Bad credit has been a problem for many individuals over the past months as financial and economic strains have plagued many credit cardholders. Most notably, job loss or cutbacks in wages at places of employment have required many to be dependent upon their credit cards and, as a result many individuals have acquired a large amount of debt and in cases where these cardholders were unable to pay these charges a bad credit score resulted.
However, cardholders who have gotten back to a point where they are financially able to begin rebuilding their credit score may find that interest rates on their current credit cards are too high or, in some cases, access to credit may not be an option. It’s in cases like these that many men and women have turned to secured credit cards as a way to rebuild their bad credit score and history.
A secured credit card works like an unsecured card only the credit card lender requires that the cardholder deposit a sum of money into a bank account that secures the lender in case the cardholder either misses payments or defaults on charges. This secured account is one reason that secured credit cards are only beneficial for those who are willing to take financial responsibility and the steps necessary to rebuild a bad credit score.
No matter if a poor credit score has been the result of bad credit practices or financial difficulties that have suddenly come upon a cardholder, smart financial practices will be necessary before a secured credit card is beneficial. Oftentimes, a secured credit card user will make small or calculated expenses from month-to-month, for which they typically have saved money so that they may promptly pay when their bill arrives.
Successful users of a secured credit card have, over the past months, restructured their spending habits and simply have begun living within their financial means. While it does take time and effort to rebuild a bad credit score, a secured credit card has been the means with which bad credit borrowers have used to accomplish this goal. While many of the nation’s top lenders like Bank of America, Chase, Citigroup, and Wells Fargo/Wachovia offer secured credit cards, it will be important for someone seeking a secured card to find a reputable lender who will offer an affordable interest rate and not charge excessive fees.