Dangers of Secured Credit Cards
Those who have bad or no credit aren't always able to be approved for an unsecured credit card. In these cases, people have to apply for secured credit cards that will help you build or rebuild your credit. Most people are thrilled to be approved for a card at all and aren't always fully educated on the dangers and misinterpretations of a secured card.Many companies make deceptive advertising claims to attract you into responding. Your secured card is tied to your savings account and your credit limit will range from 50% to 100% of what you put as a deposit, and you'll be required to put down anything from a few hundred to a few thousand dollars.
What most people aren't aware of are the costs tied to these cards, there can be hidden application and processing fees totaling hundreds of dollars. Make sure you will be reimbursed your money if you aren't approved. Many don't fully investigate this and lose out on money. There basic scams credit card companies will try to pull, and if you see the company has these offers you should be extremely wary.
Do not believe the claims of the companies that are vague as to the type of card you will be qualified for. You should also be suspicious if the company fails to reveal the fees for things like deposit, processing and application fees and your annual costs. A major scam that has been surfacing over the years is when the company instructs you to call a 900 number. Just calling this number may charge you anywhere from two to fifty dollars.
A secured credit card may help your credit if your payments are being reported to the credit bureau, however some companies may look down on secured credit cards, so if you are looking to build your credit, ask a close friend or family member to co-sign on an unsecured credit card, as that will be the best option to build your credit.
Contributing National Payday Staff Writer
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