Secured Credit Cards

Secured credit cards are safer for the bank to give away because it is secured against the fund in you account at the bank. You would initially pay a principle for your credit card say $1000 and your credit limit will be exactly equivalent to this amount. Otherwise this it is just as equivalent and similar to any other credit card. You will be paying the monthly bills for the amount that you have spent on the credit card. It could actually be even called a credit debit card.

This also helps in getting a credit card as the banks always have the amount as security deposit and can take money from it if you do not pay your bills. Thus the credit risk will be less for the lender. There are some banks that even give you a default interest on your initial principle amount.

This is actually a good way to build credit for people who have bad credit. First of all no bank will refuse to give you one as there is always an amount for which he can rely on. Secondly, if you cultivate the habit of regularly paying your bills then that helps in building a positive credit history for yourself which proves that you constantly settle your debts off.

The monthly bills should be regularly paid off or otherwise it would turn against you and make your credit report looks worse. Be careful about not exceeding your limits which is comparatively easier in these secured credit cards as they do not give you a huge credit space above the limits.

Interest rates are also easy to deal here as the limits are not very high and hence repayment interest will also be pretty less.

Many companies would even offer you lesser interest rates then the rest but check to see if there is an increased annual payment that could end up to be troublesome later.

The more you use your secured credit card and the more you ensure that you pay your bills regularly and build a chain of good credit history. After a few months you can also start applying for a non secured credit card and ensure that you maintain the limits and pay the bills regularly in that too. And also remember to ensure that no penalties for non-payment of the bills.

If at any point of time your credit card offer is rejected then you should always ask for the reason of rejection. Different companies have different rules and regulations to give away credit cards and types of credits. Some of them could be reasons like you have not lived long in the same address or worked in the same office and so on. But at the same time if there are multiple banks that reject your card then it is time to understand that you are still not ready for a Credit card.