers who have little chances of being offered not secured cards. A secured credit card helps customers build up a good credit repayment history and avail other better credit cards.
A credit card issuer company levies various kinds of charges on the credit card user like Annual fees, Transaction fees, Interest charges etc. As the name suggest annual fees are paid once in a year and does not depend on how many transactions you do through the credit card.
It is a fixed charge and is generally paid during applying for the credit card or at the end of the financial year. If at all you need to opt for a secured credit card, you should be opting for a secured card with a good introductory card credit offer. While there are various kinds of introductory offers with secured credit cards, a no annual fee secured credit card is probably the most favored one.
If you are young and are looking for a good way to build credit, a secure credit card may be a good option. Secured credit cards are also good for older people who have never established credit. Getting credit is difficult if you don’t have any. Many lenders will attempt to look at your credit report to determine whether or not you qualify for a loan. If you don’t have a credit history, they may not take the risk of lending you money.
This can put you in a difficult situation. It is very difficult to function in society without having good credit. Getting a car, house, or job will often require a credit check. Because of this it is important to have a solid credit history.
How Do Secured Credit Cards Work?
While there are many ways you can establish credit, the most common method is to get a secured credit card from a company which offers them. As the name implies, this type of card is secured by using the money you deposit in the account. The money will stay in the account as long as you use the card. The card will have a balance limit on it which will not be more than the deposit you made. Once you have made a deposit into the account, you will be able to use the card just as you would with any credit card. Secured credit cards are secure for both the lender and the borrower.
Zero Risk For Your Credit Card Company?
The credit card company lowers its risk by only lending money which can be secured by the money deposited by the borrower. It helps the borrower because they avoid taking on a large amount of debt that they may not be able to handle. The secured credit card has many similarities to a regular credit card, and you will receive a bill every month. These cards are different from prepaid credit cards which do not have an account which is used to secure them. Most prepaid credit cards are very similar to debit cards, and you cannot build a credit history by using them.
Building Credit By Spending
You will begin building your credit report as you use the secured loan to make purchases. Though you can use your secured credit card for as long as you want, most people eventually switch to an unsecured credit card. Secured credit cards tend to have much higher interest rates than unsecured credit cards, and they typically don’t have an annual charge. With secured loans, a portion of your money is locked in an account and you are not able to access it; this isn’t a problem with an unsecured credit card.
Step Up For An Unsecured Credit Card
At the same time, having an unsecured credit card requires you to be responsible. You should only get this type of card if you’ve consistently made payments on your secured credit card with no problems. If you find that you have been late making payments, it may be best to continue using the secured credit card. You don’t want to put yourself in a situation where your debt increases.
Secured credit cards are great for young people who are just starting out. They carry a low amount of risk; this is something which benefits everyone. Since secured credit cards have a much higher interest rate than unsecured cards, you can expect to pay more in interest when using them. Those who are looking for low interest rates will want to look at unsecured credit cards. These cards are aimed at people who have built up a good amount of credit, and have demonstrated that they can make payments on time. Building up a solid credit history is an important part of managing your finances.
We get quite a bit of email asking about the differences between these two categories of credit cards so I decided to write a short article to explain the basics of each category. Each of these cards will require funds to be deposited in advance before using them, so what’s the difference? The truth is there are some distinct differences that may work better for people from different walks of life. I have listed these differences below.
Prepaid Debit Cards – Prepaid debit cards are a descendant of the secured credit cards that you are probably familiar with. Prepaid debit cards are just that, debit cards that have the Mastercard or Visa logo on them and are accepted worldwide. Much like your bank debit cards they deplete funds in your account as you use them, they do not require monthly payments and do not charge interest.
The major difference is how you qualify for one and how much it cost to use the card. Prepaid debit cards are not concerned with having card holders qualify for their cards. Most issuers do not verify employment, credit, addresses or even legal residency. This makes these types of cards very popular with immigrant workers in the United States illegally.
Debit cards are also more fee intensive than traditional secured credit cards. They have fees that are usually measured by transaction. Other fees include, loading fees, transfer fees, check deposit fees, annual fees and more. This is the price people have pay for convenience and anonymity. These cards will not report cardholder transactions to the credit bureaus, which is not ideal for those who are trying to establish credit.
