The Best Way To Pay Off Secured Credit Cards

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A secured credit card can be a touchy thing. You definitely need to make sure that you pay your bills. Many people don’t know much about the best way to pay off secured credit cards or sometimes even how to get them.

This is a great example I have here for so many people to get into the habit to start spending their credit cards the right way. I am going to talk not just about paying off the secured credit cards, but more importantly how you should spend on these cards. I have a story from a friend of mine that has been through a lot and has struggled to get his credit turned around. It took him some time and this is his experience:

I had such a horrible time using my credit cards correctly. I struggled to know how to do it right. My spending habits were pathetic. I couldn’t make payments because I was spending so much more than I could afford. It was difficult for me to pay off my debts.

First, I couldn’t pay off any debts and I started building up interest. It continued to multiply and then I couldn’t even pay the full interest any more and the principle wasn’t even a thought. It got so bad that I had to stop my credit cards. I had to drastically change my spending habits and pay off so much debt.

My credit was in the can, but I wanted to get a business going. I spent so much money on consumer debt that was just staying there doing nothing and hurting my score. I started to realize about leveraging capabilities. There were people that would spend so much money and more than I was, but they were using that money to make them money. I realized this from a friend that was sporting the American Express Black card.

Well that type of a card was out of my range. So I had to look at a secured line of credit that was out there that I could get my hands onto. I found some business partially secured credit cards that were quality interest rates and not a lot of application fees that I knew would be a pain in the neck if I didn’t take care of it. I started using these cards wisely for the first time in my life. I thought to myself each time and for the first time, ‘Should I pay for it or can I go without it?’ Finally, I found myself spending more wisely.

This friend of mine has improved his credit gradually and found out the best way to pay off secured credit cards. Be careful what you buy. One of the worst things you can do is spending too much and assuming that you will be able to pay it off. It is never that easy. You never realize what other bills may come up or other emergencies you may have. Play it safe and create more streams of income so you can spend lavishly, but within your means.

Secured Credit Cards for a Small Business

Credit cards can be a business owner’s best friend. They make it possible for you to pay your monthly expenses without having to drain all your cash. Not to mention you can earn rewards like sky miles just by running your normal business costs through a credit card. But what if your business hasn’t established much credit? Or worse, what if you had some credit cards, but you fell on tough times and your credit was damaged?

Secured credit cards for a small business can be the solution. These cards offer the same credit building benefits of secured credit cards geared towards individuals, but there are some differences.

A good example I found is the Wells Fargo Business Secured Credit Card. Here is a general outline of their offer (taken from their official site):

You can get up to $50,000 in credit extended to you as long as you have an equal or greater amount deposited with the bank.

The interest rate isn’t too high; 9.9% on purchases you make (pretty good considering I’ve seen some with interest rates as high as 24.99% on purchases).

Wells Fargo will even pay you 2.5% on your security deposit for the first year you have the account with them, but after one year it drops to 0.5%

I looked for other offers for small business credit cards secured by deposits, and I couldn’t find too many. Why do you suppose that is? Here are a few ideas I came up with:

Applicants probably won’t have enough cash on hand to put down a big deposit. The deposit is something the credit provider can earn interest on, not to mention it allows them to give higher lines of credit, which pays them higher fees.

The see business that need secured credit cards as too much hassle to work with. Think about it, most businesses fail anyway right? Why would they want to provide a line of credit to a small business that either has no credit or has had a bad experience with credit in the past? Better to offer credit cards to established businesses that will keep the card open for years to come.

Secured credit cards must not be as profitable. After all, we’re talking about credit card companies here. They go where the profits are.

Based on my research, I’d say the Wells Fargo Business Secured Credit Card is the way to go.

Secured Credit Cards in Canada

We share the same language, the same name for our currency, we even share a few professional hockey and basketball teams. Why wouldn’t we share similar financial problems and solutions?

After a tough financial stretch, people are just as likely to be looking for secured credit cards in Canada as they are here in the US. Canada has similar bankruptcy laws to those of the US and the same credit bureaus monitor a person’s management of their debts. That being the case, a secured credit card in Canada will be just as useful for improving credit rating up there as down here.

Here is a short list of companies in Canada that provide secured credit cards:

1. Capital One Bank

The capital one website doesn’t say much about its terms other than the fact that your credit limit will be determined based on your credit score. No mention of interest paid on the security deposit, so I doubt they pay any.

