How To Evaluate Secured Credit Card Offers

Secured credit card offers come in various shapes and sizes. Though they may be the best option for those who are either trying to establish or rebuild their credit records, it is important to recognize how banks offer secured credit cards so that people can get the best possible deal. There will be different requirements depending on what bank offers the secured credit card, and it is important to understand all terms and conditions before getting a card from anyone.

Look closely at fees

Before you decide which credit card to choose, you should first take a close look at fees the company charges. There are many different options, as banks such as Chase, Citibank, and First Premier, offer bad credit credit cards to help people get a better credit score. Don't waste time with cards that charge an application fee, because these cards should be instant approval. When you're putting the money in an account to determine your credit limit, there's no risk on behalf of the bank, and there is no need for an application. Watch for transaction and other fees, too. Some cards charge so many fees that the entire balance is eaten up before the card is even used. Don't pay too much to use the card or its purpose will backfire. Expect to pay a higher interest rate and annual fee than you would with an unsecured card.

What is the minimum deposit?

For those who don't have a lot of starting capital to work with, finding out what the minimum deposit will be is very important. The deposit is usually what determines the credit line. Most secured credit card companies require at least $300 if not $500 before allowing the card to be used.

Look at interest earned

Your money will earn interest like it would if it were in a savings account or money market. Find out the details on the interest and how it is paid before opening a credit card account.

Make sure the bank reports to the credit bureaus

If the bank will not report to the credit bureau, you're mising out on the main point of having a secured credit card. Do not confuse a secured credit card with a prepaid debit card where you can add money as you wish and pay a one time fee to purchase the card.

How long will it take to get an unsecured card?

Most banks will be willing to upgrade you to an unsecured card after you have made a certain number of on time payments. It may take 3 months, it could take a year. It all depends on the bank's policies.

The best way to make an unsecured credit card work for you is to buy a few small things with it each month and pay off the bill in full. This will establish a good payment history of on time payments, and a good debt to income ratio because you don't owe anything. A secured credit card is not an ideal option for carrying a balance.