In today’s world having a credit card is no longer a choice it’s a necessity. If you don’t have a credit card it hinders you from having access to a lot of things which not only affects your finances, but also your career and education opportunities.
Building credit is an essential part of day to day living in most western countries. When we go through a phase where for some reason we have bad debt write off and bankruptcy rebuilding your credit becomes a nightmare.
If you are having difficulty getting approved for a conventional credit card, you must think about applying for a secured credit card. Secured credit cards provide access to credit for individuals who are aiming in establishing or rebuilding their credit history.
The first step towards this is to decide what limit you want or how much money you can block for at least a year or two. This is important because if you start with a very high limit you may not have any free cash available to pay the credit card on time. This will beat the purpose this decision should be made with careful consideration of your cash flow.
The next step is to look at the cards available in the market. Choose one which will give some additional benefits as well like low interest or points. Clients should also check on other charges that could add up on the payments that need to be settled every end of a month; these could be annual fees. These specific items must be evaluated well in order to get the safest and most beneficial credit card in the market.
You will be provided with a credit limit equal to the amount of money you deposited in the deposit account. This amount will be restrained and you will have no access to it at all.It is always better to look at options where your security deposit will be earning some interest.
If you want to have access to the security amount you will have to pay off your credit card and close it. Then this money will be released to you.
The card works like any other credit card you have to make your minimum payments on time and keep the balances within the credit limits. This will help you to start re-establishing your credit history.If you do not make your payments on time and default on your payments for more than 90days (this may differ for different companies but is a general rule) the financial institute will use your security deposit to pay of your credit card and close it.
All you have to do to maintain this card is practice good credit behaviours. This will help you achieve the goal of reestablishing your credit.