When it comes to secured credit cards, many myths abound. From “they’re only for people with bad credit” to “they’re more expensive than unsecured cards”, you can’t always distinguish the truth from the lie. Worry not. I’m debunking the most common secured credit card myths.
1. Secured Cards are a Bad Credit Stigma
Think a secured card announces to the world that you have bad credit? Guess again. Most secured cards are indistinguishable from unsecured cards. Your card itself won’t say anything and your credit report won’t show the fact that your account is secured.
2. Secured Credit Cards Have High Interest Rates
Many people assume that secured cards are for people with bad credit, and as such they have a higher interest rate attached to them. This isn’t the case. A secured credit card is less of a risk to creditors because the credit line is backed by a bank account. Because of this, secured cards often have lower interest rates than many of the bad credit unsecured cards.
3. They’re For People with Bad Credit
If you think a secured credit card is only for people with bad credit, you can rethink that logic. Secured credit cards are for people from all walks of life. You don’t have to have bad credit to carry one. Many people with decent credit qualify for unsecured cards, but not the best ones. In these cases, a secured credit card can offer better terms and higher credit limits.
4. They’re Issued by Predatory Lenders
Secured credit cards, more often than not, are not issued by predatory lenders. The cards issued by predatory lenders have high interest rates and high annual fees and processing charges attached to them. While a secured credit card is likely to have an annual fee it will usually be reasonable (in the $50 range), as will the interest rate.
5. A Secured Card Is Like a Debit Card
This one couldn’t be further from the truth. Secured cards are connected indirectly to a bank account, but they work nothing like debit cards. Your secured credit card account will be reported to the three credit bureaus, helping you improve your credit rating. Debit cards don’t do this. And like unsecured cards, you must pay your secured credit card statements when they come in each month even though your security deposit is securing that line of credit.
So are secured cards the black sheep of the credit card family? Absolutely not. A secured credit card can be a valuable financial tool — it’s just a matter of differentiating the myths from the reality.
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Debunking 5 Secured Credit Card Myths
What Do You Mean By A Secured Credit Card?
Secured credit cards are another very popular breed of credit cards. Secured credit cards, as their name suggests, are secured. Well, they are secured for the credit card supplier, really. Secured credit cards require you to open an account with the credit card supplier and maintain some cash balance in that account. This cash balance acts as a security for the supplier of secured credit card.
Your credit limit is dependent on the amount you hold in the account that you have started with the supplier of secured credit card. This is generally between 50 to 100% of your account balance. So in that sense, secured credit cards are not really credit cards (since they don’t offer you any credit really). For this reason, the secured credit cards are sometimes also referred as debit cards.
Why is the concept of secured credit cards so important?
As we know, credit card debt is a raging problem which is caused by improper usage of credit cards. Such people end up spoiling their credit rating to an extent where they cannot get another unsecured credit card (that is what we call the commonly used credit cards). Even after they have paid off their dues and cleared their debt, their credit rating still haunts them. For such people, secured credit cards are a boon.
Secured credit cards present them with an opportunity to not only get a credit card in the first place but also to improve their credit rating by using the secured credit card in a disciplined way (paying their dues in time, controlled spending, utilizing a maximum of 70% credit limit etc). As they continue with these good habits, their credit rating gradually improves over a period of time. Hence secured credit cards provide them with the means of rectifying their mistakes (credit rating).
It’s not just the people with bad credit rating who go for secured credit cards. Some people go for secured credit cards because they don’t want to bother themselves with the bills etc for credit cards. They don’t like to even fill-up application forms for unsecured credit cards.
Then there are some who just don’t like to borrow money (even if it means borrowing from a credit card supplier by using their credit card). However, such people are very rare to find.
Some people just go for secured credit cards because they have heard a lot of horrifying stories on credit card debt – maybe someone from their family or one of their friends was devastated by credit card debt and they don’t want to repeat the mistake. So they decide to go for a secured credit card.
Whatever be the reason for going for it, the secured credit cards are surely popular too.
Posted in Secured credit cards 
Tags: Cash Balance, Improper Usage, Secured credit cards 
No Comments »Capital One Secured Credit Cards: Good Choice For Bad Credit
Never mind the story behind the name. There’s an obvious reason it’s called Capital One, and one of them is that it’s the credit card of choice for people with huge need for capital.
Since its creation in 1995, Capital One has become a successful financial service provider. The global company maintains operations in various countries. Forbes Magazine lists Capital One as one of the 100 Best Companies to Work For. And why not? Capital One offers an array of financial services, including home, auto, and personal loans; financing for dental, medical, and cosmetic procedures; and various banking services. Furthermore, the company provides a line of credit cards touted as the perfect fit for people with bad credit: Capital One secured credit cards.
Secured vs. Unsecured
A secured credit card is one that requires an applicant to submit a security deposit. If you have bad credit or none at all, odds are you can only get approval for a secured credit card, or an unsecured credit card with high interest rates and fees.
Should you feel insulted about being asked to put up a security deposit before you can get a plastic? You could, but this would be a waste of time. After all, there are many credit card companies that will readily offer you credit cards, but these come with steep initiation, registration, monthly, and annual fees. So if you have bad credit, it makes more sense to send in a deposit to secure one of the Capital One secured credit cards.
