Secured Credit Card Reviews: Benefits And Tradeoffs From Popular Issuers

A type of credit card issued to the cardholder with a deposit account on the issuer is referred to as a secured credit card. The deposit account serves as the security in case the cardholder fails to comply with his payment obligations. The credit limit is then determined according to the deposited amount, which is typically equal to or twice the credit limit. Hence, the owner of a deposit account worth $1000 may be granted a credit card account with a limit ranging from $500 to $1000. Secured credit card reviews suggest that this type of secured credit has been popular among individuals without credit history. It has also become popular among those who are trying to rebuild a bad credit history due to delayed payments and outrageous spending.

To attract customers, financial institutions who issue secured credit cards offer various perks. Among the most popular perk is zero application fee. Just as long as the applicant deposits the required amount for a specified period of time, the offer to apply without any fee comes easy. Capital One Financial and Applied Bank are some of the widely renowned financial institutions that offer such perk.

Since the secured credit card is much easier to apply for than regular credit cards, the former also doubles as an opportunity for borrowers to establish a good credit history or fix a bad credit history. Another feature to check, therefore, is the frequency of automated reporting to the three major credit bureaus. Payment information must be sent periodically to Equifax, Experian, and Transunion. From then on, cardholders must make sure to pay promptly without exceeding the specified limit. In addition to Applied Bank’s Platinum Zero and Capital One Financial’s Capital One credit cards, First Progress Platinum also offers this type of service. As soon as cardholders are able to establish a good run in credit history, an upgrade to unsecured credit is more easily approved.

While it may be beneficial at times to get a high credit limit to deposit amount ratio, it is better to stick to a limit which is equal to or less than the amount in the deposit account.  In this way, the cardholder is not tempted to spend outrageously which is particularly the tendency for first-time card owners. A low credit limit also encourages the borrower to spend wisely and learn the proper ways of using the card.

Another important feature to watch out for is the annual percentage rate (APR) set forth by the issuer. APR is the annualized interest applied to the credit card as a form of finance charge. Platinum Zero is the best in this aspect with its ongoing APR of 0% on purchases. Capital One, on the other hand, attaches a relatively high APR at 22.9%. This high APR is a serious tradeoff after application fee for this card has been lifted out.

Secured credit card reviews present to potential credit cardholders the value of owning a secured card. While some financial institutions offer the best perks at the beginning of the term such as zero application fees, tradeoffs later emerge as high APRs.