1. What is a secured credit card?
It is a type of credit card that is created for people with bad credit or no credit history.  To make up for the risk, the applicant is required to submit a deposit.  The amount of deposit will also define the secured cardholder’s credit line.

2. How do I apply for a secured credit card?
Some banks and credit card issuers offer a secured credit card.  You can personally apply from your local bank or send an application online.  If you are a member of a credit union, you may inquire if your Union offers a secured credit card to enjoy lower interest rate and fees compared to commercial Issuers.

3. What fees should you be aware of?
Some secured credit cards charge an application fee while others may not.  Although all secured credit cards carry annual fees, you should be able to find a card with a reasonable annual fee by doing your research.  Carefully examine the fine print to make sure that there are no hidden charges.

4. How much is the security deposit?
The security deposit may runs from $300 to $500, depending on the Issuer. If you need a higher credit limit, be prepared to raise your cash deposit as well.

5. Can a secured credit card help me get out of bad credit?
Yes.  A secured credit card can be used for rebuilding bad credit but this will depend on the kind of card you choose and how you will use it.  To rebuild credit, you must use your secured regularly.  However, it is important to pay back your charges on time at all times.  More importantly, you need to make sure that your payments will be promptly reported to all three major credit bureaus as it is the only way you can raise your credit score.

6. Will others know that I’m using a credit card for bad credit?
No.  Your card will not show any sign or print indicating that you are using a secured account because you have bad credit history.  That information is exclusively between you and your secured card Issuer only.

7. Will my deposit earn interest?
Some Issuers place the security deposit in a timed deposit account to earn interest.  Before choosing a secured card, understand how long your money has to stay in the deposit account should you want to terminate your secured card.  Furthermore, understand if you can keep the interest your money earned or if it will go to your card’s Issuer.

8. Can I get an upgrade to unsecured credit card?
Some issuers will automatically upgrade your account to an unsecured credit card after a year of consistent payments.  You can also request for an upgrade if you think you have proven your credibility as a cardholder.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

However, there are circumstances that may lead us to bad credit. It is not always because a person has an over-spending habit. Sometimes bad credit is a result of an unexpected events such as illness, divorce, lost of job, etc. Whatever the reason is, there is still a chance to repair a bad credit history.

Secured Credit Cards

Some people may think that getting a new credit card to recover from bad credit is a wrong move. Yet, if done the right way, it can actually be an effective step to rebuild bad credit.

Credit cards for people with bad credit? Yes, this is possible. Many credit card companies are offering bad credit credit cards or secured credit cards.

A secured credit cards are just like a traditional credit card in the sense that you can use it for making purchases or paying bills. However, you must deposit a sum of money which acts as security for your debts. If you cannot pay on time, the bank will use your cash deposit to pay off your debts. The amount you deposited will act as your credit limit as well.

How Secured Credit Cards Increase Your Credit Score

Most secured credit cards offer credit reporting to the three (3) major credit bureaus. Paying on time and avoiding exceeding your credit limit will surely improve your credit rating. Be sure to understand how you are being scored so you can work on the improvement of your personal credit history.

How to Apply for a Secured Credit Cards

The easiest way to look and apply for a credit card for bad credit is to search the internet. Most credit card companies offer online applications making the application processes faster and easier.

Disadvantages of Secured Credit Cards

Due to the high risk involved, most credit cards for bad credit come with higher fees and interest rates. There are credit card companies that charge application fees, processing fees and annual fees.

Is it worth getting a secured credit card if you have bad credit? Yes, it is. Despite having to pay higher fees and interest rates plus submitting a deposit, secured credit cards can really help you repair your credit history.

With regards to higher fees and interest rates, you just need to shop around for choices and compare your possible options before choosing the best deal. Remember to always make payments on time to avoid penalties and incurring negative remarks on your credit report.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

However, they can apply for a secured credit card in order to fix their credit Before submitting your application, here are some important facts you need to know about this card:

Fees:

This type of card may involve fees such as processing fees and annual fees. Such charges may also vary from one credit card company to another. You need to check the fees before applying so you can avoid credit cards with very high charges.                                                          

Deposit:

Secured credit cards require a cash deposit which can range from $300- $500. There are secured credit cards with minimum and maximum deposit limits. Some issuers may place your cash deposit in an interest-bearing account. It that’s the case, see to it that you clearly understand the terms of your credit card issuer.

Your credit limit can either be the same as or exceed to the value of your deposit. However, there are instances when your credit limit may be less than your security deposit.

You can add money to your deposit so as to raise your credit line. As an incentive for being able to pay on time, some banks may increase your credit limit after a few months of consistent payment. The cash deposit will be used by the credit card issuer in case the cardholder fails to pay off charges on time.

Qualifications:

For those who want to apply for a secured credit card, the requirements may vary from one company to another. Aside from the security deposit, some credit card companies may impose specific qualifications on age or income bracket.

Payment Reports to the Credit Bureaus:

There are times when the card company does not report your payments to the three major credit bureaus and in such case, it does not help rebuild your credit rating. If you wish to rebuild your credit history, your payments should be reported to the credit bureaus.

Unsecured credit cards have lower fees, fewer restrictions and lower interest rates. Now, if you want to upgrade your secured credit cards to an unsecured credit card, it can be possible after a year of consistent payments.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

• Understand the terms and conditions of the credit card company. Before signing up, you have to read the fine prints first in order to avoid unpleasant surprises later on.  You need to verify some important information: the length of grace period, the rate of interest, credit limit, charges, and the other details of the offer.

