After Bankruptcy 3. – Secured card option
Posted on February 28, 2008
Filed Under Advice, Bad Credit, Bankruptcy | Comments Off
Of course, in today’s credit-driven society, it’s hard not to have a credit card. You need one to rent a car and reserve a hotel room. One way to re-establish your credit is by obtaining what’s called a secured credit card.
A secured 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. 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.
But before applying for a secured card, ask these questions:
•What kind of charges will there be? Look for a card that doesn’t charge an application fee.
•How much money do you have to deposit?
•Does the card issuer report your credit history to the credit bureaus? That’s important because you want a solid record of on-time payments.
Some secured cards don’t report to credit bureaus, and those won’t help you re-establish your credit.
Don’t carry a balance on a secured card. With a secured card, you don’t want to be paying interest on your own money.
After you’ve made steady, on-time payments, ask the issuer if it will convert your card to an unsecured card.
by Pamela Yip