Secured credit cards can be a great way to build or rebuild your credit. Unlike regular credit cards, secured cards require a refundable deposit, which acts as your credit limit and as collateral for the bank. Here is a step-by-step guide on how to use a secured credit card.
We hope that this article, which we have prepared at Responsible Economy, will be helpful to you. Let’s get started!
Understand secured credit cards
First, understand what a secured credit card is. It is a type of credit card that requires you to make a security deposit, which then becomes your credit limit. This deposit acts as collateral and minimizes the risk for the card issuer.
Apply for a secured credit card
Choose a bank or a credit card company that offers a secured credit card. Make sure to read the terms and conditions, as well as any fees associated with the card. Then, apply for the card either online or at a bank branch.
Make a deposit
Once you have been approved for the card, you will need to make a deposit. This deposit will usually be your credit limit, so if you deposit $500, you will have a $500 credit limit.
Use your card wisely
Now that you have your secured credit card, you can start using it just like a regular credit card. However, it is important to use it wisely. Try to keep your credit utilization below 30% of your credit limit and pay off your balance in full every month. This will help you build a positive credit history.
Monitor your progress
Regularly check your credit report to monitor your progress. Make sure that your payments are being reported to the credit bureaus and that there are no inaccuracies on your report.
Graduate to an unsecured card
After a period of responsible use, you may be able to graduate to an unsecured credit card. This means that you will get your deposit back, and you will no longer need to provide collateral. However, not all secured cards offer this feature, so be sure to check with your card issuer.
Remember, the key to using a secured credit card successfully is to use it responsibly. Make timely payments, keep your credit utilization low, and monitor your progress. With time and responsible use, a secured credit card can help you build or rebuild your credit.
Additional tips
Here are some additional tips for using a secured credit card:
- Only use the card for essential purchases that you can afford to pay off in full each month.
- Set up automatic payments so that you never miss a payment.
- Keep track of your spending and your credit score so that you can see how you are doing.
Best secured credit cards
We have compiled a ranking of the best secured credit cards you can apply for in the United States:
- Fees: $0
- Cashback: 1.5%
- Welcome bonus: $0
- Credit Score: No
- Fees: $0
- Cashback: 1%-5%
- Welcome bonus: up to $300
- Credit Score: 690-850
- Fees: 0
- Cashback: No
- Welcome bonus: No
- Credit Score: No
- Fees: 0
- Cashback: Up to 3%
- Initial deposit: $200-$5,000
- Welcome bonus: No
- Credit Score: No
- Fees: 0
- Cashback: 0%
- Initial deposit: $300
- Welcome bonus: No
- Credit Score: No
- Fees: 0
- Cashback: 0%
- Initial deposit: $200-$5,000
- Welcome bonus: No
- Credit Score: No
- Fees: $35
- Cashback: 0%
- Initial deposit: $200
- Welcome bonus: No
- Credit Score: No
- Fees: 0
- Cashback: 1,5%
- Initial deposit: $200-$5,000
- Welcome bonus: No
- Credit Score: No
- Fees: 0
- Cashback: 1,5%
- Initial deposit: $200-$5,000
- Welcome bonus: No
- Credit Score: No
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Updated the day 5 September, 2023 by Alfredo Barandiarán
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