Get a secured credit card

Finding ways to repair a bad credit report is not easy especial if you simply have – bad credit. It takes time to correct old habits and start to make real progress in increasing your credit score. One way to to get started to re-establishing your credit is to get a secured credit card.

Secured Credit Card: What is it?

A secured credit card operates just like a regular credit card. The major difference is that the cardholder is mandated to give a deposit against the credit limit on his account. This acts as a safety net for the creditor, should something happen to the credit holder that will force him to make a default on all his credit card payments.

Usually, the credit limit on a secured credit card is around 50% to 100% of the deposit a credit holder makes. So if he deposits around $800 for a secured credit card, then his limit will be between $400 to $800.

If you read the Common Credit Card Fees, you will see that secured credit cards have fees, unlike a regular credit card. The usual fees include the processing fee, annual fee, and the application fee. However, caution must be taken, because some cards with high fees can reduce a credit holder’s deposits. Consequently, this can decrease a person’s credit limit.

The Advantages of Having a Secured Credit Card

The most common reason why damaged credit exists is poor payment habits. In case the traditional way of getting credit is improbable, then applying for a secured credit can be an effective way of showing a newly-improved payment habit. The reality is, a credit holder can’t really prove that he has the capacity to make his early payments until he acquires a new credit card creating good payment history.

When a credit holder’s application is approved, he should remember that his purpose for the card is to demonstrate a positive credit history. So it’s best to be careful and only use the credit card to purchase small items that can be easily paid every month. Remember: Temptations need to be controlled and this new debt paid monthly to build a good payment history.


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