The recession has hurt many American’s credit score and rebuilding your credit is not an easy task. However, a secured credit card may be an excellent way to rebuild and repair your credit score, if you do it right.
A secured credit card is backed by an account, like a savings account, and says that if you miss a payment on the Peoples Bank secured credit card the funds will be taken from that account, so there is no danger of delinquency or defaulting. However, it’s not a debit card in that the funds from the account are not supposed to pay off the secured credit card, rather you are supposed to make payments while the “security money” sits in the account.
If you have a savings account or any cash, which you can put into an account, it can be the beginning of repairing your credit. If you are able to make payments on a secured credit card then start looking for advertisements from lenders who will offer fair deals. Don’t get involved in high interest secured credit cards or ones that will charge so many fees that you end up paying more for usage of the card then you actually charge.
Not all lending institutions offer these cards but secured credit cards are out there. Don’t think of a secured credit card as free money. Look for options that offer you the opportunity to pay back what is charged on the card without being overwhelmed by interest payments and never plan to allow the secured money behind the card to make a payment if you foresee a financially tough month.
You and the lender you find must both realize that a secured credit card is to help rebuild your credit and it’s not for frivolous spending on wants, but is a credit card for necessity. If used correctly, a secured credit card is a valuable tool to rebuild ones credit.