Print Article for : Apply Secured Credit Card

Your Online Guide » Loans Guide » Check Credit Rating

[A639]Apply Secured Credit Card

by Gordon Goodfellow, Gor

A credit card is different from a debit card in that it does not remove money from your account after every transaction. So there is no need for frantic monitoring of the personal account. If this sounds enticing, you can apply for one or more of an astonishing number of credit cards on offer.

Individuals who have a poor credit history or no credit history are often advised to apply for a secured credit card in the first instance. This is a type of card which is protected by an account owned by the consumer. You can call it a down payment in simple terms. To apply for the card, you must put down 100 percent (or sometimes a little more) of the credit limit you desire into an account which will be linked to the credit card. This amount in the linked account will only be accessed by the issuer if you default on a payment.

If you do apply for a secured credit card successfully, you are expected to make the payments, as with a regular credit card, before the due date. If you default on a payment, the issuer can recover the cost of your transactions from the money that you set aside in the account linked to the card. So the issuer is safeguarded against a loss.

What is the benefit to you? Most credit card companies send reports to the credit bureaus. If you have no credit history or a poor credit history then by applying for such a card, you can build a positive credit history by being regular with your payments. Once your credit history is established, you can apply for other credit cards.

The thought of putting your deposits into the hands of the issuer before being able to get your own hands on any credit may put you off from applying for a secured card. However, it must be remembered that, although the deposit is technically totally accessible to the issuer, it will not be debited for defaulting on only a couple of payments. Your account will be debited only if there is regular, prolonged or repeated defaulting.

When you apply for a secured credit card and are approved, you may get a card with either Visa or Mastercard logo. You should be aware that card issuers generally charge a higher fee and interest rates for some cards, although it is certainly possible to get such a card without fees and with a reasonable interest rate, as well as cards which offer 0 APR for a given number of months at the start of a contract.

Someone with a poor credit history or a first time card applicant is the best candidate to apply for a secured credit card. The benefits in this case will certainly outweigh the costs.

Loans are taken to be paid back and ifyou don't, you are calling for adverse repercussions. These mayinclude loss of property at stake (if any), CCJs and bankruptcystatus. In case of unsecured loans, there is very less flexibility interms of repayment options. This is because the borrower doesn't putany of his assets like home as security. The lender, therefore,charges high interest on unsecured loans, and doesn't give anybenefit of flexible repayment options and other advantages.

However, in case of securedpersonal loans, the borrowers get many advantages. The mostlucrative feature of secured loans is that they carry low interestrates. Then you can choose from the various repayment options citedbelow:

1. Fixed Rate of Interest-Under this plan, the borrower pays a fixed rate of interest for acertain period of time. The monthly installments, therefore, remainfixed during a specified period mentioned in the loan agreement.This is irrespective of the changes in the base rate, decided by theBank of England.

2. Flexible Rate of Interest-Under this scheme, the APR on your personal loan fluctuates on thebasis of the Bank of England's interest rate. The monthlyinstallments, therefore, fluctuates.

3. Interest Only- If you havetaken a secured personal loan with interest only scheme, you wouldbe paying only the interest for the whole term of the loan. Theborrower will pay the remaining principle amount at the end of theterm of the loan.

4. Partial Interest and PartialRepayment- In this plan, the borrower is required to pay onlyinterest for a certain period of time, and then he would startpaying both the interest and the principle amount that wouldconstitute his EMI (equated monthly installment).

So, apply for if you want to availthe advantages cited above. One does not get so many benefits in caseof unsecured loans because the lender is at a very high risk.

Article Source : Check Credit Rating

About Author

Both Gordon Goodfellow & Angelo are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Gordon Goodfellow has sinced written about articles on various topics from Credit Cards, Credit Card Offers and Credit Cards. Gordon Goodfellow's site shows you how to in addition to offering 0 APR cards. Gordon Goodfellow's top article generates over 74000 views. to your Favourites.

Angelo has sinced written about articles on various topics from Debts Loans, Check Credit Rating and Bad Credit Loans. About The Author: The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in business administration and is currently assisting Shakespeare. Angelo's top article generates over 165000 views. to your Favourites.