Think a secured card announces to the world that you have bad credit? Guess again. Most secured cards are indistinguishable from unsecured cards. Your card itself won't say anything and your credit report won't show the fact that your account is secured.
2. Secured Credit Cards Have High Interest Rates
Many people assume that secured cards are for people with bad credit, and as such they have a higher interest rate attached to them. This isn't the case. A secured credit card is less of a risk to creditors because the credit line is backed by a bank account. Because of this, secured cards often have lower interest rates than many of the bad credit unsecured cards.
3. They're For People with Bad Credit
If you think a secured credit card is only for people with bad credit, you can rethink that logic. Secured credit cards are for people from all walks of life. You don't have to have bad credit to carry one. Many people with decent credit qualify for unsecured cards, but not the best ones. In these cases, a secured credit card can offer better terms and higher credit limits.
4. They're Issued by Predatory Lenders
Secured credit cards, more often than not, are not issued by predatory lenders. The cards issued by predatory lenders have high interest rates and high annual fees and processing charges attached to them. While a secured credit card is likely to have an annual fee it will usually be reasonable (in the $50 range), as will the interest rate.
5. A Secured Card Is Like a Debit Card
This one couldn't be further from the truth. Secured cards are connected indirectly to a bank account, but they work nothing like debit cards. Your secured credit card account will be reported to the three credit bureaus, helping you improve your credit rating. Debit cards don't do this. And like unsecured cards, you must pay your secured credit card statements when they come in each month even though your security deposit is securing that line of credit.
So are secured cards the black sheep of the credit card family? Absolutely not. A secured credit card can be a valuable financial tool -- it's just a matter of differentiating the myths from the reality.
How many of the credit-challenged masses would be happy to have Capital One secured credit cards in their wallets? Capital One is one of the best credit card companies out there, and there's something to be said for carrying the "what's in your wallet?" plastic in your pocket. But the Capital One name is for the credit elites only, right? Wrong!
Long Live Capital One
Capital One is not just for the credit elites of the world. The company actually offers credit cards to those with credit challenges, including their Capital One secured credit cards. Better yet, they offer these cards at very reasonable interest rates and with minimal annual fees. But what are these cards, what makes them different from traditional Capital One cards and are they as good as the original?
It Spends the Same
Capital One secured credit cards are just like all of the other Capital One cards out there as far as general use goes. You make purchases with the card and pay the bill when it comes in each month. The difference is that you provide Capital One with an up-front security deposit before they issue you the card. This protects the company in case you should default on your credit card agreement. Is it a bit of an inconvenience to have to pay a security deposit for a credit card? Yes, it can be. Is it worth it? Absolutely.
The Bad News
The bad news is that Capital One does charge an annual fee for its secured cards. That being said, however, the fee is competitive to the other secured cards on the market. You won't be paying more for the privilege of carrying the Capital One name. In fact, you may pay less than you would with some of the other secured credit cards on the market.
Still, as any credit-challenged individual knows, you are going to have to pay for the privilege of credit. Companies are going to view you as a credit risk and that means giving them cold-hard cash to lighten that risk potential. Capital One is no different; they just charge a bit less.
If you've been declined credit cards left and right and most credit card companies treat you as though you have the plague, you really should check into the Capital One secured credit cards available in order to rebuild your credit and meet your credit card needs.