So, you are dreaming of buying a house for yourself but then all of a sudden a hard reality hits you that you do not have enough credits for that. What to do now?
Well, you need not worry, there is one option that you can do to make your dreams come true. You must be wondering what is that? So let me tell you.
A secured credit card could help
Do you know you can now generate random valid credit cards from namso in a single click? You can use those randomly generated cards in various platforms as well as your experiment on cards.
- Now what exactly is a secured credit card?
- Why choose a secured credit card?
- Why is the refundable security amount taken?
- Will this secured credit card help in building your credits?
- Is a secured credit card similar to a prepaid card or debit card?
- Structure and terms of Secured credit cards.
- How is the secure credit card issued?
- How long does it take to build good credits while using a secured credit card?
- Disadvantages of secured credit card.
Now what exactly is a secured credit card?
Secured credit cards are credit cards that require a refundable security deposit which would be serving as collateral on the owner’s account. Even if you have bad credit or no credit history this card can still be issued in your name.
Why choose a secured credit card?
People with bad credit or minimal credit history have got some couple of options to build their credits.
- They can ask someone else with a good credit history to sign on their credit card application. This will make them a cosigner with you. If you fail to pay the debt in the future, the cosigner will be held responsible for that. This method is generally used by parents to help their kids to improve their credit scores. However, if you have a bad credit history it becomes quite difficult for you to find a cosigner for yourself
- Well, you can also get a credit card for yourself which is issued for people with bad credit history, this is also known as subprime credit cards. But the main problem that people face while issuing this card is that its rates of interest are really high also along with its fees.
On the other hand, secured credit cards can provide better alternatives.
Why is the refundable security amount taken?
While issuing a credit card, the issuer needs some assurance to issue the card for the person. This refundable amount that you deposit does the work of assuring the issuer, so there is not much hassle in issuing the card for yourself.
Will this secured credit card help in building your credits?
Even though you are having a bad credit score from the past or you want to build fresh credit scores for the future. A secure credit card will help you with that. All you need to do is to use the credit card for small purchases throughout the month and then pay the whole amount together with at the end of the month. Using the card and paying is the key no matter how bad your credit scores were. If you are up to date with your bills, the credit goes up. It is as simple as that.
Is a secured credit card similar to a prepaid card or debit card?
You must be wondering that if you need to deposit some certain amount to get your card issued, then is it not equivalent to getting a debit card or getting a prepaid card?
Well, a debit card won’t send your reports of the payment to the credit card bureau.
No matter how many purchases you do from the debit card it won’t be reported to the bureaus and this will not help in increasing your credit score. Just make your payments in time using a secured credit card as I said earlier and thus your score would increase.
Structure and terms of Secured credit cards.
A secure credit card functions like any other regular(unsecured) credit card. The procedure and mode of payments are also the same. These cards also are issued by regular, big card lending companies such as Visa, MasterCard, etc. The owner of the card can use them wherever there is acceptance and can also be benefited from the perks and rewards.
They can pay the minimal debt at the end of the month and can pay the rest with some certain interest as issued by the companies.
They can get the monthly statements of their usage and get insight into due balances and debts.
Also Read:- 15+ ways to avoid credit card skimmers in 2021
How is the secure credit card issued?
The issuer issues the credit card in the same way as the unsecured credit cards with the same amount of annual fee which is not more than 50$.
There is no specific documentation needed as in the case of unsecured credit cards and thus it makes it easier to get a secured credit card for ourselves.
How long does it take to build good credits while using a secured credit card?
As per the research done, if a person uses the secured debit card genuinely then in a year their credit score would increase enough to let them shift to an unsecured credit card.
Now that we know what exactly is a secured credit let us now discuss some of the disadvantages of it.
Disadvantages of secured credit card.
- The credit limits are generally low as compared to an unsecured credit card ( In some cases). Some companies make their credit cards restrictive for limited usage by the owner
- Interest rates are relatively high as compared to ordinary credit cards. And if you are looking for a secured credit card only to increase your credit score then paying a monthly tax could become a headache for you
- The chances of upgrading to another plan are relatively less. Many companies do not offer plan up-gradation program which can further be problematic
- You need to have some deposit amount for the generation of secured credit cards. The amount varies from company to company. It can be from 200$ too much more depending upon which credit card company you go for. So this can be considered as one of the demerits
With some good there is some bad.
Despite all these facts, there is one thing that we should keep in mind that is, to use the card within a certain limit. Getting a credit card doesn’t mean that we are free to purchase anything we want. Keep your expenses to a limit and clear your bills timely otherwise, things could become a bit problematic in the near future. And who wants to take unnecessary hassle in life for no reason.