The Best Secured Credit Card Deals
A secured credit card allows those with no credit history or a poor credit history to have the use of a credit card. Secured credit cards require the cardholder to make a cash deposit to the card issuer. The issuer then allows the cardholder to use the card up to that limit. Though all secured credit cards work in this basic manner, there are a lot of other differences for a consumer to consider. By understanding these differences, a consumer can then determine for herself which is the best secured credit card to meet her specific needs.
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Credit Reporting
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One of the primary reasons to use a secured credit card is to build a positive credit history. Though most secured credit cards report activity on the account to the credit reporting agencies, some do not. Others may only report to one agency. To get the maximum credit building benefit, a consumer should choose a secured credit card that reports to all three credit reporting agencies. Secured card applications may note this information or a consumer may need to contact the card issuer to get this information.
Fees
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Secured credit card issuers often charge a number of fees for secured credit cards. Consumer must carefully note all fees for a card in order to compare the costs of the card with other secured credit card offerings. Many secured credit card issuers charge an application fee to process the application and setup the account. An annual service charge is also a typical fee. If possible, a consumer should find a secured credit card without an application fee and with the lowest possible annual fee.
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Interest Rates
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There are two interest rates for a consumer to determine before accepting a secured credit card offer. One is the interest rate that the issuer will charge for a balance on the card and the other is the interest rate that the deposit will accrue. Obviously, a consumer should choose the card that charges the lowest interest rate for balances and pays the highest rate for the deposit. However, the interest rate charged on balances is the most important as it will be significantly higher than the rate on the deposited money.
Card Conversion
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Some secured credit cards will convert to a standard credit card after a period of time. Consumers should ask card issuers if the company has a standard policy for card conversion, many times the issuers will change the card to a traditional credit card after about one year of prompt payments on the card. Some issuers will raise the consumer's credit limit while holding the deposit, while others will return the deposit and leave the credit limit unchanged.
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