Are you looking for a credit line to solve your financial woes, but you don’t have a credit history to back you up in applying for a standard credit card? Then worry no more, because secured credit cards could help you solve your problems without the need for a credible credit history. But how do these credit cards work? What are some important considerations in choosing credit cards for no credit? The answers will be provided below.
What are Secured Credit Cards?
Secured credit cards as was mentioned above are good options for an individual who wants to build his or her own credit history. Most people use these cards as a way to prove their capability of managing their credit and finances so that eventually they could have good credit ratings that will help them qualify for standard and non-secured credit cards.
Companies offering secured credit cards usually require an initial cash deposit from credit card applicants. The initial deposit serves two purposes: first, it serves as collateral of extending credit to someone with no credit history, which could prove to be very risky; and second, the initial deposit serves as the credit limit that an individual could use for making purchases, settling bills, and others.
Still, there are some considerations before applying for a secured credit card. Remember that you need to cash out your initial deposit, so you could have a secured credit card. The amount is usually pegged at $200 or so, and for sure this is a large sum of money, especially when you are in a tight budget.
On Fees, Terms and Conditions
Secured credit cards may also require annual fees from credit card holders as payment for the use of the credit program. So, before getting a secured credit card, you need to read about the different requirements and terms that banks and credit firms provide through their websites and printed materials.
Through these, you could easily evaluate which secured card requires the least number of fees, the lowest rate of interest and the lowest initial deposit requirement. In so doing, you could be guided in choosing the best secured credit card provider that will be suitable to your needs. Once your application has been approved, use your secured card regularly but be sure to make your payments on time, so that you could establish a good credit history.