Things You Need To Know Before Applying For A Secured Credit Card
Even if you do not have any plans of applying for a credit card now
, you may soon find that it is necessary for you to get one. For instance, if you do not have time to go to malls, you can simply place your order online and wait for the item to be shipped to your doorstep. Furthermore, purchasing products online is often cheaper than buying them from a regular store. Many airlines and hotels offer reservations on from the internet. If you often take out-of-town trips, having a credit card to make online bookings provides great convenience.
However, if you do not have a credit history or if you have a bad rating, you may not be able to qualify for a regular credit card. Fortunately, you still have a chance to build or rebuild your credit history by getting a secured credit card.
Below are important information that should be considered before applying:
Qualifications: The good news is that secured credit cards give everyone the chance to get approved - even those with no credit or poor credit history. As long as you can submit the required deposit, you can open an account right away.
Keep in mind that every credit card company has different sets of requirements and rules. Before sending out your application, read the Terms and Conditions of the secured credit card provider.
Fees: Secured credit cards may have annual fees, processing charges and application fees. However, the amount may vary depending on the issuing company. There are certain companies that do not require their applicants to pay "application fees". It is important to review the fees before signing up to avoid high charges.
Deposit: Usually, the deposits are between $300 - $500. Some deposits are placed in an interest-bearing account. Take note that your credit limit is may not always be the same as the value of your deposit. Your credit limit can either be equal to or slightly higher than your security deposit. This will be use by your issuer in the event that you default payments.
Payment reports: When choosing a secured credit card, one very important factor that you need to check on is credit reporting provision. Your payments must be reported to the major credit bureaus in order for you to establish credit history or to build up your poor credit rating. Take note that not all secured credit cards offer this service so be wise in comparing your choices.
Account Upgrade: Unsecured credit cards have lower interest rates and fewer restrictions. You can even enjoy the opportunity to get rewarded from your credit card spending. Therefore, use your secured credit card to achieve the privileges that only non-secured cardholders enjoy.
After some time of consistent payments, ask your issuer if you can have your account upgraded to an unsecured account. Some secured credit card companies will automatically upgrade your account to an unsecured credit card after only a year of timely payments. Before signing up, it is best to check if your chosen issuer does offer automatic upgrading.
Copyright (c) 2009 Tara Tiemann
by: Tara Tiemann
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