Banks Offer Secured Credit Cards To Help Consumers Repair A Bad Credit Score–Are They Helping Bad Credit Borrowers?

Offers for secured credit cards from various financial institutions have been used over the past months to assist individuals in building a good credit history and repairing a bad credit score. Bad credit borrowers may have difficulty finding lines of credit, which can be problematic especially for those who are trying to repair a credit score, but secured cards often offer a line of credit which can be used to repair one’s financial situation.

Bank of America, Capital One, and Wells Fargo are just a few of the top secured credit card lenders but are by no means the only financial institutions which offer these types of cards for rebuilding and credit. While there has been indications that many financial institutions are moving away from secured credit cards, there are still many reputable institutions, like banks of credit unions, which can offer this type of card for assisting someone with a bad credit score repair or for individuals who simply want to build a credit history.

Obviously, any type of secured line of credit will require collateral, which in the case of a secured credit card is typically money deposited into an account that backs the card. Yet, this money deposited into a secured account is not to be used like funds for a debit card, but money in the secured credit card account will be taken if payments are not made by the cardholder.

Many consumers who have had a difficult financial time as of late have seen their credit score drop because they were unable to make all of their debt obligation payments. However, there are also consumers who have simply practiced poor spending habits or who may have no credit score, both of which can be troublesome in certain cases.

Yet, financial advisors often suggest that individuals seeking bad credit repair methods through secured credit cards make sure they are in a financial position to not only make charges on their secured credit card, but they can quickly pay off the balance each month as secured cards are usually not meant to carry a balance. This means that to secured cardholders will need to make affordable purchases and promptly pay off their debt in full in order to get the most benefit from this type of card.

However, as with any type of credit or financial repair method, repairing a bad credit score through the use of a secured credit card is no guarantee unless smart financial practices are used. While some individuals may have access to unsecured credit, no matter what type of card a consumer has, if building a better credit history and repairing a bad credit score is their goal, simple saving, budgeting, and repayment techniques will have to be practiced before they see any benefit in their financial life.