Secured credit cards help you to build credit much easily than a regular credit card. It is even much easier to get with low credit score as compared to regular credit cards. In secured credit card, you need to deposit some amount of money before starting to use the card to make purchases. However, a secured credit card too has some fees included just as in a regular card, like application fees, processing fees and annual fees, etc.
The things that you should know before taking a secured credit card are:
1. The costs of the card - Like the regular credit card, the secured credit cards too require you to pay fees like the application fees, processing fees and annual fees. It is better to check all the fees included with the card offer to avoid high cost ones.
2. Where to get a secured card – You can get a secured credit card at the credit unions. They offer secured credit cards to their members. If you join a credit union, you will easily be able to get a secured credit card. Also some banks do offer secured credit cards. After this you can make small purchases, and make on-time payments on these to improve your credit score.
3. What money needs to be deposited – The amount to be deposited against a card depends on the card company or the bank. It generally varies from $300 to $500.
4. It should be reported to all 3 credit bureaus – You should report to all the 3 credit bureaus that you have taken a secured credit card. This card is going to improve your score. Thus it is of utmost importance that this card should get listed on your credit report.
5. Problems that I may face – This too depends totally on the company. Some companies are totally troubleless, whereas some harass their customers by charging exorbitant fees.
6. How to use the card – Use the card to make small purchases from time to time. Then, make on-time payments on it. This will help you build a good credit history, and thus good score too. However, it is not advisable too keep the card longer than needed.