As you enter into the world of credit for the first time, you may come across the number of available credit card offers. Some credit cards are secured while others are not. What do you do if you have little or bad credit history? Who will accommodate you? Making bad credit decisions could cost you in the long run but one of the quickest way to rebuild your credit history is by getting a credit card. Luckily, we have options for you.
Here is what you need to know about secured credit cards and how they are sometimes better than unsecured ones.
A secured credit card is a card that is backed by a cash deposit (security deposit) that you must supply beforehand. Secured cards help people with little credit history, bad credit, or those who do not have credit history at all. When you initiate the process, the amount of money that you deposit is your credit limit for the secured card. Also, you may add more money to the initial deposit amount to extend your credit limit.
In contrast, unsecured cards are for people who have good credit history, no collateral, and what you are approved for is based on your lender’s assessment of your credit risk. Factors considered by the lender include payment records, credit score, credit reports and other indicators of your financial ability to pay.
Easy to Get
Without a doubt, secured credit cards are the easiest cards to get. Lenders will approve anyone with little or poor credit history, so long as they are willing to pay the security deposit and fees associated with it.
If you are having money management problems, it is wise to choose a secured card because unsecured cards can be a deadly combination. With a secured card, you will be unable to spend beyond your security deposit so in theory, secured credit cards will force you to live within your financial limits.
Secured card keep your spending in check and help you avoid a debt burden.
Rebuilding your Credit
A secured credit card does not come with a fantastic interest rate but, these cards will benefit those who have a bad credit history. It is a fast and efficient way to rebuild or build your credit.
If you have any questions related to the use of secured or unsecured credit cards or need any other financial assistance, please visit us at www.unitedcounselors.org.