Secured credit cards have been used to help rebuild a bad credit history and repair a bad credit score by many consumers who have fallen upon difficult financial times or may have simply practiced poor financial habits. Secured credit cards are often a way for bad credit borrowers to gain access to credit if unsecured credit cards are either unavailable or simply have interest rates that are too costly to be used when rebuilding credit.
While secured credit cards work similarly to an unsecured card, they do require the deposit of a sum of money into a bank account with the lender of this type of card. Secured credit card seekers are often advised to shop around to see who can offer them the best card, with the lowest fees, which will obviously help anyone who is attempting to repair a bad credit score. Many reputable lenders often have secured credit card opportunities which can be used and will not charge fines, fees, or require insurance to be paid for these types of credit cards, so again, research on the different offers for secured cards is vital.
Yet, secured credit cards are typically used to simply rebuild credit and are not to assist someone who may want to make a large purchase on credit. Ideally, a secured credit card user will not keep a balance on this card, but will make smart financial purchases so that they can pay their debt off from month to month in its entirety.
Also, the lender of a secured credit card should be one who will report card activity to the credit bureaus, so that smart use of this type of card will reflect well on the cardholder’s credit score. While unemployment has been a main cause of financial difficulty for many, those who have gained a more stable financial ground but may have suffered a hit to their credit score can turn to secured credit cards as a way to begin the process of rebuilding their credit history and possibly qualify for affordable unsecured cards in the future.