Secured Credit Cards: Well Worth It

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Having a credit card in the modern world is almost a necessity. Many grocery stores require one to accept checks, and you cant rent a car without one even if you plan on paying in cash.

But getting a credit card can be difficult if youre looking to open your first line of credit or are dealing with an extremely low credit score. One good way to open and build credit is with a secured credit card.

What is a secured credit card?

A secured credit card works just like a normal credit card except for the fact that users are required to give the creditor a cash collateral deposit. This deposited amount then becomes the available credit line for that card.

This means that if you put down a $500 deposit, your credit limit will be you guessed it $500. Often times, you may be able to add to your deposit to raise your credit limit.

Keeping a good payment history can sometimes even lead to banks rewarding you with more credit without requiring an additional cash deposit.

Benefits of secured credit cards

As previously stated, secured credit cards are excellent ways to build credit. If you have never had a credit card and have no credit history, a secured card is a guaranteed way to start a credit history. These cards can also be beneficial to people with extremely low credit scores who cannot be approved for new lines of regular credit, but are trying to improve their credit scores.

Disadvantages of secured credit cards

One obvious disadvantage of secured credit cards is that they require money up front. Another negative aspect of these cards is that many of them come with large fees. Some secured credit card companies will agree to let customers open cards with them, but require them to open insurance policies with monthly fees as well.

This is why it is particularly important to read all documentation and fine print before opening any credit cards especially if they are secured credit cards.

If you or someone you know is struggling with credit card debt, you need debt relief. And one of the best bankruptcy alternatives programs out there is known as debt settlement.

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