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10 questions to ask before getting a credit card that is secured

Credit Cards

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It’s tough to get by without a credit card.

You need you to make a hotel or airplane reservation, or to rent a car, even if you intend to pay cash. Use of a credit card builds a credit score that is great, too, marking the owner.

But people who have never had credit or need to fix a poor credit history may not qualify for a regular credit card. For them, a secured credit card may be the only means to establish, or re-establish, credit.

10 questions to ask about secured credit cards:what’s a secured credit card?Where can I get a secured credit card?What kind of charges will there be?How much cash do I need to deposit?Do all banks offer secured credit cards?Are there any problems to watch out for?Does the issuer report to all 3 major credit bureaus?How long does it take to qualify for an unsecured card?Will my deposit make interest?How can I make the best use of a secured card to build my credit score?

If you will need to build credit, here are the answers to the 10 questions about secured credit cards.

1. What is a secured credit card?

A secured card requires a cash security deposit which becomes the charge line for this account. By way of instance, if you put $500 in the account, you can charge up to $500. You may have the ability to increase the deposit or without requesting deposits a lender will reward you and add to your credit line.

2. Where can I get a credit card?

Check Bankrate.com’s list of secured credit card issuers. If you are a credit union member, ask about a card that is secured there. Credit unions may offer lower interest rates and offer cards to their members and waive fees.

3. What kind of charges will there be?

That is where it pays to shop around. Avoid any card which wants an application fee to be paid by you. An annual fee is charged by secured cards, and they vary. Read the fine print. Some people have gotten secured cards and have seen their entire deposit (and credit limit) consumed by fees until they ever used the card.

4. How much cash do I need to deposit?

Again, the amount will vary by the card. Most permit deposits of $300 or $500. Your credit limit will either be the amount of your deposit or any percentage above that amount.

5. Do all banks offer secured credit cards?

No. Linda Sherry, director of national priorities at Consumer Action, says that her organization is currently seeing a trend in banking away from cards and toward unsecured cards with higher interest rates and limits and fees. Still cards are a fantastic choice — and at times the only option — such as job loss, a divorce or illness, for men and women who are only starting out or rebuilding after a significant life event. Moreover, cards are given only to folks who are new to charge — not those who blew it and have already had one crack by some issuers.

6. Are there any problems to look out for?

Yes. Some secured credit cards have low fees, and the issuers treat customers . However, some take advantage of customers’ situations.

The Consumer Financial Protection Bureau has taken enforcement actions against credit card issuers for marketing add-on products though cards have yet to be a focal point.

When applying for a card you should gather plenty of information. Pay attention to these items as interest rates, fees and the deposit that is required.

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