Picking a secured credit card
|  Dear
Dr. Don,
What do I need to watch out for in choosing an institution
for a secured card? Is it the purchase APR or annual fee? Let's not forget
the cash advance fees.
-- Doris Deposit
 Dear
Doris,
The typical secured credit card has a line of credit equal to
an amount you've placed on deposit with the financial institution. That's
why it's called a secured credit card. The extension of credit is guaranteed
by the funds held on deposit. Some secured cards will grant you a line of
credit greater than the deposit amount, but that is rare.
A
secured credit card can be a great way to build, or rebuild, a credit history. Once
that history is in place you can graduate to an unsecured credit card. Not all
secured cards report your payment history to the credit bureaus, so the most important
characteristic of a secured credit card is for it to report that payment history.
Ask the card provider before applying for a card. From there
you want to look at the grace period, billing period, interest rate and annual
fee. Taking out a cash advance against a secured credit card isn't something you
should plan on doing, so the costs associated with a cash advance should be secondary
to these other considerations. Bankrate provides a comparison of secured credit
card providers' terms using its Credit
Card Search
feature. |
