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Even the Best Secured Credit Cards Can Land You In Trouble

The best secured credit cards are those with the most favorable terms and lowest rates. If you are fortunate to get this type of card, you still need to be cautious. The danger doesn’t lay in the card itself, but the spending pattern of the user.

The best secured credit cards are just like regular cards except that you need to deposit cash into an account as collateral. These cards are often used by consumers with poor credit histories. If used correctly, the consumer can find themselves in a better credit situation and may become eligible for an unsecured card.

The way this works is that the customer makes a deposit, usually around $500, into an account. They are issued the plastic by the bank and they can begin making purchases. The credit limit is the amount vclubshop of the deposit in most cases. You will receive a monthly statement and will be charged interest each month. It is your responsibility to make payments on time and keep you balance below your credit limit.

The great thing is that you don’t go into debt because any payments you don’t make, the money you deposited gets withdrawn from your account. This is great for avoiding debt but doesn’t do much for you credit rating. The bank reports your activity to the credit bureaus as if you had an unsecured card. If you overspend because you know your expenditures will be covered by your deposit, you just defeated the purpose of getting a secured card in the first place. Not only don’t you get any credit restoration benefits, you just wasted your security deposit and will be charged large fees.

If the purpose of finding the best secured credit cards is to restore your credit, you need to charge small amounts and pay off the balance every month. This will ensure you are not paying interest fees and you will get good marks at the credit bureaus.

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