How To Choose Your Secured Credit Card

When shopping for the right secured card, it is very important that you consider and compare the benefits and drawbacks for each one. To choose the best secured credit card for you, determine what features are most important to your financial situation and spending style, measuring them against the costs associated with each offer.

Factors such as application fees, annual fees, finance charges, accrued interest on the deposit, available line of credit and minimum savings deposit are some of the most important considerations.

Security Deposit

Once accepted for a secured credit card, you will be required to open a savings account that will be connected to your card. The minimum deposit amount required will vary by the car, mostly bewteen $300 and $500. SInce this amount determines your credit limit, you'll need to choose one that fits your financial style and goal.

Credit Limits

The credit limit is the maximum total amount--for purchases, cash advances, balance transfers, fees, and finance charges--you may charge on your secured card. It is usually up to the amount of your security deposit.

Fees

There are various types of fees applied for use of the card and services associated with the secured credit card, such as application fee, setup fee, maintenance fee, annual fee, cash advance fee, or late-payment fee. Make sure you understand all the fee structure and terms. For more information, visit secured card fees page. Since those fees are higher than regular credit cards, you'd better shop around for a card with least fees and best benefits.

Interest Rates

If you sometimes carry over a balance from month to month, you may be more interested in a card that carries a lower interest rate. The annual percentage rate (APR) is the yearly interest rate you will pay if you carry over a balance or take out a cash advance. Compare APR's of each secured card you consider. Most secured credit cards charge fixed rates.

Balance Computing Method

Another important item you have examine when choosing a secured card is the method how the finance charge is calculated. Card issuers use one of the following methods: average daily balance, adjusted balance, or two cycle billing. The average daily balance method is the most widely used.

Cash Advance

It is not recommended to get cash advances with secured cards since APRs for cash advances are higher than for purchases. If you must, however, pay the balance in full the next month. Check the cash advance fees when you choose your secured credit card.