Secured Credit Cards
Secured Credit cards are similar to credit cards; however, with secured credit cards the secured credit card provider requires a security deposit before you are able to access your credit. The security deposit is held as collateral and allows you to use your secured credit card just like a standard credit card. The security deposit is refundable and allows you to obtain approval on a credit card which you might otherwise not have received. If used responsibly, secured credit cards are great for those people that need to rebuild their credit history but are unable to receive approval on a standard credit card. In the chart below you can compare the top Secured Credit Cards in USA. Be sure to read the clear information on advantages and disadvantages, APR information, credit limits, rates and fees and the ability to rebuild your credit rating. Always read the terms and conditions carefully so you are fully aware of your commitment.
Compare Secured Credit Cards
What is a Secured Credit Card?
A secured credit card is similar to a standard credit card, however, requires a collateral deposit before you are able to access the line of credit in your account. The collateral you provide the bank or credit card provider gives them the assurance that you will pay back any credit should you default on your payment at the end of the month. If used responsibly, secured credit cards are perfect for those people that need to rebuild or build their credit history. This is because the banks and credit card providers report your payments to one of the three major credit bureaus.
What should I look out for when choosing a secured credit card?
When researching secured credit cards you should be careful to look out for high interest rates which banks can apply to the card. Not only this but some credit card providers charge unreasonable fees which you should ensure you are aware of before you apply.
What is the difference between a secured credit card and a prepaid card?
A secured credit card is not a prepaid card but is in actual fact a credit card. Because it is a credit card it reports to the three major credit bureaus, providing you with the opportunity to rebuild your credit if you use the card responsibly. Prepaid credit cards are more similar to debit cards because they do not report to the credit bureaus and your credit history is therefore not affected.
What are the benefits of secured credit cards?
The major benefit of a secured credit card is the ability to build or rebuild your credit history. Secured credit card providers report your successful, or unsuccessful, payments to the three major credit bureaus giving you a unique opportunity to rebuild your credit. It is important to remember though; if you default on your payments or donít make your minimum monthly payments then this will be reported to the same credit bureaus and will have a negative effect on your credit score.
The benefits of secured credit cards do go beyond rebuilding your credit. You will receive all the major advantages of having a credit card as well Ė worldwide acceptance, security with online shopping and some even offer reward schemes.
Will my deposit and collateral earn interest?
Most credit card providers or banks do not offer interest on the customerís security deposit, however, some do offer rewards on spending. Look out for this so that you can get the most out of your money. It is also important to ask your provider what the duration of time the money has to stay on deposit after the account is closed is. Some secured credit card providers require the deposit to stay on account for a couple of billing cycles to ensure there are no charges that may apply. It is important to read the terms and conditions carefully so you are fully aware what you are signing up for.