Secure credit card is actually a road to unsecured credit card. How? Actually a secured card required a security deposit due to zero or bad credit history. Those who don’t have good credit score, or have no credit history at all, can deposit some amount as a security to get the credit card. This type of credit card is referred to a secured credit card.
What is Secured Credit Card?
Unlike to unsecured credit card, secured cards come up with high interest rates with not much rewards & perks. However, if you want to get – for instant Walmart credit card – though you do not need a very good credit score – but you must have some decent credit history with no financial allegation at all. So, in this case, secure credit card is best way to help improve your FICO score or credit history.
How it Works?
Here is the ultimate guide on fully secured credit card. A secured credit card is a credit card where you give the issuer a deposit in the amount of the credit limit you’re asking. For example, many credit card issuers start 300 dollar deposit and they give you a credit card with a $300 credit limit.
Don’t worry, as long as you can continue to pay at least the minimum due on time on the card, you get your money back usually in 7 to 12 months. Check the credit card issuer guidelines for their policies. Once you have received your secured credit card you won to use it sparingly.
Make a small charge then pay it off. With the passage of time, increase the amount to the level you can pay off on time. Do this practice for 6 to 12 months and you’ve a good credit history with you to apply for any good credit card.
So, people with bad credit, or no credit can deposit a certain amount to reduce the risk to the issuer, and get a credit card to help build good credit history.
Effective Way to Use it
If you want to get most out of your secured credit card, here comes some of the main points.
- Your main focus behind secured credit card should be building or rebuilding credit.
- Make one or two small purchases a month and use it sparingly.
- Always pay your balance in full, on time before due date, every month.
- Keep checking you credit score if its increasing gradually.
- When you find your credit score is good enough, ask your issuer to upgrade your card to unsecured credit card.
What are the Best Secured Credit Cards in 2019?
What are the best secured credit cards? It depends on what unsecured credit card you’re looking to apply for. At times, if you want to get a credit card that requires a very high credit score, you’re to risk on a secured credit card with very high interest rates, with depositing a healthy amount along with some more monthly purchases.
But no matter how high interest rate is, if you make payments on time, you won’t be bearing any penalties. So keep a low balance to help improve your credit.
So, card by Walmart, Chase Bank, Capital One, Self Lender, OpenSky, Green Dot Premium, First Progress etc. could be considered one of the best secured credit card to take the start with.