Before we can ask you to secure a credit card, there are so many benefit that are involved, which when you read down the content you will be able to get the
information and you will now know how you go about it. Now, for you to make it as your concern, when you hear the word secured credit card; this will in a long ways, help you, socially, financially and order wise in life. Mainly when we talk about making life ease and better in the society.
What Is A Secured Credit Card Is All About
The word secured credit car, However, is referred as the credit card account that you as a person can get achieved with a deposit of your personal funds. at the same time , your deposit serves as a collateral for the issuing bank. And it significantly reduces the risk involved in approving you for a new credit card account. In the event you don’t pay as promised, the secured credit card issuer can use your deposit to cover the debt.
Moreover, when we are to look this in a general perspectives, the cash deposit you make when you open a secured credit card is equal to the credit limit you receive on the account. In other words, a $300 deposit often results in a credit limit of the same amount. On the other hand, some card issuers, like Self, may give you the opportunity to access an additional unsecured credit limit increase to supplement your deposit. So, your credit limit could exceed the size of your deposit in these situations.
We can still consider this content, by looking more on the benefit when you as a person, that whats to go for a secured credit card. In case you are fast with the questions, What are the benefit of having, using a secured credit card. However, we are assuring here in the page, that you should worry not; we will offer to as many as 5 benefit of secured credit card you may need to know.
Benefits Of Having A Secured Credit Card
- Credit-building potential. Many secured credit card issuers will report your account to the three credit reporting agencies—Equifax, Trans-Union, and Experience.
- Avoidable interest fees.
- Better approval odds.
- Refundable deposits.
- Fraud protections.
Credit-building potential
Many secured credit card issuers will report your account to the three credit reporting agencies—Equifax, TransUnion, and Experian. (Tip: Ask the lender if it reports to all three major credit bureaus before you apply.) Once the account appears on your three credit reports, a secured credit card has the potential to help you build your credit scores.
Follow this link if you’re wondering “how much will a secured credit card raise your score”. The amount a secured credit card will impact your credit score depends on your unique credit history and how you use the account.
To get the most out of your secured credit card, it’s important to follow some best practices with your account. Timely payments are a must. You’ll also want to watch your credit utilization rate by keeping the balance-to-limit relationship on your account at a healthy level when you’re building credit.
Avoidable interest fees
Just like unsecured credit cards, you can avoid paying interest on a secured credit card account if you follow one simple rule. Make sure to pay off your full statement balance every month, by no later than the due date. As long as you don’t carry a balance over from one billing cycle to the next, you should be able to enjoy your account without incurring the cost of high interest rate fees.
3. Better approval odds
Lenders rely on credit scores to help them predict risk when loaning money to consumers. A low credit score signals to lenders that you’re more likely to have seriously late payment (90 days or worse) in the near future. No credit score or credit history can also be problematic since lenders are in the dark regarding your credit risk when you apply for financing.
If you’re struggling with either of these problems (i.e., no credit or bad credit), you might have a tough time qualifying for certain loans or credit cards. For example, issuers of premium rewards credit cards usually want you to have a good or excellent credit rating to qualify for a new account. Secured credit cards, on the other hand, tend to feature eligibility requirements that are much easier to satisfy.
4. Refundable deposits
When you open a secured credit card, the money you use as a cash deposit should be refundable. In some cases, the card issuer or credit card company may let you, the cardmember convert your account to an unsecured credit card after a certain amount of time (and responsible account usage). With other lenders, you may be able to recover your refundable security deposit when and if you close your account in the future.
Of course, it’s important to keep your account in good standing. Late payments, past-due balances, or other mishandling of your account might prompt the lender to keep some or all of your security deposit.
5. Fraud protections
Credit cards—whether secured or unsecured—represent one of the safest payment methods available for consumers. Thanks to the Fair Credit Billing Act, if someone uses your credit card without permission (and you report the problem within 60 days), your responsibility for fraudulent charges is capped at $50. Furthermore, most credit card networks feature zero liability policies when you’re a victim of fraud or credit card theft.
Debit cards, by comparison, feature fraud protections that pack a little less punch. If someone steals your debit card number, those funds are coming straight out of your bank account until the bank can research and correct the problem. And if you lose your cash, prepaid credit card, or other payment method, the possibility of recuperating your losses is even less likely.
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