2.CIBC

CIBC seems to offer similar terms as the others with one exception. They only let you apply for a secured credit card at a local branch of the bank.
3. Home Trust Bank

Requires a minimum deposit of $1000, but can go up to $10,000. They pay no interest on your security deposit, and charge a $7.50 monthly fee. I looked over their terms and conditions and these guys seem a little steep on their fee structure.

4. Horizon Plus

This card requires a minimum deposit of $500 and pays 2% annually on that deposit. They also charge a monthly fee of $5.95 to keep your account open.

These companies will have a fairly simple application process and you’re highly likely to get approved. After all, why wouldn’t they approve you when they have your cash securing the line of credit they gave you? In fact, getting secured credit cards in Canada for people with bad credit is pretty easy. You can get a credit line of up to $10,000 (if you’re willing to put down a $10,000 deposit).

The game is the same in Canada as it is in the US – open a couple of secured credit cards, and put a balance on them every month. Make sure it’s an amount you can manage and pay off before the payment is due. The credit bureaus on both sides of the border need to see you use the credit card intelligently. That means no late payments! Don’t risk making your credit score even worse!

Finding Secured Credit Cards During Chapter 13 Bankruptcy

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Recovering from bankruptcy takes years, but there are certain things you can do to speed up the process a little. There are a couple different kinds of bankruptcy – most people know that. But most people don’t know that the recovery methods and strategies are different for different kinds of bankruptcies. If you’re thinking about finding credit cards during chapter 13 bankruptcy, you’ll want to first consider the ramifications for the rules of your settlement.

Remember, in order to qualify for chapter 13, you have to agree to repay all your debtors during an agreed upon period of time – usually 3 or 5 years depending on your income. Chapter 13 can be better than other types of bankruptcy because it doesn’t cancel your debts. That means the damage to your credit won’t be as severe. The terms of the debt repayment are very specific though. They might prevent you from opening new lines of credit or taking on new debt until the full term of your bankruptcy is satisfied.

How do you know whether you can open or apply for a secured credit card during chapter 13 bankruptcy? Check with your trustee. They may not love the fact that you’re looking to get access to more potential debt, but a secured credit card is the best way to go because you have to put down enough cash to cover any balance owed on the card. And there’s no law against people in Chapter 13 applying for credit cards. It shows good initiative.

I’m sure you realize not all secured credit cards are created equal. Fees and interest rates are going to vary with every credit provider you investigate. Look for credit card issuers that pay interest on your security deposit, and look for companies that aren’t going to charge you an outrageous fee and a criminal interest rate if you’re just a day late on a payment.

Credit card companies are competitive with each other because there are big profits at stake. Let that competition work to your advantage.

I don’t know of any secured credit cards for chapter 13 bankruptcy specifically, but any time you can show the credit bureaus you’re using credit wisely they’re going to like it. The idea is to run up a balance on the card, but nothing higher than what you can pay off at the end of each month.

This is your chance to prove you can take care of the credit you abused in the past. Don’t blow it! It will take time, but I’ve talked to people who have bounced back from a bankruptcy to credit scores of over 750. You can get there too.

The Best Secured Credit Cards

It is difficult at times to find out what type of credit card is going to be good for you. If you have had problems with credit in the past then you are obviously trying to find the best secured credit cards or the best partially secured credit cards that will allow for you to build your credit back up, but at the same time they save you from the headache of having to deal with so many fees, high interest rates, and large requirements for deposits.

Many people ask are secured credit cards bad for your score? I don’t know the logic behind it because they are intended to do the opposite, but here are two possible ideas:

1. Most of the people that have bad credit scores are only able to get secured credit cards with high interest rates or a trade off of high fees. Then there must be an association between the two.

Well this is silly because really a secured credit card is like a bicycle with training wheels that will allow for credit holders to build a great deal of trust with credit bureaus. It is like grown up timeout. I think that most people get scared because these cards represent failure of some kind, but bad things do happen to good people. There is a better chance to repair your credit with the best secured credit cards and the best partially secured credit cards.

2. There are so many scams out there in the world today. I am afraid that of a bad credit card company that requires me to call a “900” number and then charges me an arm and a leg for even having the card.

There is some truth to this. There are certain card issuers out there that don’t report to credit bureaus and this will create no credit and keep you static. This isn’t what you want because your application fees, deposits, or possibly high interest rates are not worth it because you are not able to redeem yourself with the watching eye of the credit bureau big brothers. Make sure that your company is reporting to the credit bureaus. You can contact credit bureaus personally to find this out or just the Better Business Bureau to make sure that they are on the up and up.

