WHAT TYPE OF SECURE CREDIT CARDS ARE AVAILABLE IN THE MARKET?

People with bad credit report will find it very difficult to get a credit card, however this doesn’t mean that they will never be able to get one. Nowadays, several financial institutions and banks are giving away credit cards even to those individuals who have bad credit report. Therefore, individuals with bad credit report get another chance to re-establish their credit ratings.

Types of Credit cards:

Usually, banks and other financial institutions offer credit cards in 2 different forms which are unsecured credit cards and secured credit cards. For the secured credit cards, you have to pay up a security deposit ranging from a hundred to a thousand dollars that acts as collateral for your credit limit.

You will get a credit card that has a limit equivalent to one hundredth of the total deposit; therefore, the more security deposit you are able to pay the higher the credit limit. If you don’t repay the credit given to you, the bank or the financial institution will either seize the collateral or the money deposited in the same bank in a different account. Sometimes, you will get good returns on the money that you have deposited, however you do have to pay an application and a processing fee for it.

With unsecured credit cards, banks don’t demand any collateral from you. However, the card you get will have very low credit limit that ranges from a few dollars to a few thousand dollars, depending on your report. Also, these cards come with a very high rate of interest and processing fees. But, you can increase your spending limit by paying your dues regularly.

Some things you have to know:

When you are applying for credit cards with a bad credit report, be careful about misleading ads and scams. The Federal Trade Commission has initiated a special campaign against such misleading companies and scams and has taken severe action against them. Therefore, you have to find ways to spot frauds and scams and stay away from them.

You will be able to get secured credit cards from most of the leading banks even if you have bad credit. However, you should use this to re-establish your credit report. By applying for such a credit card you will be able to upgrade your credit rating as every payment you make will be notified to the credit bureaus. Ultimately, you will be offered the unsecured credit card with a good enough credit limit and if you continue to pay the dues on a regular basis your credit limit will be increased.

Overview:

Make sure that your lender reports every transaction to the credit bureaus so that you will be able to re-establish your credit report.

Always remember that a credit card for bad credit report attracts higher rates of interest. Lenders usually give this type of credit card only to defaulters so that they can charge higher rates of interest.

But, some lenders charge an annual fee for a lower interest rate.