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Secured credit cards

Secured credit cards: cards for bad credit
Ever been turned down by credit card companies because of bad credit – secured credit cards can be your solution. People with bad credit usually suffer rejection while applying for credit cards. Not only do they have to cope with the pile of existing debts, they cannot seem to book hotels or rent cars when they need to. In such cases, having a secured credit card can make all the difference.

What are secured credit cards?
A secured credit card is obtained after depositing some money in the account. The credit limit on the card is determined based on the amount deposited. It works pretty much like a savings account, except for the fact that you can use a secured credit card to book hotel rooms or rent a car at your convenience. Also, in case you default in payment, the charges are taken from the amount deposited. One major drawback is that most of the secured credit card companies do not report payment activity to the credit bureaus. This can mean having little or no effect on your credit rating.

What to look out for
A secured credit card can be your ticket to a better life, considering that you’re steeped in debt. However, in the excitement of getting this card, you should not forget to keep close watch on a few essentials.

Check out the offers:
It pays to do a bit of research on your own before going ahead for a secured credit card. Nowadays there are plenty of secured credit cards issuers who provide low interest rates and a zero Annual fee as well.
Charges applicable:
Be sure to check all the charges applicable. You can read all about it in the product literature. Many times people have exhausted their credit limit just because of the numerous charges involved.
Minimum deposit:
Ensure you know what will be the minimum amount to be deposited. The credit limit on the card will depend on this amount and will either be exactly the same or will be a percentage higher than this amount.
Not every bank offers secured cards:
Nowadays there’s been an increasing trend in banks supporting unsecured credit cards vs. secured ones. The primary reason being that unsecured cards are charged higher interest rates and fees thereby fetching banks more money. However, shop around and you’re sure to find a bank that does offer a secured card.

Beware of scams
One of the major drawbacks of secured credit cards is the chance of getting extorted. The reason being that banks know you’re in bad shape as far as credit goes and they try their best to take advantage of the situation. Very rarely will you find a bank that is good enough to declare all fees upfront and not overcharge you.

Here are some of the scams you need to be wary of:

Insurance claims:
Sometimes a credit card company will make it mandatory for you to purchase their insurance policy along with the secured credit card. Read the fine print carefully before committing.
Toll "free" number:
Many times there will be a number in the ad that will seem like a toll free number. However, in reality this can be a costly call to make. Many calls charge between 2 to even 50 dollars! Be sure to check out the rates before you even make that call.
Eligibility:
Most of the advertisements for secured credit cards make eligibility seem as easy as pie. However it’s not as easy as you think. Sometimes the entry criteria for getting a secured credit card are so stringent that you may never qualify for the card! Be sure to check these criteria out before applying.
Annual fees:
Most of the time a secured credit card will have an associated annual fee. However many credit card companies are willing to waive it off. Also be sure to check for the interest rate on any of the secured credit cards.

IMPORTANT INFORMATION REGARDING SECURED CREDIT CARDS

CREDIT CARD TYPES

Choosing the credit card that's best for your needs and situation starts with knowing what options are available to you. The following list details the most common credit cards available:

	Balance transfer credit cards - Balance transfers are a way of transferring outstanding balances from existing credit cards to another card that offers a lower interest rate. For example, if you your have a high annual percentage rate (APR) credit card with a significant outstanding balance, you can transfer the balance to another card with a lower rate or even one offer zero interest. Typically these cards offer low balance transfer rates for a specified period of time allowing you to save hundreds (or even thousands) of dollars in monthly interest charges.
	Low-interest credit cards - These cards offer a low introductory annual percentage rate (APR) for a promotional period, after which they can change to a higher rate or a fixed-rate. If you plan on making a large purchase, it's a good idea to pick up a low-interest credit card to take advantage of the savings on interest during the introductory period.
	Cash rebate credit cards - Cash rebate cards accumulate "points" for1 every purchase you make using the card. Most cash reward cards award a point based off 1% of the purchase total, excluding interest and finance charges. For example, if you make a purchase for $1,000 the credit card will award you with 10 points (or, $10.00). These cards are great for loyal customers who make payments on-time every month.
	Reward credit cards - Reward credit cards are similar to cash rebate credit cards, but differ in that they offer various forms of "rewards" for the purchases you make. For example, you can accumulate rewards for frequent-flyer-miles, free magazine subscriptions, and even hotel and travel discounts. Ideal for those who enjoy getting something for free from their credit cards.
	Travel credit cards - Travel credit cards are ideal for the frequent flyer who travels the globe on a frequent basis. These cards accumulate significant reward points every time you make a travel-related purchase. You can gain discounted airline tickets, rent cards for free, and even get discounted hotel rates!
	Pre-paid credit cards - Pre-paid credit cards are ideal for those who are on a tight budget and don't want to fall prey to the financial pitfalls associated with standard credit cards. They work similar to gift certificates or debit cards. You deposit money into the card and then use the card to make purchases as you would a typical credit card.
	Secured credit cards - Secured credit cards are ideal for people with poor or no credit. They work on a collateral system, where you put up something of value against the debt on the card.