Secured Credit Card
Applying for a secured credit card is a great way for people with little or bad credit to improve their credit
Secured cards even offer the same benefits as unsecured cards. One example is the recently discontinued Providian
secured credit card. In the early days of 2009, Washington Mutual decided to discontinue all their secured cards
including the Providian secured credit card in an effort to change their “business model”.
The Providian secured credit card differed from an unsecured card by letting cardholders charge on their own money,
instead of borrowing from a line of credit that is issued by the company. For a Providian secured card to work, the
cardholder needed to supply a deposit. This deposit allowed the Providian secured credit card user to have access
to the benefits of using a credit card without dreading debt.
The interest rate charged to a Providian secured credit card ran higher than typical unsecured cards, and
cardholders needed to pay for an annual fee. People who wanted to secure a Providian secured credit card needed to
pay a refundable application fee of 25 dollars. The initial deposit that was required by Providian to open the card
needed to be at least 250 dollars. They added the 25 dollars application fee the secured amount once the
application was approved. This gave the cardholder a credit limit of 275 dollars. This limit was raised to 500
dollars if and when the cardholder paid all Providian secured credit card dues religiously and on time. After
another six months of paying fully and on time, the Providian secured credit card limit was further raised to 1100
dollars until the cardholder reaches the highest limit possible, 1600 dollars. Ideally, this way of transacting
should slowly help a person rebuild his credit rating. Obtaining small purchases every month and paying them off
responsibly can have a positive effect on someone’s credit report.
Secured cards can be helpful when used well. Before rushing over to get a secured card, take the following into
consideration. Do a careful research on all fees that will be required since they will be lessened from your
original deposit. Also ask the representative from the company if your account will be reported as "secured". When
your account is tagged as “secured”, the chances of reestablishing a good credit will be lessened. So, you better
ask how long it will take for your account to be considered for unsecured status. You should only take an unsecured
card if they’ll give you the chance to reestablish your credit rating. A secured credit card is only temporary.
Also, avoid the common mistake of carrying over an outstanding balance from month to month. This will not help you
prove to your creditors that you are a good risk. Make sure to pay your bill in full every month.
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