Check your credit score. It can be fun to check in and see how your credit improves every few months while you’re using the secured card.
Avoid interest charges by paying in full each month. Secured cards do charge interest, and their rates can be higher than those of some regular credit cards. To avoid getting hit with interest charges, make sure you pay in full each month.
Get ready for the long haul. Credit scores can’t be drastically improved overnight. Be patient and mitigate your expectations. If you are working to rebuild your score and have significant delinquencies on your credit report – or credit dings such as a foreclosure or bankruptcy – those will take time to fall off your report, and a secured card can’t undo that kind of damage completely.
Here’s how to find the right secured card for your needs.
Look for a card with a low deposit amount. Some people may be turned off by secured cards because they need to have cash upfront to open one. Just remind yourself that as long as you use the card responsibly and make all your payments, that money will be yours again. You should, however, ask how long the bank will keep your deposit after you close the secured card as it might not give it back to you right away. Some banks will keep the deposit to cover any charges to the card for a couple of months after you close the account.
Watch out for fees and charges. Secured cards can also come loaded with hidden fees and other charges. One of the most important items to check is whether the card has an annual fee. For example, the BankAmericard Secured Card comes with a $39 annual fee and charges up to $38 for late payments. You can find better offers out there, so make sure to do your research and compare offers from different banks. Credit unions and local banks typically have their own secured or credit builder cards as well. Also check for perks such as cash back on gas or restaurant purchases. You shouldn’t focus solely on the perks when choosing a card, but they are nice to have.