Now understand that you will probably have to make some level of a deposit (around 100% of the credit you are looking to have available) and be ready for application fees or a trade off of a high APR. You probably want to try to avoid application and processing fees, which are cute ways to make more money off of the little guy, and go for a large respected bank like Bank One or Bank of America and get a small annual fee with decent interest rates. Honestly the best secured credit cards are the ones that you pay off on a regular basis and avoid maxing out.

How to Find a Visa Secured Credit Cards Online Application

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One of the best things you can do is try to buy a Visa credit card online. That might sound silly with the thought of scam, but there are plenty of options out there and it gives you a good opportunity to compare between what different companies will offer you. This is the only way to know how to find the right card and what really a good interest rate is, or who reports to the credit bureaus and who doesn’t, not to mention application fees and required limits for deposits for Visa Secured Credit Cards.

I think that one of the best things you can do is look for a Visa when you are starting out. Then tend to have the most offers for people out there with struggling credit and possibly they are the most respected credit issuer out there. I tend to see many offers for people with bad credit to either get Visa or MasterCard. Often these cards are the most general. A Discover tends to be more niche market, and American Express is looked at with a little more class. When you get an American Express it is usually unsecured and with larger limits.

Now you are probably going to have interest rates around 20% and that is probably going to be standard for someone with bad credit for a while until they can turn their credit around. As time goes on and you are able to get it unsecured then you can probably lower it to around 10%. I think even if that is the case, you should still try to limit your spending and keep your payments consistent. This will start to prove you have a good track record with Visa and Credit Bureaus.

Be careful when you find a Visa Secured Credit Card online application because you will probably have a link to be able to find out more information about the credit card terms. A low APR can be deceiving because it can quickly double or triple and sometimes the APR only lasts for a few months and might jump quickly for whatever clause in the contract. Understand that applying for a Visa Secured Credit Card Online will require several annual fees with lower interest rates, along with strict penalties and deposits. In other words set up an auto payment program so that you automatically pay these cards off as soon as possible each month.

I figure one of the best things you can do is shop around and be willing to call up the customer service numbers to fully understand what your capabilities are with the card. If they don’t have the 1-800 number listed then you probably don’t want to do business with them. There should be plenty of customer assistance and that will pay out with any standard issues you may have with the card or account through your stay with credit card issuers. So to sum up my thoughts, do your diligent homework and protect your credit and bank account.

Secured Credit Cards for Business

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This is an account from a business owner that I spoke to that gave me some tips on how he was able to get a secure credit card for his business so he could rebuild his credit. He was concerned because he had heard how important credit was for starting a business, but he wanted to create financial independence. This is his experience with secured credit cards for business:

I was going to buy media for my internet marketing business, but I was nervous because I had several occurrences where I had destroyed my credit. Some of these reasons were my fault and others were circumstances that I couldn’t control. I had gone through a bad divorce that had taken a toll on my credit.

So now I knew what I had to accomplish with my business, but I was scared of where to go to find a card that would accept me. I had some funds to help me get my business going, but I realized that I was going to need to leverage on a grander scale. It was going to require more leveraging and being able to exercise what little credit I had.

I realized that this was going to take some good credit history to replace previous mistakes. I knew that there was going to be forgiveness, but I had to prove myself to credit bureaus. I realized that a prepaid credit was a decent option. I searched around and found a company that offered secured credit cards for business. This company seemed legitimate and wasn’t requiring me to pay an arm and a leg with fees and phone minutes to sign up.

I was even more pleased as they asked me for my credit report to find out how my credit history was. This was assuring to me because it showed that they were serious about what they offered and I found out they would report often to credit bureaus about my new established history.

This became a dream come true because I could leave a larger deposit and receive a larger credit limit. I started using the line of credit often and made payments on time. Some times I would make more than one payment a month. It didn’t take long for my credit to be flipped around. Now my credit is well over 700 after being in the pits and I am able to get unsecured credit cards in a matter of months. I am going to try to build my credit more so I can get larger limits. I used to be scared about credit cards after I had bad experiences. Now I have been able to turn it around into my favor and use it to better my life.

Secured credit cards for business can be so beneficial for people with struggling credit. I like to think of it as almost paper trading, or maybe trading on a contract that is only 5 dollars. It is a conservative way to exercise your ability to use credit correctly. After a while you will learn how to use it wisely and be able to adjust it to become one of your strengths and not your weakness.

