Let's face it--you need a credit card in order to get along today. Have you ever tried to make a hotel reservation or rent a car without one? But if you are one of the growing number of people who have run into credit problems, you know that getting a credit card can be very difficult. In this article, we'll tell you about secured credit cards, and how they can help improve your credit rating.



Secured credit cards typically require a cash deposit, usually between $300 and $500. For example, if you put $500 in your secured credit card account, you can charge up to $500. I know what you're saying-why give the cash to some financial institution to hold for you until you buy something. Why not just spend cash? The answer is that spending cash doesn't raise your credit limit, or help your credit rating. For people who have never had credit or have a poor credit history, a secured credit card may be the only way to establish, or re-establish good credit.

Not all credit card companies and banks offer a secured credit card. If you belong to a credit union, there's a better chance you can obtain one from them. But be sure to ask about fees and other charges. Most secured credit cards charge an annual fee, and some fees can be quite high. Some even charge an application fee. Be sure to read the fine print on the agreement before signing. Some people have lost their entire limit on the card to fees before they ever used the card.

Shop around for the best deal before getting a secured credit card. Some have low fees, and will help you get back to financial health. Others take advantage of their clients with high fees and bad service.

Of course, the primary reason for having a secured credit card is not to buy a plane ticket to Vegas, but to build a good credit history. It is critical that the issuer of your secured credit card report to the three major credit bureaus. Each piece of good credit news that is added to your report will mean an eventual rise in your credit rating. You'll know that you've been successful when the offers for unsecured cards start arriving in the mail!

Just having the secured credit card is not enough. You have to use it. Experts recommend that you buy necessary items and goods using the card every month, and pay off the entire balance. This will result in better reports being filed to the credit bureaus. And although you have to maintain the deposit in the account, your card issuer should pay interest on it (although probably at a very low rate).

Secured credit cards are a good choice--and sometimes the only option--for people who can't get a regular credit card. Maybe they have declared bankruptcy, have had a string of late payments, or a home foreclosure. Secured cards are also designed for people who rebuilding after a major life event, such as a divorce, job loss or serious illness. In addition, some issuers only give secured cards to people who are new to credit -- not those who have already had one crack and blown it.