How To Boost Your Credit Score Fast With The Right Secured Credit Card

What is a secured credit card?

A secured credit card is a regular credit card that is secured by a bank deposit of some sort. The cards exist as a credit facility to those who have either no credit score or a low credit score. When you open a secured credit card, you are required to transfer a security deposit to the credit card provider or bank that you have selected. Typically the security deposit you pay is exactly the amount of credit that will be extended to you.

Do the secured credit cards work any differently to a regular credit card?

Absolutely not. A secured credit card works just like a regular card. You can use it to pay anywhere you would a regular credit card. You even get a monthly credit card statement with your balance that has to be paid each month. Just as with a regular card, you can choose to pay the minimum monthly payment or the full balance. One important point to mention here is that the security deposit you have with the bank is not used to pay down your monthly credit card bill. It sits there for the duration of your credit card’s life. Reputable banks will pay you interest on the money you have on deposit.

Why do I even need a credit card?

Unfortunately a lot of the purchases that we make these days require a credit card. For example if you want to go see a concert or book a flight, the chances are you will only be able to do both those two things with a credit card. Also managing a secured credit card can start to help improve your credit score since the card providers pass information to the credit agencies. As early as 12 months after taking a secured credit card, if you have been a reliable payer, your card provider might offer you a regular credit card.

I have read some negative reviews of secured credit cards. Are they true?

Secured credit cards attract some controversy because some card providers use the opportunity to take advantage of those who have a poor or non-existent credit score. Card providers may for example charge an APR (annual percentage rate) of as much as 24.99% when regular credit card holders with good credit scores can find cards with an APR at around 15%. If you are a savvy consumer and make sure you find a card issuer who offers terms not too dissimilar to a regular credit card then you can make this work for you.

Who offers secured credit cards?

There are some unscrupulous card providers out there but some of the bigger and more reputable companies offer secured credit cards. Capital One are certainly worth your consideration although we advise you to pay close attention to the APR on their cards. If you are a military family USAA offer some of the best available secured credit card deals around.