A secured credit card is a good way to form a perfect banking history. If you don’t have any approved credits yet, it can be a substantial reason to refuse your application for the first credit. Certainly, all banks are glad to have new clients with perfect credit histories, and absence thereof is not a good sign. To open an account for a secured credit card, it is necessary to consider several important points.
Criteria for Choosing a Secured Credit Card
Many online resources offer different credit card options. Most of them have a special tool like a search engine with the help of which you can choose one secured credit card to compare with others and select the best variant for you. What should you mention while choosing? Pay your attention to the following points:
- Minimum cash deposit. It is the alpha and omega for this type of financing. The main difference between secured credit cards and usual ones is that all of them must be backed by a cash deposit. The approved credit limit will be equal to this very sum; therefore, it is necessary to learn what the minimum deposit is first of all. The majority of banks require $200-500 deposits, but these limits may vary depending on the bank.
- Annual percentage rate. The APR is another crucial selection criterion. It has a great influence on your choice because the higher it is, the more money you will have to pay in case of overusing the balance. Moreover, the general tendency is higher APR for secured cards in comparison to unsecured ones, so pay attention to these conditions before ordering the card.
- Reports to major credit bureaus. If you want to use a secured card as a way to build a good banking history or improve it, focus on this point. The chosen bank must give regular reports to credit bureaus to help you in this field. Otherwise, there is no necessity to open a bank account.
- An opportunity of upgrade to unsecured type. This point flows logically from the previous one. If a secured credit card is your choice to create a good credit reputation, it is much better to choose a card with an opportunity of upgrade. This operation will take less time than the card’s renewal, and will definitely improve your credit history.
- Annual fees. Certainly, you can look for a secured card with no annual fee, but the majority of reputable banks offer these products only with an obligatory annual fee, which usually varies from $35 to $49 per year. Though this sum may seem too high, other advantages of this card type may outweigh this inconvenience.
Following these simple criteria, you will be able to choose the best variant of a secured credit card necessary for you to create good bank reputation.
