In our generation, having a credit card is not only convenient, it’s also one of the things other institutions look for. If you’re applying for a loan of any type, if you’re trying to go out of the country, chances are they would ask you if you have a credit card. Why? Because having a credit card is one assurance that you’re taking responsibility of your credit. In addition, most companies and institution feel secure because the bank where you got a credit card from will pay off whatever amount you swipe it to; then you will pay the bank. However, it’s not easy to apply and be approved of a credit card. They run background checks, they do investigations, and so on. Although that’s the case, there’s now a new and easier way on how you can achieve this and that is through a secured credit card.
Basing it on what it’s called, a secured credit card is a credit card but with a twist. A secured credit card is the one you can apply for if you’re not being approved of credit cards. It gives the highest chances of you being approved because it will ask you for an initial deposit. Moreover, the deposit you will make will determine how much your credit limit would be. Simply put, a secured credit card is an account in which it requires an initial deposit as a collateral, you can use it as a credit card, depending on the bank’s rules and credit limit policies, the credit limit will depend on an x% of your total initial deposit.
After a year or even earlier, if the bank sees that you’re a good payer and that you’re worthy of owning a credit card, the card can just be a legitimate credit card. If you don’t owe anything, your initial deposit will be released and it won’t be touched.
What if I don’t make my payments properly and on time?
If the bank notices that you’re not that good with your payments and if they sense that you’re not planning to pay, they will take it out from the initial deposit that you have. Moreover, this can decrease the chances of you being approved for a credit card. Hence, going for a secured credit card and if you miss payments, if you go overdue all the time, you’re just going to pay interests.
What advantages and disadvantages does having a secured credit card have?
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