Secured Credit Cards
Every time you apply for a credit card or loan, each single inquiry from that lender will be recorded on your credit report making too many inquiries is a signal to a potential lender that you are a risky customer just shopping for credit and not for real funds.
True or not, a secured credit card may be the right type of credit card for you because it is secured by a deposit account owned by the cardholder. This deposit consists of 100% to 200% of the total amount of credit desired, that is held in a special savings account.
But the cardholders of secured credit cards still have to make regular payments, but the card issuer has the option of recovering the full cost of the purchases paid to the merchants out of the deposit if the cardholders don\’t pay their credit balance on time.
Usually, the issuers of secured credit cards consider that if the cardholder does not make his payment, the account should be paid anyway before the security is released instead of taking money from the security to pay the balance. This is quite a risk for the cardholder because the cards is not cancelled and the balance does not set off the deposit.
This advantage may seem like just a financial move to let interest continue to grow, but in time, or with additional debt, it can be so difficult to pay.
This is not a threat but a condition usually described in the secured credit card agreement of some credit institutions that most of the time is ignored by the cardholders, or something that they do not read, or do not understand clearly, when the account is opened.
So it\’s very important that you ask questions so you will understand everything, because secured credit cards are the most viable option for people who do not have good credit.
If you want to rebuild or improve your credit history report, then your best option is with secured credit cards, but be aware that they have higher fees than regular cards.
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