As of late there have been more consumers who are considering ways to acquire credit despite being in a position where they may have a poor credit score, as bad credit repair is vital to any consumer’s life and, before this can take place, many consumers feel that they will need a line of credit, particularly like a credit card, along with other forms of debt, which can be used properly and show that they are responsible enough to handle these obligations. Yet, in the realm of credit cards, secured cards are one of the more popular ways that borrowers have been able to access credit despite being in a bad credit position, but when it comes to using this particular line of credit consumers must take certain steps so that they can not only keep their costs low but improve their score in such a way that they may qualify for a more affordable unsecured line of credit.
Many secured credit card lenders are very upfront about the fact that if a consumer is able to handle their secured credit card properly, make charges and promptly repay what they owe, down the line they may be offered a more affordable unsecured credit card despite being in a position where they are still reestablishing their credit score and building their credit history. Yet, secured credit cards can be notorious for having interest rates that are costly, in relation to other types of credit, and this is no surprise as they are typically tailored for consumers who may be viewed as a credit risk.
It’s common sense that the interest rate a consumer gets will depend on what card and lender they choose, but some cards may run in the neighborhood of 22% to 26% in terms of the average interest rate that a bad credit borrower may see. This is obviously a far cry from interest rates available to borrowers in a great financial position, but consumers who are using a secured credit card should not have to worry about this high interest rate due to the fact that secured cards are usually not meant to carry a balance and if consumers will implement quick repayment practices so that they will be able to erase the entirety of what they owe on a monthly basis, interest rate charges will not be a factor.
Consumers also are constantly cautioned to be on the lookout for excessive fees that may come with secured credit cards as some lenders will not be in a position where they are willing to give consumers the chance to repair their bad credit score but want to guard themselves against any problems that may arise if a cardholder does not use their card properly. Yet, secured credit cards also require collateral, so consumers who spend beyond their means to repay will find that money that has been deposited into a savings account will be used to meet these obligations and will essentially be a step back for a bad credit borrower.
However, when balances are kept at an affordable level, promptly paid off by budgeting within the cardholder’s personal financial life, and consumers are able to show they are in control of their financial life overall, not simply just when using a secured credit card, they may find that their lender or other financial institutions will begin to offer affordable, unsecured credit card opportunities that may be used to help these bad credit borrowers in ways that simply go beyond bad credit repair.