Many cardholders have had trouble over the past months with their finances and, as a result, many have either gotten in over their head with credit card debt, missed payments, and have seen their credit score drop as a result. However, cardholders are looking for ways in which they can repair their credit history and one of the tools many have been using comes in the form of secured credit cards.
Financial institutions like Bank of America, Citigroup, Wells Fargo/Wachovia, and Chase typically offer secured credit cards for individuals who either want to establish a credit history or repair their bad credit score through building a better credit history. Sometimes unsecured credit cards become unmanageable, since interest rates are often increased when a bad credit score is involved.
In these cases, cardholders have used secured credit cards as a way to gain an affordable line of credit with which they may repair their credit history. While unsecured credit cards can be used in a similar manner as secured cards, secured credit card holders have typically been those who were either unable to obtain an unsecured credit card or, again, saw interest rates increase due to their bad credit score.
Secured credit cards have many similarities to unsecured credit cards, especially when it comes to repairing one’s credit score. However, a cardholder is required to deposit a sum of money into a bank account which secures their card before they can acquire a secured credit card from a reputable lender. This secured account protects the lender against loss in cases where a cardholder may use their secured credit card irresponsibly, so a cardholder must be serious about repairing their credit history if they used a secured card.
While finding a reputable secured credit card lender, depositing money into a secured account, and making smart purchases will all be required before a secured credit card is helpful, consumers who have been successful at repairing their bad credit history in the past through the use of secured credit cards have simply made affordable purchases on their cards which they paid off promptly each month. A secured credit card is no guarantee to a better credit history or higher credit score, but when used properly they have helped numerous consumers in the past build a better credit history and increase their low credit score.