As reports indicate that more consumers are finding themselves on a stable financial ground and in a position to begin combating credit card debt and better manage their money, more men and women are looking for ways to rebuild a bad credit score and secured credit cards have been one way that bad credit repair has been accomplished by these men and women. However, there are some considerations that advisers are attempting to communicate to these men and women who feel that a secured credit card is the best and quickest route to bad credit debt repair.
Obviously, there are pros and cons of secured credit card use when increasing one’s credit score, but a secured credit card is not a guarantee when it comes to improving one’s financial life. Consumers must provide some form of collateral, typically a deposit into account which will secure the credit card, and many feel that this makes the card similar to a debit card since funds are essentially backing this line of credit. However, advisers often caution cardholders against this line of thinking as funds from the secured account will only be used if the cardholder fails to make payments on their charges.
For this reason, a secured credit card must be used like an unsecured card through the use of smart financial practices and budgeting. Secured cardholders who have been successful at repairing their bad credit score are usually those who have formed a budget for month-to-month and made affordable purchases on their card so that they can promptly be repaid each month. Cardholders are usually advised against keeping a balance on a secured credit card due to the fact that the interest rate associated with this type of card, while it may be affordable for some, can cause overall costs to increase if the balance is not paid, but this is true of both secured and unsecured cards as well.
While cardholders need to seek out reputable secured credit card lenders and make sure that they report to the big three credit bureaus before they will see any benefits from secured credit card use, consumers are also cautioned to remember that repairing a bad credit score by reestablishing one’s credit history does take time and financial discipline so, again, a secured credit card should not be viewed as a quick fix. However, responsible secured credit card users have often been offered unsecured cards with a higher line of credit which may also be more helpful when it comes to establishing a cardholder’s credit history and continuing to increase their score.
Yet, cardholders are again told by advisers to be sure they implement proper budgeting, repayment, and saving habits when using any type of card as these types of financial practices must be kept throughout one’s life if a bad credit score is to be avoided and a cardholder’s credit history is to remain in a positive area for years down the road.