Those with bad credit often got there through no fault of their own… job loss, medical bills, and other economic hardships we can’t always control. Whatever the case may be, instead of dwelling on the past, it’s best to focus on the future and rebuild your credit. But of course the catch-22 is you can’t apply for a credit card with bad credit and get approved! However with secured cards you can, no matter how horrible your history may be!
Here are 3 important things to consider when choosing your secured credit card…
- Reasonable Fees – Fees should be expected, but some banks will rip you off with outrageously high fees. The application fee and annual or monthly fee should be reasonable and when combined, they should not cost more than $100 to $150 over the course of the first year.
- Reports to Credit Bureaus – Of course it’s important that your account is reported to the bureaus. However, banks that offer secured credit cards (or any card for that matter) have to pay to report customer records… for that reason, some unscrupulous banks won’t report because they’re being cheap, make sure you watch out for them.
- Flexible Security Deposit – We all know higher credit limits are better, but maybe you can’t afford much for your security deposit right now. The best cards should give you some flexibility. For example, you can start with a $500 deposit for a $500 limit, but later on when you can afford to do so, you should be given the ability to raise that to a $3,000 limit by adding more to your security deposit.
2 Important tips you need to know!
Tip #1 – Contrary to popular belief, you do not need to carry a balance to rebuild your credit. What’s actually reported to the credit bureaus is the balance on your statement when it closes each month. So it’s best to use your card and pay off the bill in full every month in order to avoid interest.Tip #2 – A small portion of your credit score is based on what percentage of your available credit limit you are using. Again, contrary to popular belief, having higher balances are not better. It’s best to never use more than 25% to 30% of your credit limit at any given time.
The Best Secured Credit Cards To Rebuild Credit In 2012
This sponsored listing of the best offers is regularly updated.
Top Pick: Capital One Secured MasterCard
Many forum members have shared positive reviews of using this card to successfully rebuild their credit. It has a low annual fee of $29 and there are no processing or application fees. You can start with a minimum security deposit of only $49, $99 or $200 (based on your credit). Best of all, if you manage your account and credit responsibly, you may earn credit limit increases, without having to increase the deposit.Orchard Bank MasterCard
What’s so unique about this offer is that Orchard Bank will check your pre-qualification for 4 different cards at once – both secured and unsecured. Who knows, maybe you will qualify for a regular unsecured card? This issuer specializes in credit cards to rebuild credit and since they are part of HSBC (one of the world's largest banks) it is a great, respectable card to have. The rates and fees are quite reasonable ($35 annual fee for the secured version).Check for free which MasterCards you pre-qualify for. Or if you prefer Visa, here is the Visa card pre-qualification form
First Progress MasterCard
Although you may not have heard the name before, this card is issued/managed by Synovus (a parent company for dozens of banks in the S.E. which operate under local names). They were founded in 1888 and have $29 billion in assets… so rest assured, this is not some fly-by-night bank! It has a reasonable $39 annual fee and you can choose a security deposit ranging from $300 to $2,000. You will get a real, full-featured Platinum MasterCard. Applied Bank Platinum Zero Card
They call this the Platinum "Zero" because the interest rate for purchases is fixed at 0% (even if you make late payments) and there's $0 in application fees. However the monthly maintenance fee is $9.95 so this secured credit card is probably only appropriate for rebuilding credit in the short term, rather than paying that fee for years to come. The security deposit ranges from $500 to $5,000 depending on how high of a credit limit you want