Secured Credit Cards

A secured credit card is one of the best ways to ensure that you:

  • Can get a credit card
  • Will not be held hostage to interest payments
  • Will be able to pay it off immediately

Here’s how it works. You start a savings account with a bank. Then you ask for a credit card. You can have as little as $100 in this savings account for them to offer you one. You can then use that $100 credit as much as you want.

Most people will use this method if they have no credit or poor credit. The fun part is, you are obligated to use the credit card to establish better credit.

Let’s say you have $100 in that savings account. You go out and make a $100 purchase. You then wait until your first bill comes. Once it does you use that $100 in your savings account to pay off the credit card.

The bank will then see that you are able to pay your credit card on time and they will increase your credit limit. This is the strange thing about credit. The more debt you have the more credit they will offer you.

You can then continue this process as long as you want and get as much credit as you could need.

The only hard part is you have to keep that savings account open and you have to make sure that you have a continual flow of money into it to balance your credit card. If you do not do this you might not be able to pay off your card and then the worst thing possible can happen. You will get a bad (or worse) credit rating. Once you have this stigmatism it is very hard to shake and it may require you to start the process all over again.

Also, don’t think that you can cheat the system by going to another bank and doing the same thing once your credit is soured with one bank.

Major Credit Bureaus like

  • Equifax
  • Trans Union
  • Experian

All have your credit information no matter what bank you are dealing with and they will freely give your credit information to bank if you want to start a new credit line with them.