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Secured Credit Cards

A secured credit card can help establish credit history or repair a bad credit history. But for many people who sign their names before reading the fine print, it can be a nightmare. Here are a few tips when it comes to considering a secured credit card:

- The difference between a regular credit card and a secured credit card is a secured card requires the borrower to open and maintain a savings account at the bank from which the card is issued. The credit limit on the card is the amount of money you deposit or a percentage of that amount.
- The advantage of a secured card is that no one, except for you and the banks, knows your credit card is secured. And most people will be approved because repayment is virtually assured and risk is minimal.
- The disadvantage of secured credit cards is that if you default on the balance of the credit card, the bank keeps the money in your account and the card is cancelled.
- Also, some issuers charges exorbitant application and processing fees. Most secured cards charge an annual fee and higher interest rates than regular cards.
- Many advertisements for secured credit cards are misleading, giving the impression it only takes a phone call. But typically, it’s a “900” number that can costs as much $50 to call. These ads also usually leave out costs of the offer, like applications fees, processing fees, annual fees and high interest rates.
- The ads also claim anyone can be approved, but gloss over the requirements of a deposit into a secured savings account.

Consumer Credit Counseling Service is a non-profit agency that can help clients manage debt by setting a budget and payment plan. CCCS helps thousands of its clients decrease interest rates, stop late payment charges, stop over-the-limit fees, extend credit terms and stop creditors from calling their home.
For more information, contact CCCS at (800) 821-4040 or visit www.cccssavannah.org.