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Secured credit cards: What to know

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Because cardholders may not pay their bill in full or on time every month, the first thing they'll want to know is the annual percentage rate, or APR. The issuer is required by law to disclose the APR, which is typically a little higher than unsecured rates, despite the fact that the issuer is taking on less risk because of the deposit.

According to data from Mintel Comperemedia, a firm that tracks credit card offers, APRs on secured cards averaged 19.8 percent at the end of 2010. Unsecured cards averaged 15.8 percent APRs for the same period. However, those are average rates, and many experts say secured cards have been known to charge a 29 percent APR.

But while consumers should shop for a good rate, too much emphasis on the APR misses the point, says Kim McGrigg, spokeswoman for Money Management International, a nonprofit credit counseling agency in Sugar Land, Texas.

"Remember that the main purpose of obtaining a secured credit card should be to establish or reestablish a positive credit history," says McGrigg. "You can do this by paying the balance in full every month, (and if) you do, the interest rate won't impact you."


 

 

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Balance Transfer Cards 15.71%  0.01 15.70%
Cash Back Cards 16.36% --0.00 16.36%
Low Interest Cards 10.91% --0.00 10.91%
 
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