When you have bad credit, you know how difficult it can be to get a credit card. In this day and age, credit cards have become vital in everyday life. You need them for almost everything. Buying airline tickets, shopping online, booking a hotel room, and the list goes on and on. If you can’t get a credit card, you will have to deal with a lot of hassles. But don’t worry, you are not totally screwed. Virtually anyone can get a secured credit card and you would be rebuilding your credit at the same time.
What Is A Secured Credit Card?
There are two types of credit cards, secured credit cards and unsecured credit cards. Unsecured cards are what most people use. Secured credit cards act just like regular unsecured credit cards. You would use them the same. You can use them to purchase items online or to pay a meal at a restaurant. Secured cards are basically the same with one big difference. They are back by collateral that you put down prior to receiving the card.
How Do Secured Credit Cards Work?
Secured cards are easier to get because you must send the credit card company a deposit before you can use the card. This way, they have little risk in not getting paid because they are holding basically a security deposit from you.
For instance, if you want a credit card with a $1000 credit limit, you would have to send them $1000 which they would hold on to. This money is completely refundable as long as you pay your total bill. If you don’t pay your full bill and decide to close the card, they will deduct what is owed from your safety deposit and return the rest to you.
How Can A Secured Credit Cards Help Rebuild Your Bad Credit Score?
The great things about secured credit cards is that they are viewed the same by all credit agencies. This is how they can help you rebuild your credit and raise your credit score. Since you need to have a credit card to build your credit, using a secured card would build your credit the same as a normal card. You can use them to pay your bills or anything else for that matter. As long as you keep paying your credit card bill on time, your credit history will improve. After a while and as long as you are paying on time, a lot of secured cards can be changed over to normal cards and you won’t have to have put upfront for it.
If you have no credit or really poor credit, secured credit cards are the way to go. They present little risk to credit card companies so they are easy to get. You can use them anywhere credit cards are accepted and you credit will slowly improve and build.