Best secured credit card to rebuild credit

Is bad credit limiting you from accessing new credit? If you want to rebuild your poor credit rating or building your credit history for the first time, it might be ideal for you to get a secured credit card which might also be the only option you have.

Is a secured card right for you?

The major difference between unsecured and a secured credit card is that a secured card requires a security deposit from the holder which serves as collateral against payment defaults.

A secured credit card is ideal for consumers with no or with little credit history who are actually declined unsecured credit cards. Secured cards guarantee approval by the lending company because in effect, the holder of the card is the one who is actually taking a financial risk by making a security deposit.

Secured credit card acts as training wheels on the credit line allowing you the benefit of owning a credit card and at the same time giving you a chance to to build a history of responsible use of credit with timely payments. A few deposit requirements and credit limits act as a protection for the card holders from getting themselves into poor payment history that may have affected them in the past.

There are many secured cards available today and it is advisable that you should do a thorough research, read the fine prints and use the card in a responsible manner and clear your payments in time. Improvements to your credit score do not happen overnight, you will need some time of solid credit history before you are ready for an unsecured card .

The best credit card that will help rebuild your credit should be one that does not have application fees. A high number of secured cards have annual fees, charges and it is advisable to go for one with the least charges. If you obtain a card with high annual charges, you might find your entire limit consumed by fees even before you use the card.

Depending on your particular card increasing your security deposits, allows you to obtain higher credit limits or if you make consistent payments on time the card company reward you by increasing your credit limit without asking you to make additional deposits. The best secured credit card should increase your credit limit after six to 12 months of on- time payments and responsible use of the card.

Failing to break from old habits such as delayed payments and misuse of a credit card, could drag you into footing huge financial debts. Some of the drawbacks involved in security cards include all kinds of fees such as processing fees, application fees, interests with high rates, fees on late payments, fees on over limits, fees on cash advance, deposit fees among others.

Avoid secured credit cards that do have grace periods on payments. Those without grace periods means means that you will pay an interest on any charge that is made from the time your card is swiped and without a grace period, a card holder can not avoid in any way paying interest.