Being in the financial services industry, every day we see all types of credit card offers, and one type that continues to grab our attention like no other is secured credit cards. They are a great option for those with little or no credit.
The Basics of How Secured Credit Cards Work
This type of credit card is designed for those who don’t have excellent or perfect credit scores. By not providing financial institutions with the assurance that they need to ensure their risk is minimized, it makes them more likely to provide a consumer with the opportunity to pursue a better credit score.
You simply make an initial deposit (as little as $200 and as much as $500 seems to be the norm), and they use that deposit to secure their credit line if you default on your payments. However, if you decide to make your payments on time, and prove to be a responsible person, they’ll refund your deposit when it’s time to upgrade your credit card with them.
What are the benefits of having a secured credit card?
While some might think that there are a lot of limitations in place when using this type of card, it couldn’t be further from the truth. Here are the top 3 benefits of secured credit cards.
· A chance for a solid start to a better credit rating.
Instead of giving you a denial right out of the gate, secured credit cards are a chance to get your credit score back on track. Whether you’re starting fresh or repairing your credit, this is the start that could lead you to possibilities you might not have known even existed.
· Easier to get approval considering it’s less risky for the bank.
Banks are cautious when it comes to lending money, and it’s no different when they decide to give you a credit card. Since your credit limit will be equal to the amount of money you put down, there’s virtually no risk.
· Works just like an unsecured credit card for the most part.
From grabbing cash at an ATM to unlocking unique benefits, secured credit cards still come with some of the most common approaches. The only difference is that you ended up putting your money where your mouth is, and in the future, you’ll be able to unlock an upgraded credit card.
If you want a great starting point, this is the type of card worth taking a look at. Make yourself aware of the different options that are available to you. After all, nobody knows your needs better than you