Best Secured Credit Card - What You Need To Know

A secured credit card is one that is backed by money you keep on deposit with the financial institution that issues the card. Often when a person cannot be approved for an unsecured credit card because of a lack of credit history or a negative credit history, a secured card can be a good option.

Secured credit cards are not all created equal however. A good basic article on what secured credits cards are and how they work is available at: http://credit.about.com/od/usingcreditcards/bb/securedcard.htm.

The best secured credit cards have a limit that is equal to the required deposit or greater than the required deposit, and can be converted to an unsecured credit card once the lender has been satisfied that the owner of the card can manage credit and make payments on time. Some secured credit cards however carry limits that are actually lower than the deposit required, and also carry exorbitant fees.

For a list of some of the issues to consider when shopping for a secured credit card, bankrate.com offers the following article: http://www.bankrate.com/brm/news/cc/19990823.asp.

All secured cards have an annual fee, and all of them have a less-than-ideal interest rate. Some secured credit cards however also charge application fees which can be quite high, and some charge high application fees and also require monthly insurance that can add up to much more per year than the limit on the card.

To get the best secured credit card it is vital to read everything, even the small print, and to deal with a reputable financial institution, not an anonymous one you hear about by mail or online. A good place to start is any bank or credit union where you already have an account of some kind. Another good place is to find the best secured credit card is a website that offers comparisons like Apply For A Credit Card Now.com.

For example, Orchard Bank offers a secured MasterCard with no application fee, an annual fee of anywhere from 0 to $79, and an interest rate that can be as low as 14.9%. The card is secured by a savings account, and minimum income requirements apply. However, once you fill out the application, you may be approved for a better card, or even an unsecured card. Orchard Bank is owned by HSBC, a major retail lender.

Bank of America offers a secured VISA with a limit you set yourself according to how much you keep on deposit and how you manage your payments. The regular APR is 15.99%, which is not bad at all for a secured credit card, and the annual fee is only $29. Capitol One offers a No Hassle Cash Rewards secured MasterCard that offers 1% cash back on every purchase, with an annual fee of only $29.

One word of warning: Be careful of sites that search for the best secured credit card for you but then charge a $30 (or more) fee for doing so. Make sure you understand what you are applying for and all fees and charges associated with the application. If you are applying online and cannot find the answers you need in language you can understand, call the bank or go into a financial institution and get everything in writing, then ask questions. Otherwise, you may find that your checking account has been debited an unexpectedly large amount the day after you submit the application, and you will have to go through the inconvenience and stress of getting the charge removed and refunded.