In our society it is virtually impossible to live without some type of visa or Mastercard, debit cards fill this void. They offer a “de facto” banking system for those unable to qualify normally. They offer direct deposits for paychecks and many other features to a segment of society that traditional banks have left out in the cold. All in all, prepaid debit cards are pretty cool for some people.
Secured Credit Cards – are credit cards that are specifically designed for people with bad credit. Most people that apply for these types of credit cards do so to build or rebuild their credit. The other advantages are they appear, look and act exactly like a regular credit card. Most prepaid cards are clearly marked as debit cards with outrageous designs and colors.
The price you pay for rebuilding your credit is interest. The worst thing is that you are paying interest on your own money! Unlike prepaid debit cards, secured cards usually carry pretty steep interest rate, usually around 15%. Secured credit cards are not usually “re-loadable”. Meaning, once you make your initial deposit this becomes your “credit limit”. Your payments will bring down the balance giving you more purchasing power.
Secured credit cards report to the credit bureaus exactly the same way a regular credit card does. Creditors that review your credit for purchases have no idea if your credit card is secured or not. Another thing to watch is that most people will fund their cards with money that they intend to use immediately. Meaning they send in $500 and expect to be able to go out and spend that $500 immediately on receipt of their card. This is not good borrowing practices and will actually bring down your credit score.
Credit cards are viewed as liabilities on your credit bureau once you borrow over half of your credit limit. The credit bureaus see this as a sign of credit dependency and discount your credit score 35%. When this happens you are hurting your credit, paying regular credit card fees, paying interest on your money and carrying around a maxed out credit card.
Our advice to borrowers is to save up enough money so that your initial deposit is large enough to show a decent credit limit on your credit bureau, around $1000. Then leave it alone. It will only cost you the price of the annual fee to keep it in their bank. Most people feel the need to charge something on the card to “prove” they can pay it back. This assumption could not be further than the truth. Credit bureaus do not show monthly payments; they only show the months you have had the account open and any months that you have been delinquent.
When a future creditor sees your $1000 open line of credit, higher credit scores and the financial restraint you have demonstrated you will be much more likely to get the loan. Secured credit cards can significantly help you rebuild your credit and have a positive impact on you overall credit score. Unfortunately most people use them incorrectly and end up hurting their credit more than it was before getting the card.
We all know having a good credit score is a necessary thing in life. Having a good credit score means you have an easier time with buying a new home or buying a new car and many other major purchases you may make. But attaining that good credit score and keeping it isn’t always very easy, and if you’ve got a low credit score from previous mistakes you might have made, getting another credit card to use to rebuild your score can be quite difficult.
One solution is what is known as a secured credit card. This is a type of card that is basically meant for people with low credit scores who are therefore considered high risk. When opening a secured credit card account, you will put down a deposit, which the credit company will hold as collateral in the event you default on your payments. In other words, the card issuer will use that deposit to try to recover their money should you not make the payments necessary to meet your obligations.
Secured credit cards have credit limits like “regular” cards, and they vary from program to program. It is not unheard of for your limit to be the same as the deposit you’ve put down, meaning if you deposit 200 dollars to open the account, then your card’s limit will be 200 dollars. Other programs may allow you to have a limit that is more or less than the deposit amount, depending, with people with higher credit scores getting the higher limits as opposed to the lower limits people with worse credit scores may get.
If you’re considering getting a secured card to help repair your credit, make sure you read all of the fine print before opening the account. Though you will be required to put down a deposit that is ostensibly there to act as collateral if you default, card issuers often only go ahead and use that deposit when the account is closed completely. This means that if you are late on a payment, the card issuer may not take the payment from your deposit, and instead charge you late fees and interest for a while before they use your deposit. In this way, you can manage to end up with even more debt than you started with if you are not careful.
As long as you remain vigilant about making your payments and carefully inspect the terms before agreeing to open up an account, a secured credit card may be a good option for you if you’re looking repair past credit mistakes or have no credit to begin with. Just bear in mind that they are easier to acquire than “regular” credit cards because they can often land you in more hot water later due to their fees and restrictions.