If you have bad credit and are looking for a credit card, you probably know by now that many card issuers do not qualify for a regular card. Often you have to go for a bad credit credit card, which comes with its own set of considerations. Many of these cards for people with bad credit are what the industry calls the protected card.
A secured credit card is a card that is secured by a deposit you make. Often the amount that you deposit is equivalent to credit card line, so if you are qualified for a card with a limit of $ 300 must deposit $ 300 to have the card. The money is held in a savings account as a fail-safe in case of default on the card, which helps to protects the credit card issuer.
Many people with bad credit have some serious doubts about using a secured card, which is understandable. While it's not a one-size-fits-all scenario, the fact is that secured cards can be a useful tool for rebuilding your credit. Continue reading for reasons why you should give serious thought to applying for and using a credit card.
Not being able to qualify for an unsecured card is perhaps the most compelling reason to get a secured card. You might have items on your credit history that are so negative that lenders do not want to extend you credit. If this is the case, the only way to re-establish your credit might be getting a credit card guarantee. Is not ideal, but having a secured credit card can help you to work in the future, the road back to unsecured credit lines. Of course this is only true if the card issuer reports your business of the three major credit agencies, so make sure it is declared in writing before you apply.
You can get one right out of the bankruptcy.
If you have had the misfortune of going through a bankruptcy in the past, you know that as a result of qualifying for the credit may be difficult. Why secure card involves much less risk, lenders are more likely to take a chance on you. This means that potentially you could have a credit card, only a few days or a few weeks after the bankruptcy discharges.Lower taxes and interest rates. Even if you can qualify for an unsecured credit card, you could end up paying more out of interest and taxes would be laid on a deposit for a secured card. Of course must shop carefully for any credit, even one that is insured, because there are still some that charge a high interest rate as well as a high annual fee and sometimes a monthly maintenance fees tall enough. But generally you can get a card with much lower costs and an interest rate significantly lower if you go with a credit card guarantee.
Then convert it to an unsecured card. If you find that getting an unsecured credit card is an impossible task, a secured card could be the perfect location for your goal. Depending on the protected card might be able to convert it into an unsecured card. Some credit card companies do not convert protected cards real credit card, but if after a certain period of time with good behavior card will you extend an offer for an unsecured card, and then close the guaranteed line of credit.
A higher credit line. Sometimes A secured credit card to qualify for a line of much greater credit than if you were to qualify for an unsecured card. The reason why is because you are putting your money down on paper, in other words, if by default the card issuer maintains your money. Some secured credit cards allow you to make regular deposits, savings account associated with the card, increasing your credit limit over time. Depending on the issuer might be able to increase your credit limit for over $ 1,000. Having a high credit limit is important as it affects your credit score. The more credit you have available to you it's easy to qualify for future credit lines. In addition, the higher your credit limit less it hurts to carry the same amount on the card as a balance for the total amount a percentage less than the credit limit of the card.
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