Where to Apply for a Secured Credit Card

By Zakiya Lathan

  • Overview

    U.S. consumers are just as likely to whip out a card to pay for purchases as they are to whip out cash. For some, credit cards are the main financial vehicle. Some people pay for all of their purchases with plastic, and before the end of the month they pay off the bill in full. In this way, no balance is carried and no interest fees are incurred. But credit cards, as implied by the name, are not money--they are loans. These short-term loans, or lines of credit, are usually provided by financial institutions to people who they believe are creditworthy. If your credit history has a few blemishes on it, or if you are just starting out and have no credit history, it may be difficult to get approved for a standard credit card. Many people who fall into one of these two categories opt for a secured credit card.
    • Step 1

      Know that a secured card is much like a traditional card. The account holder can pay off her balance in full each month, thus avoiding financing fees, or she can choose to carry a balance. Each month, the secured-credit cardholder receives a bill that details purchases made, the total balance and the minimum payment due. The key difference between a secured credit card and a traditional one is the required deposit. Secured credit cards require some form of collateral. In this way, if the cardholder defaults, the debt is covered and the credit card company is protected. Usually, the credit limit on secured credit cards is equal to the deposit amount. Some secured credit cards report to credit bureaus, allowing card holders to develop credit or improve previously bad credit.
    • Step 2

      Compare different credit card offers. If you are considering applying for a secured credit card, you can compare different credit card offers at the free online resource www.creditcards.com. On this site you can compare credit card offers in several categories including secured, standard and prepaid. You can also compare cards based on incentives such as airline miles, gas credit and hotel credit. Two of the most well-known standard credit card companies, MasterCard and Visa, also have secured versions of their cards. You can find a link for both sites in the "Additional Resources" section, below.

    • Step 3

      Know that prepaid cards are cards that have a set monetary value. The card value can often be replenished. Prepaid cards act much the same way that gift cards do. Since some prepaid cards are branded with the American Express, MasterCard or Visa logo, some confuse these cards with credit cards. They are not. Customers who use prepaid cards do not receive a monthly bill. Also, prepaid cards do not typically report to credit bureaus.
    • Step 4

      Be aware that consumer protection laws vary between prepaid cards and credit cards. With credit cards, generally, purchasers are able to dispute charges for goods and services that are less than satisfactory. The credit card company will often advocate on the customer's behalf and deal with the merchant. With prepaid cards, as with cash, the purchaser pays up front. So if a product or service is subpar, the customer may be on his own when it comes to handling the refund. When it comes to unauthorized charges, prepaid cards are usually just as well protected as cash: If you lose it, you're out of luck.
    • Skill: Moderately Easy
    • Warning:
    • This article is meant only as general information on the subject and might not adequately answer all of your specific financial concerns. As with any financial advice, be certain to contact a financial professional about your individual financial questions.

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