About Secured Credit Cards

Every time you apply for a credit card or loan, each single inquiry from
that lender will be recorded on your credit report making too many inquiries
is a signal to a potential lender that you are a risky customer just
shopping for credit and not for real funds.

True or not, a secured credit card may be the right type of credit card for
you because it is secured by a deposit account owned by the cardholder. This
deposit consists of 100% to 200% of the total amount of credit desired, that
is held in a special savings account.

However, cardholders of secured credit cards still may expect to make
regular payments as they would with any other regular credit card, with the
only difference being the card issuer has the option of recovering the full
cost of the purchases paid to the merchants out of the deposit if the
cardholders does not pay their credit balance in a timely manner.

Most entities issuers of secured credit cards consider that if the
cardholder does not make the required payment, the account must be paid
anyway and before the security is released instead of taking the money from
the security to pay the balance due.
This is a risk for the cardholders because their card is not cancelled and
the balance does not set off the deposit.

It is sad how easy it is to find that such advantage at first glance is
nothing more than just a financial move to let interest to continue,
accumulating on the unpaid balance for considerable periods of time which
total charges often exceed the original deposit and leading the cardholders
not only to lose their deposit but after that with additional debt that may
become a nightmare to pay.

This is not a threat but a condition usually described in the secured credit
card agreement of some credit institutions that most of the time is ignored
by the cardholders, or something that they do not read, or do not understand
clearly, when the account is opened.

Understanding all the terms of the agreement and not fearing to ask when in
doubt is important because secured credit cards are the most viable option
to allow individuals with poor credit, bad credit history or no credit
history.

In fact, secured credit cards are the best option for rebuilding or cleaning
up your credit history report, particularly if Visa or MasterCard endorses
them, but always bearing in mind fees charged for secured credit cards more
often may exceed those standard fees charged for ordinary non-secured credit
cards.

About The Author: Copyright 2006, Fruzsina csery.
http://www.securedcardsmall.com