Secured Credit Cards For Persons With Bad Or No Credit Rating

Secured credit cards are credit cards that are issued to people with bad or no credit.

With secured credit cards, borrowers must first put down a secured deposit in order to borrow money.

Generally, the deposit is the exact amount or higher than the line of credit issued to the credit card holder.

For example, a $1000 deposit will result in a credit card balance of $500 to $1000.

For secured credit cards, the deposit is held in a special savings account.

The reason for a security deposit on a secured credit card is to deter delinquent payments. The credit card holder will lose the security deposit if payments toward the balance are not made.

Often times, if the borrower continues to make payments on time and in full, the line of credit will increase. The purpose of a secured credit card is to help those with bad or no credit build their credit rating. Secured credit card holders can build their credit rating by showing they can make payments on time.

The secured credit card holder is expected to make payments on the balance of the credit card in order to keep his or her deposit in the savings account. Secured credit cards work in the same way regular cards work. The only difference is the security deposit.

Secured credit cards are usually issued to people with bad credit or with no credit as a means of improving their credit rating. The advantage of having a secured credit card is that individuals with poor or no credit can raise their credit rating.

Although the lender of the security deposit holds the deposit in a savings account, the deposit is generally not lost if one or two payments is missed. Generally, the deposit is lost if the credit card account is closed by the credit card holder, or if the credit card account is extremely delinquent.

An extreme delinquency means that the balance of the card has not been paid off in 150 to 180 days. A delinquent account will continue to gain interest and will eventually retain a balance that is much higher than the original balance.

In the case this happens, the credit card holder will lose his or her deposit and will be left paying off a balance that is much higher than the original amount of money that was initially borrowed.

The specific terms of each secured credit card is outlined in the cardholder agreement, which the cardholder will sign before receiving the secured credit card.

Getting a secured credit card is a great option for those with bad or no credit.

In most cases, getting a secured credit card is the only option for improving a bad credit rating, or building credit where it was once seen as impossible.

Many credit card issuers will not loan money to people with bad credit or no credit.

However, getting a secure credit card will improve your chances at bettering your credit rating and moving on to unsecured credit cards with lower interest rates.

Often times, after a period of using a secured credit card, you will be eligible for an unsecured credit card from the same lender.

Typically, you can be eligible for an unsecured credit card in as little as one year. One disadvantage of a secured credit card is that the fees and service charges are often higher than those of regular unsecured credit cards.

However, in cases of people with a history of delinquency, a secured credit card can be far less expensive than getting an unsecured credit card.

Here is a list of secured credit cards:

Bank of America Secured Platinum Visa, $29 annual fee (16.99% APR).
Digital FCU Secured Classic Visa, No annual fee (8.90% APR).
Orchard Bank Secured Standard Mastercard, $35 annual fee (14.90% APR).
The Golden 1 Credit Union Secured Classic Visa, no annual fee (17.00% APR).
Wells Fargo Bank Secured Classic Visa, $18 annual fee, (20.49% APR).
Emigrant Savings Bank Secured Classic Visa, $20 annual fee (22.82% APR).

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