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what's a secured credit card
20 Jul 2019

What’s a Secured Credit Card? It is the Key to Rebuilding Your Credit

Put your financial follies in the past.

What’s done is done. 

What matters now is how you’ll approach rebuilding your credit. So, what better way to do so than with a secured line of credit? Think about this no doubt has you likely wondering… what’s a secured credit card?

You likely got offers for them. Maybe you saw a secured card roundup. Or, noticed them promoted in a favorite credit app.

Here’s what you should know.

What’s a Secured Credit Card?

secured card is like a regular credit card except backed by collateral. You’ll apply for them the same you would with any other card. Except, upon approval, you’ll make a deposit securing your line of credit.

Most secured cards ask for deposits between $200 to $1,000.

The deposit isn’t accessible until you prove you can pay your bill on time. Use it smartly and you’ll begin reaping the benefits of good credit use/scores. The benefits range from access to better cards to better loan terms.

When you’re ready to apply:

  1. Check your current credit score
  2. Visit the major credit sites or our list of cards for bad credit
  3. Apply, accept, and make your deposit

You should receive the card in a week or two. Activate it and you’re good to go!

How a Secured Credit Card Helps Build Credit

A secured card acts the same as an unsecured card (minus the deposit). So, you’ll see credit increases with proper use.

The three common things to aim for include:

  • Regular on-time payments
  • Avoid spending more than 30% of the credit line
  • Don’t keep applying for cards

Simple, right? Well, as long as you don’t fall back into bad financial habits!

Credit Building Tips When Using a Secured Card

Let’s disregard why your credit score became bad. Instead, let’s focus on the good financial habits you should use with the secured card.

Set It and Forget It

A popular secured card suggestion is:

  1. Set up the card for autopayment for a basic, recurring subscription
  2. Set up automatic payments, to the card, before its due date
  3. Sit back and let it process month-after-month

Pay no mind to the card during this time outside of checking payments went through. In a few months time, your score will creep up. Why? Because you’re building great credit history and use.

Pay In Full (Every Month)

Don’t believe the “carry some credit” mumbo jumbo. Pay the card, in full, every month. This avoids interest charges and keeps credit usage to a minimum.

Don’t Apply Too Often, Have Patience

There are two types of credit pulls:

  • Soft
  • Hard

The latter can ding your credit score. And, repeated attempts — with hard pulls — can impact your score. Plus, it doesn’t look good to credit lenders.

So: Apply when you’re ready else show patience and wait if you got denied. Try again in a few month’s time if this is the case.

The Next Phase in Rebuilding Your Credit

You’re probably wondering “what’s next?” now that you know what’s a secured credit card. That answer is using your boosted credit score to apply for unsecured cards.

From there it’s a matter of showing good financial responsibility. You dug yourself out of that hole — keep up the good work and things will get better!

Which cards should you aim for? Try our list of unsecured credit cards. Want to learn more about online loans? Check out our blog!

Here are some other articles that you might enjoy:
Is the My Premier Credit Card Worth Your Time to Apply?
How to Get Quick Approval for Online Loans with Monthly Payments
How to Apply for a Loan Online and Get Approval the First Time
Need Loans for Poor Credit? What to Know