Want to build good credit? We have some ideas.
What Are Secured Credit Cards and Why Would You Carry Them?
The credit card industry operates on the “carrot and stick” premise: you manage your finances well (and your debt), and you’re rewarded with more credit, and a shiny, newly elevated FICO credit score. You mess up and you end up with some of that credit taken away.
Many of us make some mistakes with our money, so it’s possible to find yourself with damaged credit at some point. You may say it couldn’t possibly happen to you — but “never say never”! A job loss or an unfortunate turn of events — something unexpected can come along and turn our fortunes around. When that happens, some of us may find ourselves hard up and unable to keep up with debt payments, which may unfortunately lead to ruined credit (and a less favorable Equifax credit report and score, among other things!).
So what happens then? What IF your credit gets hit?
Develop Your Credit History With Secured Credit Cards
If you think about how we get, keep, and lose credit, it’s very much the same. When we make irresponsible financial decisions, our credit suffers, consequences abound and oftentimes our credit is lost. Damaged credit can affect our chances of getting a new credit card, checking account, and even getting a job. So if you find yourself in this position, know that it’s vitally important to get back on the path of financial responsibility by doing what it takes to repair your credit.
Now the problem is that in order to fix your credit, you have to show that your credit habits have improved and in order to do that, what do you need to have? Credit! It’s a chicken and egg situation but maybe there’s a way to get started on the right path.
If your credit is damaged, the first thing you want to do is to work on restoring your credit standing. So that’s where secured credit cards come into the picture. Luckily, there are ways to get credit if all of the traditional means have failed, and such a card might be just the ticket to help you get back on track. Here is a handy list of secured credit cards that you can check out for this purpose:
Drawbacks Of Secured Cards
However, before applying for a secured card, you’ll need to be aware of a few things. Some of the drawbacks of using this type of plastic include having to be subjected to possible high annual fees and high interest rates. Some banks may even require you to take out credit insurance. It sure isn’t easy (in fact, it can get pretty expensive) when you’ve got bad credit that you’re trying to improve.
Bottom line: secured credit cards offer you a great way to rebuild damaged credit but be careful that the negatives don’t outweigh the positives!