What You Should Expect On Secured Credit Card Applications

Credit cards are a part of everyday life for most people. Many people have more than one. They’re the ideal item for emergencies and special occasions. Credit cards require good credit because they have no collateral. Credit card applications are for a revolving credit line based on signature only. If you don’t have good credit, the only type you can apply for is a secured credit card.

A typical credit card has a limit based on your credit score, the length of time you’ve been in your home, if you’re renting or own your own home and how long you’ve been at your job (among other things). The limit you get on your card isn’t the only thing affected by these factors. Your interest rate and being able to pick your choice of lenders is another perk of having a credit score above 620. Credit cards for people with good credit have an interest rate of anywhere between 6% interest to 8% interest. Many even have lower rates.
A secured credit card is also based on your credit score, but has a few caveats. The secured card is for people with bad credit mainly. The people with scores between 500 and 600 will most likely need a secured card. It’s helpful in rebuilding credit, but it can be very expensive. So what exactly is a secured card?

A secured credit card is backed by collateral. The collateral is a deposit made to the lender. Some secured cards require a fee for the application alone. So be prepared to pay anywhere from $25 to $50 up front for any applications for secured credit cards. This is why you don’t want to apply for with more than one credit card application. While it’s tempting to apply for several, most have almost the same requirements so if you get denied for one, you’ll most likely get denied for others. And all those applications get marked on your credit. If the application is approved be prepared for a deposit requirement of anywhere from $300-$500. The amount of your deposit is the limit on the card.

Many secured cards take advantage of borrowers because they know it’s their last and only option for a credit card. Some cards have upfront fees that cost the entire deposit amount. So your card is already maxed by the time you get it in the mail. These types of cards you should avoid at all costs. There are plenty of different types of secured cards. You don’t have to settle for a lender that takes advantage of your situation. Shop around and find the best deal you can before making your application.

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