Sometimes you can't get a break! Can't qualify for a credit card? Well, cash secured credit cards are the answer to your problem! Anyone can apply for and obtain one, and they offer a great stepping stone to other financial products and financial freedom. Secured credit cards are great tools to use if you need to establish a credit history or reestablish damaged credit.
Any number of reasons may exist in your life right now that might make it difficult to qualify for a standard credit card: bankruptcy, divorce, poor credit history or no credit history at all. If you find it difficult or impossible to qualify for a credit card, a cash secured credit card is the answer to your needs - they give you the opportunity to build a credit history, posturing yourself for more advanced credit products.
With a secured credit card, the balance is prepaid, and the card can be used in all of the same places where a regular credit card is accepted. The big difference is that the charges on a prepaid card are covered by money that you give to your credit vendor before you use your card. The bank that issues your secured credit card will require some money up front, usually between $50 and $500 - the ones that require less may change you more for maintenance of the account, but they give you the opportunity to build a credit history with very little balance down. You can usually spread the initial cash outlay out over time too, by making several initial payments to the bank to bring your balance up to whatever they require.
Here's the important part: even though a prepaid credit card is funded by your own cash, the issuer reports your usage of the card and payment information to the three big credit bureaus just as standard credit vendors do. So - with a Secured Credit Card you are guaranteed acceptance, and you have the chance to demonstrate your willingness to make your payments on time. This will have a swift positive impact on your credit score. Don't forget: it's important to maintain the account, make your payments on time and keep the balance at an acceptable level.
After nine to eighteen months of good payment performance credit companies will usually give you the opportunity to convert the credit card to a standard credit card. With continued maintenance of your account you will build (or rebuild) a healthy credit history that you can build on with increasingly flexible credit vehicles. Look for future articles that will describe how you can build upon the incremental credit that you establish with a secured credit card.
Credit card companies make money when you pay interest. The company determines the amount of interest you pay each month by using the annual percentage rage, or APR. There are two basic kinds of APRs: fixed and variable. A fixed APR doesn't vary much over a period of time. Should your credit card company change the APR, they must inform you before it is increased. The variable APR can change from time to time. You can find out which kind of APR you have by looking at your credit card application.
The grace period is the number of days that you can pay off your credit card balance without receiving a finance charge. In most cases, the grace period only applies to new purchases that you make. If you already have a balance on your credit card from a previous month, new purchases will not have a grace period. Your grace period is usually printed on your monthly credit card statement.
In some situations, your credit card may have certain fees associated. The annual fee is a yearly fee you must pay for having the credit card. The late-payment fee is charged when the credit card company receives your payment after the due date. If you use your card for a cash advance you can be charged a cash advance fee that is either a flat fee or a percentage of your advance. A balance-transfer fee is incurred when you transfer a balance from another credit card. Should you go over your credit limit you could be charged an over-the-credit-limit fee.
Many credit card companies offer incentives for the use of their credit card. The most common type of incentive is a rebate on the purchases you have made. This rebate is sometimes is made in cash (via check) or as a credit to your credit card account. Frequent flier miles, car rental insurance, and travel accident insurance are other incentives that are offered. Another feature offered by many credit cards is insurance that covers payments to your balance should you become disabled or unemployed.
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