Consumers that have a hard time getting approved for a credit card generally fall into two problem categories. Either the credit card applicant has a very poor credit history or the credit card applicant has no credit history.

Without a good credit history, or at least fair credit history, credit card companies have no basis to evaluate whether a card applicant is likely to pay their balance on time. Without a good record to work with, the credit card issuer is generally reluctant to approve the card applicant.

For those consumers that cannot obtain a standard credit card there are alternatives. One alternative may be to apply for a secured credit card. With a secured credit card, the credit card applicant makes a deposit in a linked bank account such as a savings, money market, or certificate of deposit which is held as security for the credit card. The bank will then have the right to draw on the collateral if the credit card holder defaults on the terms of the payment agreement.

In some cases, the bank holding the security and issuing the credit card will pay interest on the account. Unfortunately, with a number of secured credit card issuers they offer no interest or compensation on the deposit held as collateral for the card.

There are a number of advantages to the secured credit card for consumers that have difficulty obtaining a standard credit card. The primary advantage of the secured credit card is access to a credit card to make any number of purchase transactions including online purchase transactions as well as transactions by phone. Secured credit cards look the same as unsecured credit cards and are used and treated in the same manner.

Secured credit card holders can also use the card to develop a new, clean credit history. Secured credit card holders that make transactions and pay their monthly credit card payment on time can establish a new on time payment history. For those card holders that are considered about building a good credit history, they have to make sure the credit card company report the payment histories to the major credit reporting agencies. Once a secured credit card holder demonstrates a good payment history, they may be able to apply for a traditional credit card or maybe upgraded to an unsecured credit card by the secured credit card company.

Potential secured credit card applicants should compare card issuers to be sure they choose a secured credit card with the greatest benefits and least costs. Since a secured credit card works just like traditional credit cards, some cards will have annual fees, there will be interest charges for outstanding balances, late payment fees will apply and similar such costs will apply to secured credit cards.

Credit card fees and credit card rates for secured credit cards can vary measurably between different credit card companies. Since the creditworthiness of the applicant has very little to do with the card approval, spend time to compare secured credit cards that are currently available to obtain the credit card with the best credit card rate and terms.

To review credit cards and credit card rates by category, please see low interest rate credit cards, cash back credit cards, rewards credit cards, balance transfer credit cards, prepaid credit cards, credit cards for bad credit and secured credit cards.

Additional credit card resources can be found at Chase business cards and Chase Freedom card.

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