How To Get A Secured Credit Card? – A Complete Guideline
There are millions of people in the world who do not like using real money for shopping or doing other transaction types. They prefer using credit cards, debit cards, or prepaid cards. As long as you have a checking account, you can quickly get a credit card or debit card. In this article, you will find more about how to get a secured credit card for doing your financial transactions.
When using a credit card, you borrow money from your bank to use and later repay it with some interest. In most cases, you have to repay the amount spent at the end of the month. If you receive a monthly salary via the same account, the bank deducts the money you have used plus the interest automatically. That does not mean that credit cards are only for the salaried people.
Most banks require you to have a good credit record so that you can get a credit card. The higher the score, the higher the credit limit. However, people with poor credit records find it difficult to get a credit card. Some banks demand you to deposit a certain amount of money to act as your security. However, there are ways on how to get an unsecured credit card with bad credit.
What Is A Secured Credit Card?
A secured credit card is the one that requires you to make a specified deposit to act as security before you get the credit card. The amount of money you deposit determines your credit limit since you cannot spend more than the amount of money you deposited.
A secured credit card is there to help people with bad credit to improve their scores to higher levels. You may have your score go down if you do not make timely payments of debts. Other factors can contribute to a poor credit score as well.
Is it Possible To Get A Credit Card Without Making A Deposit?
Some financial institutions allow you to get a credit card without depositing anything. Once you make your application, you can get instant credit card approval for bad credit no deposit for unsecured credit cards. However, there are a lot of fees associated with such credit cards.
For instance, most unsecured credit cards have monthly fees and yearly fees, among others. However, sometimes you have to bear with the burden so that you can improve your credit score. Remember that the card issuer reports to the credit bureaus every month to give financial reports about every customer in their system.
The credit bureaus determine your score using various information about you given to them by your bank. If you practice good financial behavior, your credit score raises gradually, thus increasing your credit limit.
Why Is a Good Credit Score Important?
A credit score helps you to benefit from various products from financial institutions, which include loans, credit cards, and overdrafts. The better the score, the more trust the financial institutions have in you.
You can find a personal loan from a credit union if you have a good credit score. However, most times, a credit score alone cannot dictate whether you will get a loan or not. You can have a low score and still get a loan from a credit union. Most importantly, you must be a member of the union.
How Can Someone Get A Credit Report?
You have a right to get your credit report every year from the various credit bureaus. The main credit agencies are Equifax, TransUnion, and Experian. Each one of them does its analyses independently.
You can take your credit report from all the companies at once for free. Unfortunately, the credit report does not have a credit score. You may ask your bank about your credit score so that they may give you. Banks and other financial institutions usually buy the credit score records from the credit agencies so that they may utilize them when giving out loans.
Sometimes you may be in an urgent need of your credit score. In such a situation, you can buy it from the credit bureaus.
How Do You Maintain A Good Credit Score?
If you want to maintain a good credit score, you always need to pay your debts on time. Late payments usually reduce your score greatly.
Another thing you need to do is to spend slightly below your credit limit all the time. Learn not to exhaust your credit limit. That way, you will slowly create trust with the banks.
In addition, you should periodically check whether someone else has opened a bank account using your name. Fraudulent people open bank accounts using someone’s documents, get loans, and disappear only for the bank to forward your name to the credit bureaus. To avoid identity theft, you can freeze your credit so that no one accesses it.
Also, avoid keeping unused credit cards with you. If you own several credit cards, you have to ensure that they remain active. If they stay dormant, your score lowers.
What Is The Difference Between Secured And Unsecured Credit Cards?
The difference between the two cards arises on the issue of collateral. Secured cards need you to deposit specific amounts of money to act as collateral. On the other hand, unsecured cards do not require you to pay any deposit as collateral.
Interest rates for secured credit cards are lower as compared to that of unsecured cards since a secured card has a low risk due to the deposit you make when taking the card.
Moreover, most unsecured credit card issuers check your FICO score before deciding how much to give you. For secured credit cards, the issuers do not bother checking your score.
Which Are The Best Secured Credit Cards?
Are you in need of a secured credit card? If so, then see the following secured credit cards and find out which one favors you.
1. Discover it Secured
Discover it Secured gives you 2% cashback at selected gas stations and restaurants. Again, you get a 1% cashback on any other purchase. Moreover, Discover matches any cashback you earn in the first year. If you receive $40 as your cashback, they add you $40 to make it $80.
When applying for the card, you need to make a $200 security deposit. After eight months into operation, Discover it Secured reviews your account to see if they can return the deposit for use. See more details
2. Capital One Secured Mastercard
Unfortunately, the Capital One Secured Mastercard doesn’t offer any cash back, points, or miles. They do not have any welcome bonus also. Again, the annual fee is zero. The regular APR is 26.99%, which is variable on purchases and balance transfers.
The card issuer does not give foreign transaction fees. Moreover, no balance transfer fee with this card. Again, the company requires no credit history. With this card, you can pay $49, $99, or $200, which is a refundable deposit. See more details
3. First Tech Federal Credit Union Platinum Secured Mastercard
There is no welcome bonus with this card. Moreover, there is no annual fee to pay upon getting the card. When you start using the card, you will always get 1 point per $1 spent on all purchases as a reward.
The APR is 17.50% and is variable. There is no foreign transaction fee or balance transfer fee whatsoever. Again, there is no need for credit. You have to pay $500 as the minimum security deposit. See more details
4. Citi Secured Mastercard
Citi Secured Mastercard does not offer any cashback. Again, there is no welcome bonus with this card. Moreover, the annual fee is zero. You need to pay a $200 security deposit.
However, you have to part with $5 or 3%, whichever is greater of the amount of each transfer you make. The foreign transaction fee is 3%. The APR is 22.49% and is variable on purchases as well as balance transfers. The card does not need a credit history. See more details
5. DCU Visa Platinum Secured Credit Card
DCU Visa Platinum Secured Credit Card has no annual fee. Moreover, there is no welcome bonus or cashback on any transaction you make. Again, the APR is 13.00% and is variable while the foreign transaction fee is 3%. The balance transfer fee is zero.
There is no credit needed for this card. Moreover, there is no Intro APR. However, you need a $500 minimum security deposit before getting the card. See more details
6. SDFCU Savings Secured Visa Platinum Card
The card has no welcome balance. Interestingly, the card has no annual fee. Again, you get 1 Flexpoint per $1 you spent on all purchases.
The APR is 13.49% variable. The card does not charge any foreign transaction fee or balance transfer fee. Moreover, the issuer does not need any credit history. You can get up to $100,000 maximum credit limit. See more details
How Can You Get a Secured Credit Card?
It is simple to acquire a credit secured card. Most companies offering the cards allow you to apply online upon visiting their website. Therefore, you are required to provide details such as your full names, phone Number, Date of Birth and your email. Moreover, you should have;
- Government Issued ID
- Funding Information
- Proof of Address and
- Social Security Card
Federal laws require that you produce all required documents before registering for a credit card. Most credit card issuers will send you information to continue with your registration in your email. Once approved, you get an instant replay in your email. It can take even less than a day to get approved.
Bottom Line
Secured credit cards are better as compared to unsecured credit cards due to the low-interest rate. The only disadvantage of secured credit cards is that you need to make a deposit. The credit limit is also low. When using credit cards, you should see them as an opportunity to improve your score. You should avoid too many credit cards as some may remain unused, thus lowering your score.