Apply for Secured Credit Cards

A couple of years ago my little brother crashed his car and needed to buy a new one. He wasn’t looking to get anything too expensive or brand new, but he didn’t have the cash for a car. He was going to have to get a loan. Only one problem, right? He didn’t have the credit history to get approved for the loan, no matter how small it was. He had to have my parents co-sign the loan with him. Both he and my brother in law should have looked to apply for secured credit cards as a way of building their credit history.

My brother in law went through the same thing. The weird thing was he actually makes decent money and had a nice chunk of cash in the bank. He went to apply for a loan, and they wouldn’t approve him for anything. The only option they gave him was to put some of his cash in an account and they’d let him borrow enough money for the new car. I’m thinking – why would I give you the cash so I can borrow some money? Why not just pay cash for the car?

Both of these guys were in the same situation, they didn’t have enough credit history to get approved for the loans they needed. How do you get that history? You need to open lines of credit.

It’s like the old saying about getting a job – you can’t get a job without experience, but you can’t get experience without a job. The solution to the problem in the professional world is to get yourself an internship. You work for free for a while to get yourself some experience. The employer doesn’t have to risk much because you’re not getting paid, but it’s worth it for you because you’re getting the experience people are going to look for when you interview in the future.

In the world of credit cards, the internships you get are called secured credit cards. Since you don’t have the experience (credit history) that makes them feel safe giving you a credit card, you have to minimize their risk.

The solution here is that you apply for a secured credit card. Basically you’re putting down some money – giving it to the credit card provider as collateral just in case you decide not to make your payments. They know they can use your deposit to cover unpaid balances (but you won’t leave those balances unpaid, will you?), and while you’re making payments they’re sending good reports about you to the credit bureaus.

Of course, while you’re doing your credit card internship, make sure you apply for low interest secured credit cards. There’s no reason to pay a bunch of interest while you’re establishing yourself as an experienced credit user. Eventually you’ll have enough ‘on the job experience’ so credit card companies will give you the credit cards you want. Just make sure you use them wisely…

Are Secured Credit Cards Bad For Your Credit Score?

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I am sure you are looking for ways to improve your credit score. One of the ways you may have heard of is getting a secured credit card to help slowly turn your misfortune around. You may have heard the opposite. Are secured credit cards bad for your credit score?

Well first let’s take a look at what a secured credit card is. It is secured by a deposit account owned by the cardholder. If you find yourself in this situation you may notice that a regular requirement is a 100% to 200% deposit for the total amount of credit desired to use. So if you deposit $500 then expect a range of credit between $250 and $500 at your expense.

Sometimes you may see the card issuers exude a flash of kindness offering a deposit sometimes less than the 100% of the desired credit availability, possibly even as low as 10%. This is actually done to inspire more responsibility in the mind of the credit customer. Obviously payments are strict because most people are in this situation because of lavish spending and mindless awareness toward payments. If there is a default on the payment then the issuer has the option to recover cost by keeping the deposit.

There is an advantage toward having a secured card, the companies report regularly with major credit bureaus and this allows for faster establishment of good credit. Think of it as being on probation with a parole officer. You can get out for good behavior.

These are really great tools that can give a lot of people a break to prove themselves with baby steps. They are often offered by companies with Visa and MasterCard logos on them, so that will allow for a lot more use in areas that you may not have had access to and we all know how easy it is to swipe a card instead of writing a check. Expect higher fees and service charges compared to non secure credit cards. If you have had a rough history with your credit and high consumer debt, then this will actually be financially more affordable for you.

Now some people will assume that it is bad for your credit because the credit bureaus look down on your involvement with them. To tell you the truth that is ridiculous and otherwise they wouldn’t be recognized by credit bureaus, but some are scams just like any business.

The real problem is if you have a secured credit card issuer that doesn’t report often to the credit card bureaus. You want to avoid issuers that say to call a costly “900” number only to deny you, and if they do accept you then you will pay annual fees, higher than average interest rates, application and processing fees, and countless other ways to nickel and dime you to death.

Make sure they ask for a credit report, this shows their legitimacy by establishing guidelines, and don’t get it from “credit repair” companies or “credit clinics.” They will help you clean up your credit for a fee, but often you can correct genuine mistakes or outdated information by getting a hold of credit bureaus personally. In the end it comes down to time and good behavior, parolees.