Secured Credit Cards

Did you get in a tight spot a while back because of that one thing and now your credit only has two digits? I get it. I’ve been there. When my wife and I first got together there where quite a few phone numbers we had to dump in the lake to get a moments rest from creditors. The good news is, I know how to fix this and I’m going to tell you a few ways that have worked for me and many of my clients. This particular page is going to cover secured credit cards. If you would like more generalized information about building your credit go HERE.

What are Secured Credit Cards…

you googled? Well, I will tell you. They are a wonderful little tool to start getting some positive credit reporting on your credit report. They work by taking a down payment. Usually between $200-$500 dollars. They hold on to that money for you. Then they issue you a credit based on the amount you collateralize or deposit. $500 in, $500 card back out.

Isn’t a secured card just spending your own money?

Not really. Look, you have to pay to play this game. You torpedoed your credit and no one is going to help you unless you put some money up front. Most loans require collateral. If you get a car loan, a boat loan, or a home loan they are going to tie the amount they loan you to the title and assumed value of those assets. In this case, they trust you about 0 so that is the discount you are going to get on your collateral.

There is a silver lining though. As long as you keep your balances low and pay them off in full every month you will be well on your way to building your credit and over all financial picture.

How many secured cards can I get?

Bunches, although you may not have to. If you are tracking your credit score with any of our Suggested Credit Score Tools AND you have all of your debt caught up and paid off for the most part. It is a good idea to start putting money aside for things to start building your credit. I recommend working on putting aside $200-$300 to open your first secured card. Once you can manage that and save up another, get another. It is a good idea to get up to 3 maybe even 4. Use them minimally below 30% of their available balance and pay them off directly from your bank account as soon as they accrue a balance or at least before the monthly due date if you are in a pinch. Be responsible here. These can turn in to weapons just like regular credit cards.