It’s nearly impossible to make it in today’s world without a credit card. You can’t reserve hotel rooms, buy airline tickets, or rent a car without one. As such, you may find yourself in need of a little extra money before payday and have no way to get it. If you have bad credit or don’t have much of a credit history, you’re likely going to find it hard to get plastic money. However, secured cards are also available. Learn how to get the best secured credit card for your situation and needs today.
What Are They?
Primarily, secured credit cards work like prepaid cards because they don’t usually extend whatever money you put on them. The security deposit is equal to the credit limit you have available. Still, they are better than prepaid cards if you want to rebuild your credit as they are reported to the three credit agencies.
Therefore, the card you choose must report to the major credit bureaus. You can find out this information by visiting the website or talking to a representative.
What Fees Are Involved?
In most cases, secured cards tack on a variety of fees, such as annual, application, and processing figures. The company you choose to work with should disclose all the costs associated with its card before you sign up or get one. If it doesn’t (either online or in the documentation), you should contact the provider to find out for sure. Otherwise, it might be best to choose a different secured card.
The best secured credit card is still likely to have fees involved, but there might not be as many as you think. Application costs are probably going to be low, and you might not have an annual fee (or it might be broken down into monthly charges). Compare rates and prices before making a final decision to ensure that you get the right card for your situation and needs.
What Are the Average Minimum Deposits for the Best Secured Credit Card?
Secured, when concerning credit cards, means that you have to put a deposit down before you can spend the money. Some companies use it as a ‘savings account’ of sorts. It’s only used if you default on the payment. If you pay on time every time, you won’t dip into the fund.
Of course, lower deposits are easy to get, but you get a low credit limit. In most cases, the deposit is the amount you have to spend. If you have to pay $200 for the deposit, you’re only likely to get $200 spending money. That might not be enough to book hotel rooms, rent vehicles, or have a little extra cash between paychecks.
Usually, the minimum deposit is anywhere from $200 to $500. Some companies will double or even triple the actual credit limit based on the deposit, so you could have anywhere from $400 to $1,500. It’s usually a good idea to stay around the $1,000 mark on a credit card, at least while you’re building your credit.
Why Are These Cards Used?
Of course, you’re probably wondering why you should get a secured card at all. It makes more sense to get a traditional (unsecured) credit card, but they’re a challenge to obtain. If all else fails, you can start building up your credit history and repairing your bad credit score. The best secured credit card does that for you. You pay off the bill each month, raise your score, build some positive history, and might be able to get an unsecured card. However, the process takes time, but you can achieve success and get out from under a bad credit score.