04 Mar Secured Credit Card: Who, What, and Why
Credit cards are admittedly, the fastest way to help you build your credit rating. However, in order for your application to get accepted, you need a good credit score! It may sound odd, but this is the actual reality. Secured credit cards on the other hand, can be really useful if you’re trying to repair your not-so-good credit. In this article, Baby Boomers Financial will let you know everything you need to know about a secured credit card. What is it, what are the benefits? Keep reading, and let’s find out!
What Is a Secured Credit Card?
A secured credit card is like any regular credit card, with the only difference that it requires a cash deposit from your side, once you open your new account. The amount of the deposit varies, and it’s usually relevant with your credit limit. This way, your creditor can ensure that he will get his money back, even if you will not conduct a payment. And that means, that your credit report will show regular payments!
How a Secured Credit Card Works?
As you already read, these cards are used in order to help you build a good credit score, while creditors make sure they will not lose their money. It’s a win-win situation for both of you. The process goes like this: First you apply for a secured credit card, and if you’re qualified to get one, then your application is accepted. Then, you have to immediately add into your account a cash deposit equal to your credit limit. In this phase, you receive your card, and you can use it like any other non-secure credit card. If you can manage to pay your monthly balance on time, despite the deposit, then you can easily give a boost to your credit rating.
Why to Choose a Secured Credit Card Over a Prepaid Debit Card?
You may think why should I get involved with creditors, commitments etc., when I can simply use a prepaid debit card? The difference between a secured credit card and a prepaid debit card is simple. With a prepaid card, you use your own money, something which does not show a credit activity in your report. It cannot in other words, determine your payment behavior and history. On the contrary, a secured credit card, will create a regular footprint on your way to achieve a better credit rating.
And this was a secured credit card definition and scope of work, simplified! If you’re currently looking for fast, and effective ways to repair your credit, then don’t hesitate to contact Baby Boomers Financial for a free credit review. We’ll be more than happy to lead the way towards your financial freedom!