So, you are looking for a secured card from Chase? This used to be one of the most popular cards among the consumers with bad credit. More than ten years ago, you would be able to find just the secured card you needed.
In the early 2000s, Credit One Bank, HSBC Bank, Capital One and Washington Mutual were the largest issuers of secured credit cards. When Chase acquired part of Washington Mutual, it seemed likely to lead to mainstream lender acceptance of secured accounts.
However, shortly after acquiring WaMu, Chase closed the secured card program and does not offer secured credit for consumers today. The mail offers that used to fill our mailboxes with offers of credit accounts for consumers with bad credit have almost disappeared.
Today, if you need a secured credit card it may take a diligent search to find a valid offer. Of the lenders listed above, only HSBC now has a secured card available.
What To Look For In a Secured Credit Card
When you choose a credit card or a loan it is important to carefully read the terms and fees that might be involved. This is especially true when you are choosing a secured credit card.
- Reporting: Most, but not all, secured card lenders report regularly to all three credit bureaus. As if the lender reports and how often reports are made.
- Fees: Secured cards often have an annual fee or a membership fee. Some may also have additional fees such as a fee to establish the new account, usage fees or a fee for rush delivery of the new card.
- Interest Rates: The interest rate on a secured card will be higher than that for a standard credit account. This is one of the costs incurred when you have bad credit. Expect to pay a fairly high interest rate but look for the lender that offers the lowest rate and fees combined.
- Grace Period: Some credit card users never pay interest rates because they pay off charges in full during what is known as a grace period. The grace period applies only when an account is not carrying a balance and is usually 20-25 days long.
What this means for you is that if you charge $100 on your credit card on the 10th of the month and you pay that $100 to the lender by the end of the month you are not charged any interest for that purchase. On some secured accounts the interest begins accruing the day after you make a purchase.
Purpose of Secured Credit Card Accounts
When you apply for a new card the first thing the lender does is check your credit rating. If you have black marks in your file with the credit rating agency, your application for a card will be denied.
Your credit rating may have been hurt by job and income loss, a medical emergency or another temporary financial setback. If that is the case, a secured credit card can help you overcome the problems and improve your credit rating.
How Secured Credit Cards Work
A secured card is not the same as a prepaid card. With a prepaid card you are paying in advance and can use the card only as long as you add cash to the account.
There is no credit involved and the prepaid card issuers do not report to credit bureaus. A secured credit card requires you to place a specified amount of money in an account.
You are then issued a card in your name with a credit line that is equal to or slightly less than the amount of funds you deposited.
You can use the secured card just as you would a regular card when you make purchases. Each month you are billed for a minimum payment and the issuer (lender) reports your payment record to the credit rating agencies.
Using a secured credit card for a few purchases a month and paying more than the minimum due each month will in time add positive numbers to your credit score.
There are secured credit cards available to consumers but Chase is not longer issuing them.