Secure credit cards offer the opportunity to build your credit history from scratch or repair your credit after your credit has hit. With so many secure card options chosen by the market, it’s easy to overwhelm, but there is this. What does this focus on?
How to Choose a Secure Card: What to Look for
Consider the benefits of each card so that your efforts can actually help you build your credit history.
1. Find a card to report to all three credit bureaus.
In most cases, credit card companies report account activities such as balances and payment history to three major credit bureaus: Experian, Equifax and Transunion. If you obtain a secure credit card from a major card issuer – Capital One Platinum Security Credit Card Alternatively, this feature is standard, such as Citi®Secured MasterCard®*.
However, if you are obtaining a secured credit card from a lesser known card issuer, your activity may only be reported to one or two credit departments. The problem with that is that different lenders can extract data from different credit bureaus when making lending decisions.
For example, if you get a secured card at a bank that only reports to Experian, and apply for a loan with a lender that only checks Equifax and Transunion credit reports, it becomes as if all your efforts never happened.
2. Please consider the price
Protected cards are available, especially from major issuers, without annual fees. If you find something that charges an annual fee, please proceed with caution.
That’s because your first card is something you want to keep in the long term to increase your overall average credit age. This is what makes your credit score. If you close the oldest card, your score may be reduced. Also, if your oldest card has an annual fee, you will only pay to keep your credit score high.
Also, many cards have interest rates well over 20%. This is not an issue if you pay back your card from each billing cycle, but if you need to carry the balance, the higher interest rate will cost you. Also, if your card has extra fees such as monthly fees, membership fees, or processing fees, please avoid this completely. There are better options.
3. Make sure your card has a blessing period
The credit card grace period is from tomorrow until the deadline. During this period, interest will not be paid as long as you pay your statement balance in full.
If your credit card does not offer a bounty period, and not everything, surprisingly, your purchase will start earning interest from the date of the transaction. (Certain transaction types, such as Cash Advance, typically have no grace periods on most cards.) This should be a top priority as secure credit cards can be faster because there is no blessing period.
Fortunately, most secure credit cards offer a bounty period. However, consider setting up automatic payments to pay full statement balances by the due date so you don’t miss your payments by mistake and don’t get hit with interest or late payment fees.
4. Choose the security deposit that suits your budget
When using most secure cards, the initial security deposit determines your credit limit. This can be a stretch for those new to credit or those considering rebuilding their credits. However, the more time you have, the better.
That’s because you want to keep your credit usage low (the percentage of available credits you use at any time). Ideally, you’ll use your card for a few small fees each month, then pay it back.
If your card offers a pass to upgrade to an unsecured (traditional) credit card, you can regain your security deposit.
5. Check if you can upgrade to an unsecured card
Historically, we were unable to regain a deposit on a secured credit card unless we closed our account. However, there are some card issuers who are willing to upgrade their account to an unsecured card after payments on time. for example:
It is important to have a secure card that can be converted to an unsecured credit card. This is because you can get your deposit back, but you can keep your account open even after you’ve grown big. Keeping your old credit card account open can help you build your credit by increasing the length of your credit history, especially if your account has a track record of paying on time.
6. Check eligibility requirements
On the surface, it may seem like a secure credit card should guarantee approval. After all, you usually have a line of credit with cash that the card issuer can hold if you default.
However, the card issuer may refuse an application even if the income or credit history does not meet the requirements.
- You have an account charged for your credit report.
- High existing liability balances. This may make your lender wary of extending your new credit.
- Bankruptcy, not discharged from hospital. Some card issuers may even have a waiting period after the date of discharge from the hospital.
Compare options to see if each card issuer has a pre-approval process that allows you to give the idea of approval odds without a hard credit check (which can temporarily lower your credit score).
If your credit situation is in a disastrous strait, OpenSky®Secured Visa® Credit Card It can be a solid option as it does not require credit checks to apply. However, the card comes with an a $35 As this is an annual fee, it may not be the best option if you can qualify for another card.
7. Look at the benefits and rewards of cards
The main purpose of a protected credit card is to build or rebuild your credit, but it doesn’t hurt if the card you are using offers rewards or perks along the way.
for example, We offer 1.5% cashback with every purchase. This is a fee comparable to some of the best cashback credit cards on the market. Additionally, this card does not have an annual fee and gives you the opportunity to use your responsible card to regain your deposit without closing your account.
Similarly, annual salary Find your IT® Secure Credit Card We offer up to $1,000 cashback (1%) of up to $1,000 per quarter at gas stations and restaurants, and an unlimited 1% on all other eligible purchases. Additionally, Discover automatically matches all cashback you earn at the end of the first year.
How to get a secure credit card
To open a secure card:
- Please select the card you need.
- Please prepare a security deposit provided when applying.
- Pre-approval is completed if available. If not, apply for the required card.
- If approved, receive your new card and use it responsibly to build your credit score.
- It usually takes several months for your credit score to begin responding to your positive payment history.
Conclusion
If you are looking for a secure credit card to build or rebuild your credit history, avoid the urge to accept your initial offer. Instead, take your time to research options, compare card features and decide which one is right for you.
You probably won’t use your secure credit card forever, but good things are good that make your life a little easier and even provide added value while you work to build your credit.
*Information about Citi® Secure MasterCard® is collected independently by bankrates. Card details have not been reviewed or approved by the card issuer.
