How Can you Get the Best Secured Credit Card
What is the best secured credit card to get if you need to establish credit or rebuild a damaged credit file? Once the poor stepchild of the credit card industry, questions about what is the best secured credit card to get have become common today.
Five years ago a secured credit card was identified by merchants as a credit account for a high risk consumer. Having good credit was a status symbol as well as a practical necessity. The perception in the public was that only spendthrifts had to resort to using secured credit cards.
Need for Secured Credit Cards in the Marketplace
The economic crisis combined with rising unemployment and falling housing values created a crisis in the credit card industry.
This crisis came during the same time new government regulations were put into effect to further regulate lending practices on credit card accounts.
Credit card interest rates soared and the resulting double or triple monthly minimum payments led tends of thousands of consumers to file personal bankruptcy to eliminate crushing credit card debt.
Most of these non-paying customers had been people with good credit in years past. When they obtain their credit cards they had every intention to pay as agreed but circumstances interfered.
Lower incomes led many to pay only the most necessary financial obligations each month to keep their homes and feed their families.
Secured Credit Cards Offer a Solution
A section of the new lending regulations involved management of secured credit cards. This was perhaps the most beneficial part of the legislation for consumer in this bad economy.
Prior to the new laws, the best secured credit card to get was "none". Though the accounts were available, the fees to originate an account added to annual fees were so high the new card holder found much of his spending limit used up by fees charged when the account was opened.
That has changed. If you ask what is the best secured credit card to get today you will find some very good options. Orchard Bank is a leader in providing secured credit cards and the terms are some of the most lenient in the market.
You can determine your own spending limit for your new account by the amount of money you place in an account that is held to guarantee payment.
With a standard credit card you buy now and pay later. With a secured card, you pay up front for purchases by establishing an account with funds you supply to the lender. This is not a prepaid credit card where those funds are used as you make charges to the card.
When wondering what is the best secured credit card to get, understand that you are charged interest and fees just as you would be on a regular charge card and as long as you make the payment in a timely way, the funds you deposited are safe. Those funds are accessed only if you fail to pay the debt on your secured credit card.
What to Look for In a Secured Credit Card
To learn what is the best secured credit card to get means understanding the importance of a lender reporting to credit agencies on a regular basis. The top secured credit lenders report you payment activity monthly to the three major credit bureaus. This is what rebuilds your damaged credit.
The bad credit from past problems stays on your credit report for years but the negative affect can be overcome by good credit reported that appears above the bad reports and eventually results in a better credit rating.
The Best Secured Credit Card
Not all secured cards are equal. Three of the best lenders in this market are Orchard Bank, Capital One and Citi Secured MasterCard. There is a large variation in the amount of spending limit you can establish but the most common credit line is only $300-500.
The secured credit card is not meant to provide you with big spending power but to allow you to have a credit card to use when needed and to aid in building credit for those with no credit established. Today, the secured cards are most often used to rebuild damaged credit.
To choose what is the best secured credit card to get, compare all of the terms for the offer. Interest rates will be high and the annual fee, initiation fee and any other fees attached to the account can be more important than the actual APR.
Narrow your search down to three good offers and choose the best by comparing the terms and conditions. Look for hidden fees and avoid any cards that can only be used in limited venues. The most important question to ask is how often the lender reports to the three major credit bureaus.