Do you have bad credit due to some bad financial decisions in the past? Do you spend most of your time on finding the best credit repair company in town? If so, don’t you think that instead of paying a substantial amount to a company for repairing your credit, you should simply graduate from an unsecured credit card to a secured one?
Why you should graduate to a secured credit card
Yes, I know that unsecured credit cards offer tons of benefits. But, you should also understand this fact that you couldn’t manage your unsecured credit cards properly, and that’s why you’re in this mess.
Have you ever tried to analyze why are you in this predicament? An unsecured credit seems to be a lucrative option since it gives you an easy access to money all of a sudden. Ultimately, you end up spending the amount and live with very little credit. Plus, there are lots of fees associated with unsecured credit cards .
For instance, you get an unsecured credit card with $250 credit limit. Once you get the card, you have to pay approximately $50 setup fee, $50 annual fee, $8 monthly fee, and $100 for program fee. This means you’re shelling out $200 even before making a credit card purchase. This is not all. You have to pay interest on this credit card as well.
That is not to say that secured credit cards come for free. You have to deposit an amount that is equivalent to the credit limit. This means, if you apply for a secured credit card with $350 credit limit, then you have to deposit $350 with the credit card issuer. The credit card issuer will return the money once you close the account.
The best part of a secured credit card is that it won’t let you get into financial trouble. It compels you to spend as per your means. You won’t be able to spend beyond $350 (the amount you deposited as a security). It is a great tool to build your credit. You can buy everything. But, you have to pay interest if you don’t repay the balance on time.
Secured credit cards come with an annual fee. You may have to pay $500 annual fee for a secured card with a credit limit of $200. Some credit cards may agree to waive off the annual fee in the first year also. A low credit utilization ratio and an account in good standing can help you repair credit fast.
Conclusion
It is better to graduate from unsecured credit cards to secured ones when your credit is in bad shape. An unsecured credit card will only make your financial situation worse. It’s not that you have to buy something with a secured credit card. You can just keep it safely in your drawer. Just pay the annual fee on time. Your credit report will show that the account is in good condition. This would make a positive effect on your credit score.
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