Credit cards have become very essential these days, especially if you want have a good credit score. With banks checking the credit history of people before approving their credit card application, it is difficult for people with a bad credit history to qualify for a credit card. A secured card is the only way to establish credit for such people. If you are looking to build or rebuild credit with a secured card, read on to know more about secure credit cards, the applicable charges, and how to use them to get great benefits.

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• What is a secured credit card?
  A secured card is a card, which requires a collateral deposit in cash. This deposit becomes the credit line for the account. You can use the deposit made by you in the account. You may be able to add to the deposit in order to extend the credit.
• What kind of charges are applicable?
  Avoid any card that requires you to pay an application fee. Secured cards do charge an annual fee, but it varies from card to card.
• What amount do I have to deposit?
  This amount will vary according to the card. Some require a minimum deposit of $300 or $500. Your limit will either be the amount of your deposit or a percentage of the amount.
• Is there anything to watch out for?
  Secured cards have low fees, and issuers treat customers well. But, some also take advantage of customers’ bad credit situation. You need to gather plenty of information when you apply for a card and pay attention to the fine print such as interest rates, deposit, and fees.
• How does the credit card-issuing company report to the credit bureaus?
  The sole reason for having a secured card is to build a good credit history. All credit card companies report to the three major credit bureaus. If they do not do this, the customer will be at a disadvantage. The card issuer can also flag the report on a secured card to any of the credit bureaus. Such a flag could be an obstacle to rebuilding the credit.
• How much time does it take to qualify for an unsecured card?
  The card issuer will qualify you for an unsecured card after a period wherein you have made all of your payments on time, which is usually a year.
• Will the deposit earn interest?
  Majority issuers do not pay any interest on the security deposit of a secure credit card, though a few offer rewards on spending. You also need to find out how long your money has to remain deposited after the account is closed.
• How can I make the optimum use of my secured card to build my credit rating?
  The easiest way to build your credit is by making a few purchases and paying off the balance amount each month. Secured cards make sure that you never spend more money than your spending capacity, but it is not a good idea to keep a secure card for a longer time than you need to.

Use your secured card with financial discipline and make sensible spending decisions to make the most of it.

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