When you hear the term “secured credit card” what comes to mind? Do you immediately cringe and say “no way”? Are you at least open to the idea?
Even though a secured credit card may not be right for you, you should at least be open to the idea. There’s nothing to be scared of. In fact, once you learn more about the benefits of a secured credit card, you may find that it’s just what you have been looking for.
Here are five benefits that are likely to pique your interest:
Better Chance of Approval
If you have bad credit or no credit, you may find it difficult to receive approval for an unsecured credit card. Fortunately, you don’t have to worry about the same with a secured credit card.
Since you’re required to provide a security deposit, the credit card company is not taking any risk. If you default, they get to keep your deposit. This makes it very easy to receive approval for a secured credit card.
Typically Reported to Credit Bureaus
This is something to check on before applying for any secured credit card. If your activity is not reported to the three main credit bureaus, continue your search. Without this, responsible use of your secured credit card won’t result in establishing credit and raising your score.
While most secured credit card activity is reported to the credit bureaus, this isn’t the case across the board.
Help You Boost Your Credit Score
This is one of the primary reasons to apply for a secured credit card. If your credit score is low — perhaps due to some financial errors in the past — you can use a secured credit card to give it a push in the right direction.
Of course, a secured credit card only helps if you use it responsibly.
Rewards May be Available
There aren’t many secured credit cards with a rewards program, but they do exist. Keep an open mind so that you can at least learn more about these offers and whether one of them is right for you.
There’s no better feeling than getting something in return for the purchases you make with your credit card.
Return of Your Security Deposit
Your credit card company will only keep your security deposit if you default. So, when you move from a secured credit card to an unsecured credit card, you’ll get this money back.
Note: verify this with the credit card company before signing on the dotted line.
With so many benefits, you should take the time to compare three to five secured credit card offers. Doing so will open your eyes as to what these can do for you.
Do you have any experience using a secured credit card? Were you happy with your decision? Would you add any other benefits to the five above?