If you have bad credit or credit that has been damaged and have trouble getting credit cards, you might want to think about getting a secured credit card. These are great for anyone who wants to fix their credit and wants to know what their options are. What's great about secured credit cards is that they can help you fix your credit and get your finances back on track.
Secured credit cards are linked to your personal checking or savings account. They look and work a lot like unsecured credit cards, but there are a few differences. Instead of the creditor giving you a line of credit, you set up your own line of credit with your checking or savings account. Depending on the credit card you choose, your bank account will probably be used as collateral. If you don't pay your credit card bill on time, the minimum amount will be taken directly from your bank account.
What good does this do you? Well, banks and other lenders won't give you credit if you have bad credit for whatever reason. This can make it hard, especially in a society where plastic is everywhere. But if you get a secured credit card and pay your bills on time and use it wisely, you will show that you are a good credit risk. At some point, the bank or your creditors may decide that you've earned their trust again and start giving you more traditional credit cards that aren't tied to a deposit.
With these kinds of credit cards, you really don't have to worry about getting into debt. Simply put, the only credit line you have is what you have saved in the special savings account. Keeping it paid will make sure that your credit line is always where it should be, within a range that fits your budget.
There are also some things that are bad about secured credit cards. For example, if you don't pay on time, you'll have to deal with their high interest rates and other late fees. What can happen is that they can keep going up until you can't pay them anymore and have nothing left to fall back on. This is why it's important to pay that bill on time every single time.
But this is the best choice for people who want to fix their credit and build it up. Secured credit cards are the first step toward financial freedom and, eventually, a credit-worthy life.
