Help Finding the Best Secured Credit Card
If you have bad credit or no credit at all, you may only be able to qualify for a secured credit card. This card allows you to place charges on the card only after you pay a deposit that is equal to your credit limit. To find the best secured credit card in the market, shop with a few criteria in mind.
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Credit Building
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The main benefit of a secured credit card lies in its ability to allow you to build your credit. While major banks and well-known credit card issuers always report their credit cards to all three major credit agencies, subprime lenders may not do this. Without the report, you can't establish a credit history. You should confirm that the issuer will report your card before accepting the credit card. You should also ask if the issuer will flag the report as a secured card because this could hurt your credit.
Interest Rate
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Secured credit cards charge a lower interest rate compared to unsecured credit cards for people with poor or no credit. However, the typical interest rate is still high, usually at least in the high teens, according to Bankrate.com. However, you may be able to find low-interest secured credit cards. In 2010, Newsweek reported that the best secured card had a low interest rate of 11.24 percent.
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Annual Fee
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Most secured credit cards charge annual fees because the issuer views the cardholders as high-risk borrowers. The amount of annual fees varies from one product to another. Some secured credit card issuers don't charge any annual fees, but they may charge other fees instead. As such, you should determine whether the savings in annual fees is worth as much as the cost of other fees.
Other Fees
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While secured credit cards usually come with annual fees, some also charge other fees. These fees include application fees, monthly participation fees and program fees. Some lenders charge more than $200 in up-front fees, according to the Motley Fool. Some people find that these fees eat up all of the deposit they pay even before they use the card. The best secured credit card, according to Newsweek, had a $75 sign-up fee.
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