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Do you have a bad credit history that does not allow you to enjoy the luxuries of credit card? Do you to undergo the pain of carrying cash to shop because you have no credit history? Well, if that is the case with you, then do not be disheartened because you can also have a credit card. For people with bad credit, many financial institutions and lenders have issued a secured credit card. If you have never heard of this, we will tell you all about secured credit cards.
What
is a secured credit card?
Just focus on the term ‘secured’ and you will get a fair idea of
what it is. Secured credit cards are credit cards, which have a security against
them. Secured credit cards are similar to secured loans. To apply for a secured
credit card, you will have to fill an application form that will be given by
the issuer and returned to him after you have filled it. The issuer will further
see your credit history and if he is assured that you are eligible for a secured
credit card, he will issue you one against the security. However, negative facts
like credit card frauds, bankruptcy, etc will not work in your favour.
Secured
Card vs. Unsecured Credit Card
You can use secured credit cards in the same way as unsecured credit cards.
The benefits and usage of secured credit cards are synonymous with unsecured
credit cards. But the fines and penalties are also the same. You can be fined
if you do not pay your bills on time or if you cross the credit limit. The only
difference between secured credit cards and unsecured credit cards is that of
security.
What
is the amount of security?
To get a secured credit card, the issuer will ask you to deposit money in the
savings account or certificate of deposit, which will be your security. The
amount of security is not fixed but it should not be less than $300. The issuer
will decide the security by considering your line of credit and income. Some
issuers may provide you with more credit limit than the amount of security,
while some may offer lesser credit limit that the amount of security.
Choosing
the issuer
You get a rate of interest on your security deposits, so choose an issuer who
offers you better interest. Before taking a final decision, read the terms and
conditions carefully.
