TABLE OF CONTENTS
— Overview
— Before beginning your approach
— Review the interest rates
— Review fees and additional costs
— Consider the rewards and benefits
— Assess whether you need a special credit card?
In addition to the standard cards, gold and platinum, there are special credit cards that meet special needs. Here are a few:
Secured Credit Cards
Secured credit cards require a security deposit with the issuer before using the card. Your credit limit is usually expressed as a percentage of your deposit (often 100% or more). For example, if you make a deposit of $ 500, you will normally get a credit limit of $ 500 or more.
You might think about getting a secured credit card if:
— You have no credit history;
— You have had difficulties in the past and want to rebuild your credit score;
— You have recently declared bankruptcy.
Requirements to obtain a secured credit card
To obtain a secured credit card, you must make a deposit with the credit cards issuer. According to the credit limit you request, the amount of the deposit required may vary from several hundred to several thousand dollars.
In addition to the deposit, you may be asked to pay a processing fee . Before you apply for secured credit cards, it is important to ask the issuer if you have to pay a fee.
Your credit limit is normally a percentage (usually 100 percent or more) of your deposit. For example, if you deposit $500, you can receive a credit limit of $ 500 or more. If you do not pay your credit card bills, the issuer may use your deposit to pay the balance of your account.
If you always pay your account before the due date, you will establish a credit history or, if bad, you will improve your credit score. When a credit cards issuer will consider your credit score as satisfactory, you can qualify for an unsecured credit card, with a reduced rate or at least a regular rate. If necessary, your deposit would be returned to you if you decide to close your secured credit card account after paying the balance in full.
Interest rates and other charges
Normally, the secured credit cards interest rate are higher than the unsecured credit card. In addition, secured credit cards are usually accompanied by monthly or annual fees. As with other cards, service charges also apply to certain transactions.
Interest on deposit
Most secured credit card companies pay interest on your deposit. The financial institution holding your deposit is either your credit card issuer (if it accepts deposits) or other financial institution chosen by him. No matter who holds your security deposit, you should check with your credit card issuer.
Tips for a secured card
Before you apply for a secured credit cards, check your credit with one of the three credit reporting agencies: Equifax, TransUnion or Experian, if your credit file contains an error. Have it corrected immediately, because it may prevent you from getting an unsecured credit card. To learn more about obtaining a copy of your credit report or to check for error you can click at the links below:
Here are a few precautions when shopping for a secured credit card:
— Be wary of secured credit card offers from unknown institutions.
— Be wary of secured credit card offers that do not have a recognized brand such as Visa, MasterCard or American Express. It could be cards that are accepted in a few stores, or may require you to do your shopping by catalog.
— Read all the conditions attached to secured credit cards and make sure you understand before you apply for one.
Student Credit Cards
Credit cards for students are for those with limited incomes and in general they offer a credit limit lower than regular credit cards. There are also credit cards for students with low interest rate.
Retail Credit Car
Department store credit cards offers discounts or rewards programs in some stores or at select retailers. Store credit cards are generally subject to higher interest rates than regular credit cards, and usually they can be used in the store that issues them. Retail credit card can be valid if you shop around enough in a particular store to enjoy the rewards program associated with it. When you look at the benefits you could reap, be sure to take into account the interest expense or other you may have to pay.
Note:
Sometimes retailers offer extended interest-free periods on purchases made with their credit card. The conditions of these tenders may vary, but generally if you have not paid the balance in full before the end of the interest-free period, you will be charged interest from the date you made the purchase. Because the interest rate on retail credit card is higher than that applied to regular credit cards, a store credit card can ultimately be very costly. It also happens that retailers offer a discount for your immediate purchases if you accept and use their credit card. The discount can be interesting, but do not forget that the interest rate applicable to the balance you see on your statement is usually higher than regular credit cards. If you are unable to pay the balance, the interest they will charge you may be higher than the discount offered.
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