Credit cards are a liability and, the thought of looking for one is daunting, no matter how experienced you are with credit and how intact your finances are. Although, there are various kinds of credit cards that could help ease your anxiety, like secured credit cards. If you are considering applying for a secured credit card, the following are a few things to look for:
What Are Secured Credit Cards
Secured credit cards are a great way to build credit without the much-added risk. Secured credit cards require you to make deposits while the card's issuer matches your amount. For instance, if you have an insured card with a $1000 credit limit, a deposit of $1000 is placed into a special account, accessed by the creditor in the case that you fail to pay your bills. And luckily, most people are approved for secured CCs because creditors don't run the risk of nonpayments.
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Reporting To Credit Card Bureaus
Information collected by creditors determines your credit score, so it's essential when looking for a secured credit card that you also make sure your agency reports your borrowing behaviour to major bureaus like Equifax and Experian. If they don't, your card won't have any credit building benefits at all and in that case, you might as well use your debit card.
Opportunites For Reviews
Once you are deemed responsible by credit card companies, many will allow you to transition to owning an unsecured card after reviewing your account. Automatic reviews of your borrowing behavior can help you transition without having to close your current card, become eligible for more credit and provide you with your original deposit without much hassle. Automatic reviews are a win, win.
Avoid Paying Additional Fees
Secured credit cards are often free and don't market to people who are in need of credit, in the name of "building credit fast" by having high interest rates and fees. Do your very best to avoid all credit cards that abuse your desire to build your credit score and instead choose transparency and fare agreements.
