Credit cards are certainly a fact of modern day life. After all have you tried to book a plane reservation, rent a car, or book a hotel reservation? You know that it’s virtually impossible. Well that may be but every year many find themselves in a credit mess. If that’s you, then you might be looking for another type of credit card like the cash secured credit card.
A secured card will require you to place cash collateral on deposit. That will then become your credit limit on the buy virtual credit card card. Now there is a little bit of irony here since these are often referred to as cash secured credit cards, but you are not allowed to provide cash as your deposit, it must be check or money order. A card that actually does accept cash is the prepaid credit card. With this type of card you determine how much cash you want to put on the card and then you use it like a debit card and when the cash runs out you must put more on it to continue using it.
Over time the bank holding your cash secured credit card may decide to increase your limit without requiring you to put more cash on deposit. This happens over time as you show you are responsible by making your payments on time.
There are many sites online that have a list of those who issue secured credit cards. So when you are in the market make sure you do your homework and look for who has the lowest interest rates and no annual fees. Watch for cards that offer a lower interest rate and then an annual fee. You should also look for cards that don’t charge an application fee. Always read the fine print. Many have received their card only to find out there limit has been consumed with fees. If they had read the fine print they would have known this was going to happen.
Most cash secured credit cards are around $500. Not all providers match dollar for dollar against the deposit. Many offer only 50% of what’s on deposit, and many have a maximum that they will issue regardless of the deposit. If you are going to need a high credit limit you might want to consider a prepaid credit card.
Not all banks offer secured cards, but you can always start with your own bank and see what they have to offer. And like with anything you buy it’s important for the consumer to be aware – after all there really are the good, the bad, and the just plain ugly when it comes to secured cards. You want to seek out the good and avoid the ugly.
There’s more to having this type of card, than just wanting to book a hotel or a rental car. It also is an excellent tool for rebuilding your credit report. In fact if the bank issuer doesn’t report it’s not the card you want. You also do not want an issuer who reports it as a secured card as this can actually hurt your credit rather than help it.