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Benefits of a Secured Credit Card

A secured card is recommended for people with challenged credit or no credit. This card requires a deposit to secure a certain amount of credit, but you will have the same privileges of unsecured cards. A secured card may be used for renting a car or for other purchases that may require a credit card.

Do I Have to Pay Interest on a Secured Credit Card?

Yes, you will be required to pay interest on the credit card if you do not pay the card in full each month. If you are late on the payments, the interest rate may be increased. The credit card company will also report your payment history to a credit reporting company. Poor payment history will damage your credit even with a security deposit.

Who Will a Secured Credit Card Help?

People Who Have No Credit History. If you have no credit history, obtaining a credit card may be difficult because creditors have no way of knowing whether or not you are a responsible person or not. A secured credit card is an excellent way to establish credit if you have none.

People Who Need to Reestablish Their Credit. Secured credit cards to rebuild credit will help clients repair their credit score over time. If your credit history is damaged, you will be able to apply for a secured credit card. Some companies will issue a secured credit card to even a person with the worst credit available.

If you have a Visa or MasterCard and make consistent on time payments, your credit card company will take notice and report this to the credit agency. The credit card company will then serve as a reference for your on-time payments and your credit history will improve.

What Privileges Do I Have with a Secured Credit Card?

Your secured credit card allows individuals to charge hotel reservations, airline tickets and rental car reservations. As long as your credit history is strong, you will have some of the same privileges as some of these other credit cards. If you pay more than the minimum on time each month, many customers may be able to qualify for an unsecured card in as little as 12 months. Secured credit cards are also protected by the Fair Credit Reporting Act.

What Happens If I Get Into Debt Again?

A secured credit card can help you avoid getting deep into debt again. If you do get in debt again and your account becomes delinquent, your security deposit will be seized and your account will be closed. This will help to minimize your losses due to debt.

To avoid getting into debt, do not sign up for a credit card with a subprime interest rate. These cards prey upon people with bad or no credit. The fees on subprime cards can easily total in excess of $200 annually. Most of your credit line may consist of paying fees on a small purchase.


Credit card companies understand that sometimes circumstances in this world cause us to become delinquent on our accounts. However, a secured credit offers a second chance to those who need it. Choose your secured credit card wisely to avoid paying exorbitant interest rates and fees.

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April 21, 2012 um 10:59 am
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