• Check your lifestyle and need for credit. If you are getting secured credit card to fix your credit rating. You must choose a card that matches your lifestyle.  If you do not need to use your credit card on large purchases, choose one with a lower credit limit.   

• Compare different types of cards in order to find the best card for you. There are lots of companies offering secured credit cards, and every company has their own set of rules. You have to carefully compare credit cards to find the one that suits you best.

• Period to wait to qualify for an unsecured card. Secured credit card holders can qualify for an unsecured credit card after a year of consistent payment.

• Verify if they’re reporting to the main credit bureaus. This is very important if you are attempting to reestablish your credit history.

You have to make sure that your chosen secured credit card company reports your payments to the major credit bureaus to have your credit report updated.

• Research for more information. Every 6 months, the Federal Reserve publishes a survey of credit card terms. There are various websites over the internet where you can compare offers.

These are just some of the important points that you have to think about before applying for a secured credit card. All secured credit cards may not be the same, and so, it is important to compare them to make sure that you’re signing up for the right one. This can also serve as your stepping stone to get approved for an unsecured credit card.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

Having poor credit rating raises doubts to your capacity to pay debts. Naturally, credit card companies are looking for those who can pay off their debts on time and with a great credit history to prove it.

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Good thing, those who have poor credit rating may apply for prepaid credit cards. There is no background check or credit check conducted upon review of your application. The application procedure is a lot more convenient than applying for a credit card. Issuers of prepaid debit cards does not care about your credit standing. In fact, a prepaid card can be used to rebuild a bad credit. How can that be possible?

Prepaid Debit Cards and Bad Credit

Today, you can have a debit card that does payment reporting to the three major credit bureaus. Thus, as you use your prepaid card for purchases, you are also improving your credit rating.

You can go online and do research on various prepaid credit cards advertised in the market. Compare different debit cards before making a choice. Consider these important pointers:

• go for one that best suits you and your needs
• go for those that report to the major credit bureaus
• go for the one with reasonable fees

Owning a debit card can be a great way to control your spending. Set a specific budget each month and stick with the plan. Before using your debit card, check your available balance and carefully consider whether you really want to spend it for that particular purchase or save it for more important buys.

Unlike credit cards that allow you to shop now and pay later, you can only use your prepaid debit card if there are available funds in your account. This limitation prevents debit cardholders from damaging their credit or getting stuck in bad debt. Also, there is no need to think about over-the-limit charges, over draft fees, late charges, and interest rates.

Yes, you can apply for a debit card to rebuild your credit rating one step at a time. Once you have proved your credit worthiness, that’s the time you can apply for a regular credit card with good rates.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

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Protection Against Unauthorized Use. Aside from a PIN code, your issuer must also provide you with a security code that you can use for transactions where the actual debit card is not presented such as online or over-the-phone payments.

Online Account Access. Online banking is an indispensable feature for monitoring your account, sending payments, or making money transfers using the internet.

Reward Options. Some prepaid debit cards offer reward programs that may complement your lifestyle or spending style.  Check out the different prepaid debit card reward programs available in the market and consider if there is one that’s right for you.

Reasonable Costs. Although you don’t have to worry about interest rates or late penalty fees, you want to make sure that your prepaid card does not charge you with hidden costs or expensive transaction charges.

Accepted ANYWHERE. It is strongly recommended to choose prepaid debit cards that is supported by a major credit card network such as VISA, MasterCard or American Express.  This way, you can be sure that you can use your prepaid card for payment at any merchant or establishment that accepts VISA, MasterCard or American Express cards.

Credit Reporting. Take note that not all prepaid card issuer provide credit reporting service.  Ask your issuer if your payments will be reported to the major credit bureaus (TransUnion, Equifax, Experian) as that is the only way you can use a prepaid debit card to build credit history.  Otherwise, you can be using your prepaid card to pay most of your bills but none of your payments will be included in your credit report.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

The Difference of Credit Cards and Prepaid Cards

Credit cards give its cardholders the freedom to use the card for advanced purchases and pay for them at a later time.  Generally, a credit card comes with a grace period where the cardholder must pay off his/her balances to avoid incurring the interest rate fees.  A credit cardholder may choose to pay off the full balance or submit only the minimum required payment.  However, if a credit cardholder fails to submit any payment on or before the due date, he/she will incur an additional late penalty charge plus interest.

On the other hand, debit cards are prepaid or paid in advance.  In order to use a prepaid debit card for payment, the cardholder must have available funds in the account.  When the funds have been used, a prepaid cardholder must make a new deposit before he/she can use the card for new transactions.

The limits of prepaid debit cards minimize the risk of teenagers falling in the debt trap.  Parents can deposit only a limited amount of cash each month to their teen’s debit account to keep their spending on track.  Furthermore, prepaid cards eliminate additional costs on interest rates and penalty fees.

Prepaid Debit Cards that Build Credit

In the past, only credit cards can be used to build credit history.  Today, there are issuers of prepaid debit cards that include credit reporting services to the major credit bureaus.  Yes, a student can now start building an early credit history using a prepaid debit card.  Use the internet to search for debit card issuers with a credit reporting provision.

Send Allowance Conveniently and Cheaply

Prepaid debit cards are also valuable tools for sending and receiving money.  Prepaid debit card money transfers are really much cheaper than using traditional Wire Money Transfer Services.  Parents can transfer funds to their student’s debit account through online banking without the need to pay transfer service charges.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

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