It might be difficult to get a credit card if you have poor credit. If you're looking to build your credit or improve your credit score, a secured credit card may be the answer. A secured credit card requires you to pay a deposit equal to the credit limit. You will receive a credit score from all three major credit bureaus. You will also have the ability to receive an identity theft monitoring and FICO score.
Credit card that helps you build or re-build credit
For those trying to rebuild or build their credit, secured deposit credit cards are a great option. Secured deposit credit cards are different from regular credit cards in that they don't require a credit review or a minimum credit rating to apply. However, this type of card may not be appropriate for individuals who have a high spending habit. These cards usually have a credit limit that is equal to the amount you deposit. High-spending individuals may wish to find another credit card.
Secured credit cards that are backed by cash require a cash deposit. Once the deposit is made, the secured card functions just like an unsecured credit card. You can make purchases, pay them off, and the issuer might withdraw your deposit.
Credit card that requires a security deposit
A security deposit can be used for monthly payments, but it is not required if you apply for a credit card. You'll be required to pay the minimum monthly payments plus any interest each month. Likewise, if you're late on a payment, the card issuer can charge you late payment fees and report you to the credit bureaus, which will negatively impact your credit history.
You will need to open a bank account and get a routing number in order to be eligible for a credit card that has a security deposit. You will receive a credit limit depending on how much security deposit you made before you get approved for a new card. According to the credit card company, a $200 security deposit will give you a 200 credit limit. Other secured credit cards allow you to increase your credit limit over time.
Credit card that does NOT require a security deposits
Unsecured credit cards may be an option for people with poor credit. Although secured cards typically require a minimum deposit, unsecured cards don't usually require one. These cards give you rewards and let you build your credit history without having to put up collateral.
A security deposit will ensure that the card account doesn't get closed, but it doesn't cover your payments. For example, a $2,000 deposit will result in a monthly payment of around $125. Additionally, interest will be charged. If the account is closed, the bank will refund your security deposits and subtract any outstanding debt.
Unsecured credit cards are usually easier to get because the bank doesn’t have a safety deposit. You might not be able to qualify if your credit isn't good. However, if you're just starting to build credit, you might be able to obtain an entry-level secured card without a security deposit. The bank is required to report all payments to credit bureaus.