Secured Credit Cards With An Interest Bearing Account

by Mack Bartlett

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If I ask you to name the number one concern with owning and using credit cards it will take you about half a second to say “high interest rates.” It’s everybody’s worst nightmare right? Run up a balance on your credit cards and then you’re paying them back until three weeks from never. That’s why so much fear and hatred is associated with credit cards and the credit card industry.

Well I don’t hate credit cards. I love them; my business couldn’t survive without them. Have I made my share of mistakes with them? Of course. But you have to learn from your mistakes and move on. Just think if the cavemen had given up on fire after they got burned for the first time. Hot Pockets would be Cold Pockets, and I can’t bear the thought.

So let’s talk about this issue of interest and credit cards, and let’s focus it on those of you who are in the credit building or credit re-building phase of your life, because I want you to be looking for secured credit cards with an interest bearing account.

Those of you unfamiliar with secured credit cards probably need a little background. Secured credit cards offer people a chance to rebuild their credit or establish some credit history without putting themselves or the credit card companies at much financial risk. The risk is removed because the credit line (whether it’s $100 or $10,000) is completely secured by cash deposit the applicant makes into an account owned by the issuer of the credit.

By having this deposit in place, you’re assured against ever running a balance you can’t repay, and the issuer gets to sleep well at night in his giant corporate bed knowing you won’t leave him holding the bag on a big, unpaid debt.

Let’s assume you pay the balance on your new credit card every month (I know you wouldn’t think of doing anything else). That means you’re not paying any interest to your credit card company. But what about that security deposit you made? Is it just sitting there earning no interest for you? I hope not, because the bank is definitely making money off your cash.

If they’re going to make money off your cash, then you need to get paid too. That’s why I’m trying to teach you how to earn interest on secured credit cards.

When you start shopping around, make sure you look for companies with low or no fees, reasonable interest rates, and above all, look for companies that will pay you 2% or 3% on your deposit.

Think about it. If you’re paying your balance and earning a couple percent on the money you’ve deposited, then who’s coming out ahead? You are! (Of course, they are too. Remember, they earn a lot more than 2% on your money. But hey, it’s better than nothing.)

It’s a win-win-win. You’re building good credit history and earning a little interest on a savings account, and they’re earning billions of dollars in profits each year. I love capitalism.

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