What Is A Secured Credit Card?
A secured card is different than traditional cards. It will work the same in the idea that you will be issued a major Visa or MasterCard. You will pay an interest rate and have monthly payments.
The difference is first you must make a deposit. This deposit will secure your account, in case you default and stop making your payments. It protects the bank from losing money.
Your deposit will range from $200 to $5000, you can decide how much. Then your card will be issued with a corresponding limit. For example if you deposit $700 your limit will be $700. This deposit is FDIC insured and fully refundable.
The biggest benefit to these is they will report monthly to the bureaus. This will enable you to build some positive payment history, if used responsibly. Many individuals that are interested in this card are looking to build some credit.
There is no credit check and approval is guaranteed. You just have to have a valid mailing address and social security number. This is a real credit card and can be used to make purchases over the phone and online.
Your account will also be protected by fraud liability, which means if you lose or have your card stolen you will not be responsible for charges. There is online account access and 24/7 customer support.
The only drawback is you may have an annual fee of about $50 and possibly an application fee of about the same amount. It depends on the card and their offers are constantly changing.
Your interest rate will typically be around 12%. It is so low because the account is secured with your deposit. On a side note for your score to get the most benefit from use of this card try and keep your monthly balance at roughly 25% of your limit.
This will show that you are a responsible user of your credit and it shows you have money that you could borrow but are choosing not to. In other words you are in a secure financial position.
If you are being called by debt collectors it will help your score to settle this too. However before you just pay, you need to request debt validation. Do this through written form with certified mail.
This will place the responsibility of proving that this collection agency legally owns your debt. It’s not uncommon for collection agencies to be unable to provide this evidence. In that case you are not responsible for the debt and can have the item removed from your report.
Removing negative items from your report is the other effective method to improve a damaged score. To do this you must file a dispute with each bureau challenging the validity of the negative item. They will investigate and remove any marks that are not verified.
By doing this and using your card properly you will be able to improve your score dramatically. You don’t just have to live with a bad score! Past financial mistakes do not have to haunt your for 7 – 10 years or longer! Take action and take the first steps to a better lifestyle with an improved score.
For a free credit consultation call 1-800-483-0256 or to learn more about what is a secured credit card or for more about credit cards for bad credit visit us.