As you begin your search for a credit card, you may soon come to find that you don’t qualify for the one you want. While this is disappointing, don’t let that stop you. There are still options to consider.
The first thing you need to do is look into the benefits of a secured credit card. With this, you make a deposit that acts as both a security deposit and credit limit. Think of it in a similar manner as a debit card. You can only spend what you deposit.
Since you’re making a deposit, you’ll qualify for a secured credit card. The credit card company isn’t taking any risk.
In addition to the ease of approval, there are other benefits of a secured credit card:
- Credit bureau reporting: Check on this before you apply for a secured credit card. It’s best if all activity is reported to the three major credit bureaus, as this allows you to improve your credit history and score.
- You can still earn rewards: There are a handful of secured credit cards that allow you to earn points or cash back.
- Use it anywhere: A secured credit card is used in the same manner as a traditional credit card. You can use it in stores or online. If credit cards are accepted, you can use it to make a purchase.
Do You Really Need a Credit Card?
Now that you understand the benefits of a secured credit card, you can answer the question of whether or not you really need one right now.
For example, if you want a secured credit card as a means of re-establishing or building credit, you’re on the right track.
However, if you want a credit card so you can make unnecessary purchases, you’re better off taking a deep breath and reconsidering your approach.
Secured or not, carrying a credit card is a big responsibility. Should you take the wrong approach, it will take a toll on your finances.
Take the time to learn more about the benefits and potential drawbacks of a secured credit card. While you’re doing that, you should also answer the question of whether or not you even need a credit card at this time.
Do you have any experience applying for or using a secured credit card? Were you happy with your decision?