Secured Cards

Apply for Secured Credit Cards

If your FICO score is bad or you have no credit history and want to establish one, you can apply for a secured credit card. You can try to qualify for unsecured bad offers as well, but these plastics are not easy to obtain for people with the lapse in their credit report or those who have never had credit before. Banks are hesitating to issue plastics to people with limited FICO score. In most cases you need to have a flawless credit history to qualify for an unsecured offer.

Secured credit cards are rather similar to unsecured ones and usually have the same security and charging features. The main peculiarity of a secured plastic is that you have to pay a deposit to the issuer, which amounts to your spending limit. This is the usual security measure of the bank to prevent the risk that you may not pay back.

Secured credit cards remind, for the most part, of bank debit cards, except the user makes monthly payments and doesn't withdraw all the money at once. These plastics are also similar to prepaid cards in the main principle that money has to be deposited first. But as for prepaid cards, there can be any amount you wish. Also there are fees and charges every time you input the funds.

Some banks may give you a spending limit, which is above your collateral. Others will only give you a credit line, which is lower than your security deposit. If you are thinking about getting a secured card, search for all the available options first. A secured card is a perfect match for you:

• If you have bad credit.
• If you have delinquent student loan debt.
• If your spouse has a high debt ratio.
• If you have filed bankruptcy.
• If you are unemployed or have recently started a new job.

Secured credit cards:

• Help to establish credit history if you have no credit.
• Help to improve your rating if you have bad score or bankruptcy.
• Offer protection in case of emergencies.
• Give you the same benefits as unsecured cards.

Of course, obtaining and using of secured plastics has some drawbacks. The main disadvantages are that you have to make a security deposit, which is equal or even higher than your spending limit. The deposited funds are frozen until the time when your FICO score is reestablished. You probably won't be reimbursed for the interest on your security collateral. As the cardholders are considered to be high risk, a higher APR is applied. This can make your monthly bills rather high.

The cardholders should make sure to pay all the balance in full when the bills arrive. Remember, that making on time payments is the best way to improve your FICO score! If you use your secured card reasonably, you will soon enjoy the best deals.

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