Rebuilding Your Credit With Secured Credit Cards

By: Bob Carper

There are millions of people suffering from bad or damaged credit. As such, these folk have an impossible task obtaining credit cards.

Try to rent something? You might as well go home. Go to your friendly dentist? Without a credit card, your tooth is going to ache for a long, long while. Did your car break down yesterday? Chances are even the friendly tow truck will not get you to safe haven without a valid credit card.

In so many words, a valid credit card is not a luxury anymore. It is a necessity. A secured credit card may be a good solution for any person looking for credit repair, as long as he or she understands their options. Properly used, secured credit cards can actually restore a person's credit rating and get him/her back on the right track in financial life.

Secured credit cards work closely with the bank. They have the same look and feel as unsecured credit cards with just a few differences. Instead of the creditor offering the banking customer a line of credit, the bank identifies its own credit line with the customer's checking or savings account. Depending on the credit card being issued, the customer's bank account will likely be used as collateral. If the customer fails to make a timely payment to the credit card, the minimum amount will be deducted directly from the customer's bank account.

If the customer has bad credit for any reason, banks and creditors are unwilling to extend credit. This can make it difficult, especially in a society that is completely tied to credit. However, if a customer gets a secured credit card, he or she will be proving himself creditworthy, provided the bills are paid on time. Eventually, the bank or creditors may see the customer has proven himself again and will begin to offer extended credit.

The customer does not have to worry about debt with
these types of credit cards. The only credit line
available is what the customer has put into the special savings account. Keeping it paid will ensure that this credit line is always where it should be, at a comfortable range for the budget.

There are some disadvantages to using secured credit cards. If the customer fails to make timely payments, he or she will have to deal with their high rates of interest and other various late fees. These penalties can continue to rise to where eventually the customer will be broke and will have nothing to fall back upon. This is why it is ultimately important for the customer to keep that bill paid on time, every time.

However, this is still the best option for those who are looking to repair and rebuild their credit. Secured credit cards are the first step to financial freedom and eventually a creditworthy life.

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