There are some individuals that have been impacted with financial issues by the economic crisis the world has seen recently. If an individual has this type of problem then they may seek secured credit cards to rebuild credit. Doing something like this will allow someone to keep using a card and will also rebuild their score to a good level.
With the financial crisis that much of the world has suffered through the past few years many people have had their credit negatively impacted. Missing a few payments or having property repossessed or foreclosed is something that has happened to various consumers. All of these types of items will damage someone’s credit and make it difficult or impossible to get a card as new lenders are not willing to take a chance with them.
By receiving a secured card a person would still have the opportunity to use a card and also be working towards improving their score. If someone is trying to purchase things online or going on vacation and renting a car a card is very important.
A secured card has the same function as a regular card. Instead of being fully backed by the financial institution that offers the card the individual that gets the secured card puts cash up front for a certain percentage of the spending limit on the card. This amount can range from 50% to 100% of the limit, so a $ 200 deposit may equal a limit anywhere from $ 100 to $ 200. This money is used as a security deposit in the event that the individual that is issued the card fails to make the required payments on the card.
Fees on the card are one of the main issues that a person faces with the convenience of these cards. Both a regular card and secured card have these types of fees. Looking at what fees are added to the card is important for anyone applying for a secured card. Most cards will have various fees such as processing fees, annual fees, and application fees. The fees are deducted from the initial amount a person has on the card so it is very important to check on these types of fees since that will impact one’s spending limit.
An individual should verify that the financial institution they are attempting to do business with reports to the major scoring bureaus. By having the transactions on this card reported then someone’s score will be greatly improved by the responsible use of this card. Since this card is being used to rebuild their score it is important to always pay at least the minimum payment early or on-time.
After making consistently on-time or early payments on the secured card an individual may have the opportunity to transfer the card to an unsecured card with the same institution. If that is not something available then there is always a chance that another institution may be willing to offer a card to that person. If no other institution is willing to issue a card at that time the individual should just continue to make on-time or early payments for another six months before trying again.
Someone that has financial issues may look to secured credit cards to rebuild credit. Getting this kind of card will assist an individual as they rebuild their score while still having the freedom that a card offers.