Partially Secured Credit Cards

For consumers who have no credit history or who have poor credit scores, opening a new line of credit can seem daunting.
Many people think that having no or poor credit will keep them from qualifying for credit cards with reasonable interest rates and low fees. Luckily these fears are unfounded. There are numerous options for people with less than stellar credit. Specifically, secured and partially secured credit cards are ideal ways to rebuild credit while using credit.

Secured credit cards are backed, or secured, by an associated with deposit into a bank account. Financial institutions issuing secured credit cards use the deposits as collateral for the line of credit and allow card users to charge a certain percentage of the deposit. For example, if you have deposited $500 into a savings account associated with your secured credit card, and the lender allows you to use charge up to 50% of your balance, you can charge $250 on your credit card. Secured credit cards help build your credit history when positive repayments of your debt is reported to credit bureaus.

A great option for people who have begun to rebuild their credit is to find or negotiate a partially secured line of credit. Partially secured credit cards require you to deposit only a certain percentage of the entire credit limit. In other words, a lender will allow you to charge more than your deposit amount on your partially secured credit card. For example, if you deposit $500 into a savings account associated with your partially secured credit card, the lender may allow you to charge say $750 on your card. This line of credit is partially secured by your deposit.

Why are partially secured credit cards advantageous? If you have no credit or poor credit, getting a partially secured card will be easier than qualifying for an unsecured card. Additionally, if you plan to make large purchases, a partially secured credit card will give you the flexibility to make purchases without worrying what your current deposit balance is at any particular moment. Retailers have no way of knowing if the card you use when making purchases are secured or not. Finally, if you are practicing responsible money management, a partially secured credit card will help you stay on top of what you spend.

Right now is a great time to find partially secured credit card offers. Evaluate the terms of the offers carefully as there may be fees or down payments to consider when deciding on the right card for you. Partially secured credit cards are an ideal way to retain purchasing power while managing your money, and they can help you build your credit scores at the same time.



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