First, What Is A Secured Credit Card?
A secured credit card is a type of card that is backed by an initial cash deposit from the cardholder. You get credit that you may not receive from anywhere else, and the deposit helps reduce the lender’s risk of losing money, as it can recover overdue payments from your security deposit.
There are several reasons you would get a secured credit card and some cards are better than others. I'll explain why some are better than others after I give you the Top 3 Reasons To Get A Secured Credit Card.
1. They are easier to get than a regular credit card. Most credit card companies are not willing to give you a line of credit without having established credit. I know, What the Hell right? How can you establish credit if no one is willing to take a chance and give you credit. So, a secured credit card is the best option. But, at least you are on your way of establishing credit and if you continue to read my blogs you will reach the 800 club in to time.
2. They help you build credit. I know it might suck to have to put a deposit down to get a credit card but let's face it, you have to start somewhere. And having a secured credit card is your starting point. Once you receive your credit card begin to use it. But, do not put more than 30% of your available credit limit on the card. Why? I'm glad you asked. Because 30% of your credit score is based upon your debt to credit ratio, or your credit utilization. And the credit bureaus want to see you, and everyone else, only have 30% of the credit limit utilized. If you go beyond this, it looks like you are not responsible with what you have and your credit score suffers because of it.
3. Secured credit cards help you get unsecured credit cards. Once you have had your secured credit card a few months and you are making your payments on time and keeping your balance below 30% you will have established a credit history. Once you have established a credit history and your credit score continues to grow you will receive offers for unsecured credit cards. And once you do, treat them just like you have the secured card. Do not put more than 30% of the available credit limit on the card, less is better. And make sure your payments are made on time. This will help you to build your credit more quickly.
Why Some Unsecured Credit Cards Are Better Than Others
Not all unsecured credit cards are created equal. Some have extremely high interest rates, taking advantage of those with no credit or bad credit. While some only report to 1 or maybe 2 of the 3 credit bureaus. Do your homework. You want to have a secured credit with a lower interest rate, and I do not mean 2, 3, or even 8%, because those with great credit rarely even get that. But between 11% and 15% is fine. Plus, and this is the most vital aspect of obtaining the secured credit card, make sure they report to all 3 credit bureaus each month. Why? Because this is the quickest and most efficient way for you to build your credit. You want the unsecured credit card companies to report to all three credit bureaus. If they don't then find one that does.
Now, United Credit Education Services, the company I'm partnered with, provides a secured credit card that offers a lower interest rate and reports to all 3 credit bureaus each month, to quickly build your credit score. Which is exactly what you want. Here is the link if you want to find out more and/or get the card.
When establishing your credit, your secured credit card matters. Do your homework and choose the right one. And I wish you luck and will see you in the 800 Club!
You are Stronger Than Failure,