Building Your Credit with a Secured Credit Card
Millions of people know how it feels to have less than optimal credit scores. Sometimes, life just happens, and those once high numbers we used to have might take a dive if we are unable to pay something off, a credit account goes into the red, or an account slips into collections.
These things often happen to people who have every intention of keeping their credit score in good shape so they can be secure for their future, knowing they will be able to get credit if they need it. Unfortunately, we can’t always predict the future, and things may happen that may stop us from achieving our goals of keeping good credit.
If something does happen and your credit score takes a dive, you don’t need to panic. That is because there are several options out there today to help you begin rebuilding your credit if you can’t get approved for a credit card. Several financial companies offer this option, and it is called secure credit cards.
What is a Secured Credit Card?
You want to start building your credit back up, but with a low credit score, no one will approve you for a line of credit. This is a common catch-22 for people with low credit scores, and they may look for all kinds of different options for credit when they can’t get approved for a traditional credit card. This is where one good option, secured credit cards, could come in handy, depending on your situation.
A secured credit card isn’t so much a credit card as something you put up a bit of money on as a cash deposit, and then pay it off as you use it. The good news is, if you aren’t able to make the payment for whatever reason, it typically just comes out of the balance you initially put up. Secured credit card payments are reported to the credit bureaus, so getting a secured credit card and making timely payments on it could be a great way to start trying to build your score back up.
Secured credit cards typically have very low credit limits, so the amount of money you will have to put up for it isn’t going to be a lot. The limits usually range from $200 to $500, giving you enough credit to rely on in the event of an emergency, but not enough to get yourself into any financial trouble.
What Companies Offer Secured Credit Cards?
Many of the major financial companies and card issuers offer secured credit card options for people with low credit who are ready to make a change. The team at Nova Credit researched some of the best-secured credit card options, and you’ll see some familiar companies on the list.
- Capital One offers a secured MasterCard option with minimum deposits of $49, $99, or $200 to open an account.
- Citi offers a secured MasterCard, as well. There is only one minimum deposit to open an account, and it is $200. With the Citi card, cardholders will gain access to higher credit limits after they make payments on time for five months.
- USAA offers an American Express secured credit card option, and the initial deposit can be anywhere from $250-$5000, depending on what you’d like. You get all the benefits of an American Express card as well as a 2-year CD that earns interest.
- Digital Federal Credit Union offers its own secured credit card option as well, in the form of a Visa card. This one is a bit pricier if you choose it, with an initial security deposit of $500.
All of these options can be good ways to start rebuilding your credit at a low personal cost, and all of these credit card issuers report to the major reporting bureaus. This means your on-time payments will be reflected on your credit report, helping you rebuild your score step by step.
When you’ve got your credit score back where you want it to be, you can find even more useful credit cards with higher limits and all sorts of rewards. By utilizing your credit cards smartly and paying everything off on time, you will reap the benefits while you watch your credit score rise.