Bad credit can make it difficult to obtain a creditcard without a security deposit. A secured credit card might be the best option for you if your goal is to improve or rebuild your credit. You pay a small deposit to secure your credit card. This amount is equal to your credit limit. In return, you will get a credit file from three major credit agencies. Additionally, you will be able obtain an FICO score as well as identity theft monitoring services.
Credit card to help you build and re-build credit
People who want to build or repair their credit score can benefit from secured deposit credit card cards. Secured deposits cards don't require credit checks, or minimum credit scores to apply. For those with high spending habits, however, this card might not be suitable. The deposit amount and credit limit are usually equal. If you have a high-spending habit, you might want to look into another credit card.
Secured credit cards that are backed by cash require a cash deposit. After the deposit is made, the secured credit card can function just like an unsecured credit card. While you can make purchases and make payments, late payments could result in the issuer removing your deposit.
A security deposit is required for credit cards
If you're considering applying for a credit card with a security deposit, keep in mind that the deposit is not used to cover the monthly payment. You'll be required to pay the minimum monthly payments plus any interest each month. Likewise, if you're late on a payment, the card issuer can charge you late payment fees and report you to the credit bureaus, which will negatively impact your credit history.
To be eligible for a card with security deposit, you will need to have a bank account with routing numbers. Once you are approved for a card you will be granted a credit limit that is based on the security deposit. The credit card company may allow you to get $200 or $200 credit limits with a $200 deposit. Other secured credit cards allow you to increase your credit limit over time.
Credit card that doesn’t require security deposit
Unsecured credit cards may be an option for people with poor credit. Secured cards usually require a minimum deposit of $200, but there are many unsecured cards available that don't require a security deposit. These credit cards provide rewards and help you build credit without the need to put up collateral.
While a security deposit can ensure your card account is not closed, it does not cover your monthly payments. A $2,000 deposit for example will result in a monthly amount of about $125. There will also be interest. If you close the account, your bank will refund your security deposit.
Because the bank does not have a safety net like a security deposit, unsecured credit cards can be easier to obtain. It is possible to be denied if you have poor credit. You may be eligible for an entry-level unsecured credit card with no security deposit if you are new to credit. However, your bank will report your payments directly to the major credit bureaus.