6 Great Things About Secured Credit Cards

Forced savings

Everyone knows that having at least some cash tucked away that you can’t access easily is smart. It’s just not always easy to do. A secured card often requires deposits of a couple of hundred dollars on up to thousands. Since you can’t get at the money unless you close the account, those funds are protected against temptation. You may be able to open a card with less, but by depositing more you get a larger credit limit and more savings!

(Relatively) easy acceptance standards

Though to qualify for secured credit cards you do need to have an income that can support the credit line, your credit rating needn’t be stellar. Because the money acts as a guarantee, the issuer loosens their qualification requirements to include those with bad or thin credit files.

Credit building or rebuilding

The moment you get the secured credit card and start to use it the activity for that account shows up on your consumer credit reports (presuming they report, so check first). The account is factored into your credit scores, and since recent data on reports matter more than that which is old, you can change your past with fresh, perfect payments.

Forge a relationship with a good lender

If you get the secured credit card from a major credit issuer, you will begin to form a positive association with them. Treat this account well and you may be able to obtain a low rate mortgage, vehicle, personal, and business loans with them later.

Secured Credit Cards provide Independence.

One of the ways to get your foot in the charging door is to ask someone with good credit to cosign for you, or for you to jump on their existing account as an authorized user. That can be a fine arrangement, but its far better to stand on your own two financial feet. A secured credit card in just your name allows you to be the sole owner of the account. Autonomy is a beautiful thing.

Conversion to unsecured cards

After you prove your credit prowess with the secured credit card, the issuer may allow you to convert it to one that’s unsecured. For example, the Citi Secured MasterCard advertises that after 18 months of responsible use, you’ll be eligible for a trade up to an unsecured credit card and you’ll get your deposit back.

Clearly you’re not out of luck if you don’t already have fantastic credit. Money, as they say, talks.