Secured Visa Card Answers
What You Need to Know Before Getting a Secured Visa Card
A secured Visa card requires a cash collateral deposit that becomes the credit line for that account. For example, if you put $500 in the account; you can charge up to $500 on your secured Visa card. You may be able to add to the deposit to add more credit, or sometimes a bank will reward you for good payment and add to your credit line without requesting additional deposits. The same can be accomplished with a debit Visa card - which draws from your checking account.
This is where it pays to shop around. Look for a card that doesn't charge an application fee. Every secured card charges an annual fee, and they vary dramatically. Read the fine print. Some people have gotten secured cards and found their entire limit consumed with fees before they ever used the card. The amount of money you will have to deposit will vary by the card. Most are $300 to $500. Your credit limit will either be the amount of your deposit or some percentage above that amount. Most are reloadable, but again, this is where fees come into play.
The Good, the Bad and the Ugly
Some are good -- like the secured Visa cards. They have low fees and treat customers as customers instead of as cattle. The bad ones take advantage and extort the clients because of their situations. Then there's the ugly, which are completely despicable. They'll give you the card, but you have to buy this insurance policy for $55 a month.
The Visa card issuer should want to keep you as a customer, so most will qualify you for an unsecured card after a period of making all your payments on time. The average is about a year. While secured cards make sure you never spend more money than you can afford while they force you to save, it's not a good idea to keep one any longer than you have to. All secured cards have annual fees and higher interest rates than regular, unsecured cards. If you have enough discipline to use a secured card responsibly, you have enough to use an unsecured card and set up a better savings program on your own.
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