What You Should Know About Secured Credit Cards
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If you have a limited credit history or are trying to rebuild credit, you may have thought about a secured credit card. But what are they and how can they help you? Here are a few things to know, according to MyFICO.
Secured credit cards offer those with little or low credit a card to help increase or rebuild their score. This type of card will normally have an upfront deposit, which can be between $50 and $300 depending on the lender, according to the Consumer Financial Protection Bureau.
Related: What is the difference between a FICO Score and a Credit Score?
This deposit is generally refunded at a later date or when the card is canceled but could vary depending on the card issuer.
Cards will also differ on the amount of credit you will be initially given and is normally equal to the deposit that you first put down.
These cards, like other credit cards, will also come with some sort of monthly fees and service charges. These fees will differ from lender to lender.
Just like any other credit card, you will need to make sure that bills are paid on time. Keep your credit utilization low or this could have a negative effect on your credit score.
Related: How to Remove a Bankruptcy From Your Credit Report
It is also good to check with the lender on how they report to the different credit bureaus, as the point of a secured card is to increase credit history.
It is also good to obtain a copy of your credit report and make sure it is kept up to date to further help with financial health.
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