So you have decided to take a closer look at secured credit cards. If this is the case, read on to learn about how they work and how you can get the best deal for yourself.
What is a secured credit card?
Secured credit cards are a great way to improve your credit score and get a low interest rate on your purchases. There are a few things you need to keep in mind when using a secured card:
– You should always pay your balance in full each month. If you don’t, your credit score will suffer.
– Make sure you keep track of the APR and fees associated with your secured card. This information is typically available on the issuer’s website or within the account summary section of the card application.
– Only use your secured card for major expenses, like tuition payments or large purchases that will help improve your credit score. Don’t use it to cover small everyday costs. This could damage your credit score and lead to higher rates and fees down the road.
How to qualify for a secured credit card
Secured credit cards are a great way to get a good financial deal on your shopping spree. Here’s how to qualify:
1. Check your credit score. A secured credit card is going to be more expensive if you have a low score, so make sure you have a good one before applying.
2. Have a solid income and debt-to-income ratio. Secured cards usually require a higher income than traditional cards, so make sure you can afford the monthly payments. You also want to make sure your debt-to-income ratio is lower, since secured cards carry risks if your finances slip up.
3. Have excellent credit history. Secured cards look for excellent credit history, which means no recent bankruptcies or liens on your record. If you have any bad debt from in the past, that could hurt your chances of getting approved for a secured card.
4. Be prepared to provide documentation of income and assets. Most secured lenders will require some form of documentation to back up your claims about income and assets (such as bank statements or tax returns). This can help reduce the chances of being approved for a loan if you don’t actually have what the lender is looking for.
Benefits of a secured credit card
If you’re looking for a secured credit card, there are a few things to keep in mind. First, the interest rates on these cards tend to be lower than those on unsecured cards. Second, the cards generally offer greater protection against unauthorized use, since they require a security deposit that is tied to the card account. Finally, secured cards come with perks like no annual fees and reduced late fees. So if you’re thinking about getting a secured credit card, make sure to explore all of your options first!
Disadvantages of a secured credit card
There are some definite disadvantages to using a secured credit card. For starters, the interest rates are generally quite high, so you’ll be paying a lot of money in interest over time. Also, if you ever lose your card or it gets stolen, you’ll likely have to pay hefty penalties in order to get a replacement. Finally, many secured credit cards only offer limited benefits, such as reduced interest rates on Purchases and no annual fee. So if you plan on using your card for everyday spending, it might not be the best option.
A look at the best secured credit cards
If you’re looking for a secured credit card with great perks and security, here are five cards to consider.
1. The Chase Sapphire Preferred® Card: This card comes with great rewards and a tough security check. Plus, it has an annual fee of $95, which is relatively low compared to other secured cards.
2. The American Express® Gold Card: This card offers excellent benefits, including travel insurance and reimbursement for emergency expenses. It also has a low annual fee of $0 introductory period, followed by a $450 annual fee. However, the card has a strict security check that may prohibit some applicants from applying.
3. The Discover it® Secured Credit Card: This card offers great perks, such as no interest on balance transfers and cash back rewards up to 3%. It also comes with an easy online application process and a low annual fee of $0 for the first year. After that, the annual fee is $39/year.
4. The Citi Simplicity™ Secured Credit Card: This card comes with no interest on purchases and 2x points on all qualifying spend* — making it an ideal choice for those who want to save money on their spending habits.* Plus, unlike some other secured cards, there is no need to provide additional documentation or undergo a security check when applying for this card.*
5. The JCPenney ThankYou Premier Credit Card: This secured credit card offers 3% cash back
Conclusion
When it comes to securing a credit card, there are a few things you should keep in mind. First and foremost, make sure the credit card is secured. Secured cards come with security features that help protect your account from theft or fraudulent charges. Secondly, research the interest rates and terms of the card before applying. Finally, always use caution when making any large purchases using your credit card – be sure to save the receipt for proof if something happens and you need to dispute a charge.
