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Building Your Financial Credit: Using Secured Credit Cards

Aug 17, 2008
Sometimes you can't get a break! Can't qualify for a credit card? Well, cash secured credit cards are the answer to your problem! Anyone can apply for and obtain one, and they offer a great stepping stone to other financial products and financial freedom. Secured credit cards are great tools to use if you need to establish a credit history or reestablish damaged credit.

Plenty of situations may arise in your life that make it difficult to obtain a standard credit card: bankruptcy, a poor credit history, divorce or no credit history at all. If you find that it is impossible to qualify for a credit card, a cash secured credit card could be the answer to your needs; they give you a guaranteed chance to build (or rebuild) a credit history, setting you up for more advanced credit products.

A secured credit card, where a balance is prepaid, can be used in all places where a standard credit card is accepted - the difference is that the charges on a prepaid card are backed by money that you deposit before you use the card. Issuing banks usually require some money up front, ranging from $100 to $400; cards that require smaller balances usually charge larger fees for account maintenance, but they afford you the opportunity to build a credit history with little balance down. Also, you don't have to pay the minimum balance in one chunk - you can make incremental payments to come up to the amount required by any prepaid card vendor, thereby spreading your cash outlay out over time.

Even though a prepaid or secured credit card is funded by your own cash it will help immensely in building your credit because the issuing bank reports your usage and payment history to the three big credit bureaus, who really control your credit history and rating information. Secured credit cards are a guaranteed advantage - anyone can get one, and they give you the chance to show that you are willing to make your payments on time. This will have a quick and positive impact on your credit rating as long as you remember to maintain your account and make all payments on time. You also show plan so that you keep the balance owed on the card at an acceptable level, around 40% or less of the maximum allowed.

After you've used and maintained a secured credit card for twelve or more months, and have maintained good payment performance, your credit card vendor will give you the opportunity to convert your prepaid credit card to a standard credit card. Continue maintaining your account and you will build or rebuild a healthy credit history that you can continue to expand on with increasingly flexible credit products. In a future article I will describe how you can build on the credit that you establish with a secured Credit Card.
About the Author
You can find the best credit card to satisfy your needs at our site. We offer a large number of quality credit cards from various credit card companies .
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