Advantages of a Secured Credit Card
In addition to saving money by obtaining a Capital One secured credit card, you could also get money back, in the form of your deposit. Just be sure to follow your payment agreement with the company, and avoid defaulting on the account. Furthermore, by establishing credit with a top credit company, you are improving your chances of being offered an unsecured credit card later on. You see, if you pay off your dues religiously, you are already building good credit history. Your credit score improves every time positive payment history is reported to one or all of the major credit bureaus.
Applying for Secured Credit Cards
While secured credit cards have their advantages, it is wise to apply for a Capital One secured credit card first before getting a secured card. This is because the steps involved in applying for Capital One secured credit cards vary only slightly from those required of applicants for secured credit.
Credit Limits
If you get a secured credit card, your credit limit will be based on how much you deposit into your secured account. Capital One secured credit cards’ initial credit limit is $400. You might find this sum laughable. After all, it’s not enough to pay for a new car or roundtrip tickets to Timbuktu. But remember that Rome was not built in a day. Likewise, rebuilding bad credit takes time, and is an activity best done step by patient step.
Making the Secured Credit Card Temporary
Capital One secured credit card is one of the few options left to people with bad credit. So, be always mindful that you don’t exceed your credit limit. Where credit scores are concerned, the magic number is 750. If your credit score reaches that value, you can be approved quickly for credit cards, auto loans, and mortgages. In addition, the American Congress has passed the Fair Credit Reporting Act. The law standardizes the collection, using, and sharing of consumer credit data. This provides help in turning bad credit into good credit.
Everyone deserves a second chance, and the Capital One secured Credit cards offers exactly that to people with bad credit. Don’t waste second chances. There might not be a third one.
Posted in Secured credit cards Tags: Establishing Credit, Home Auto, People With Bad Credit 6 Comments »Secured Credit Cards – Getting a Student Credit Card
If you are considering applying for a student credit card, you will most likely be applying for secured credit cards. Secured credit cards are a way of borrowing against collateral. The collateral is in a bank account that is held by the credit card company that issues the student credit card.
It is easy to get a student credit card if you are willing to get secured credit cards. You can apply online after you find the student credit card that is right for you. When you borrow money on secured credit cards, you have to pay it back just as you would with an unsecured card. You pay interest on any outstanding balance. The bank account is usually held as collateral in case you default on your loan.
Secured credit cards are not like debit cards. Whereas a debit card is preloaded with your own money but has a credit card logo, secured credit cards are not preloaded. They also go on your credit report, unlike debit cards. If you are considering getting a student credit card, you can get either secured credit cards or a prepaid debit card easily. The difference is how you will pay back the amount that you owe. Secured credit cards offer an advantage to someone who is responsible enough to write a check to pay off the card each month, or at least pay towards it in a very timely manner. The advantage of using secured credit cards as a student credit card is that you can build your credit score.
The disadvantage of using secured credit cards as a student credit card is if you do not pay on time. This can end up causing you to have a bad credit score, not a good idea for someone who is just starting out with credit.
If you decide to apply for a student credit card, weigh your options. Secured credit cards are a great way to establish credit in your own name and to build up your credit score to the point where you have solid borrowing power. This can benefit you after you get out of school and get a job. You will be able to buy a car or a home with a low interest rate if you have good credit.
If, however, you are irresponsible and tend to make late payments, you should consider debit cards instead of secured credit cards for your student credit card. Until you are ready to take on the responsibility of spending wisely and paying off your debt, you should not get a student credit card.
Posted in Secured credit cards Tags: Credit Report, Credit Score, Secured credit cards 48 Comments »What should you know about secured credit cards?
ve had a troubled credit history, then there is the chance that you will be denied the usual credit cards when you apply for them. Typically, if you have a credit score of 600 and above, you can get a credit card without a problem. If you have a credit score of 500 to 599, then you may be able to get a credit card, but you are going to pay a high interest rate. If you have a credit score of 499 and under, then you are typically going to be refused for a credit card, and this may present a problem. First of all, if you are trying to rebuild your credit, then you need a credit card because a diversified amount of credit helps your credit score. If you can’t get the credit card, then your credit score suffers. As well, we live in a credit age, where many things are available through the use of a credit card, particularly online. To order anything online, nine times out of ten you need a credit card. If you don’t have a credit card, you can find yourself severely limited. So, what options are there for you if you have bad credit but need a credit card? There are not many, but the best option you have at your disposal is a secured credit card. A secured credit card is a credit card that you have secured with a deposit amount that you place on the credit card. If you want a certain credit limit, then you need to deposit between 50 and 200 percent of that money onto the credit card. For example, if you want $1,000 on your credit card, then you need to deposit between $500 and $1,000. However, there are some companies that will allow you to deposit $100 onto a secured credit card to have a $1,000 credit limit. Even though you made a deposit, you are still expected to pay monthly payments. The money does not come off the deposit, but off the credit card. However, if you find that you are about to default on what you have spent on the credit card, you can use the deposit to pay it off, but you will most likely lose the credit card at that point. The main advantage of having a secured credit card is that if you have bad or no credit history, your history on the secured credit card is reported to the credit bureau. Therefore, if you make regular payments and show yourself to have good payment habits on the secured credit card, you will improve your credit score as a result. Once you close out the credit card after you are done using it, as much as years down the road, you will get the deposit back on it. If you have a poor credit history and want to improve on it, then your best option is a secured credit card. It costs you money at first, but it can greatly improve your credit history and score. If you or anyone that you know would care for more information regarding this post, feel free to visit http://www.creditrepairbydrjen.com
