Some of the best rewards credit cards of the moment aren’t for anybody, since a lot of people are turned down by companies numerous times, due to their credit scores. However, this isn’t such a big issue, since they also have some other choices, one of the most popular being using a secured credit card.
Of course, their market share is very low right now, but they’re excellent for building credit. In order to get one, you need to make a small initial deposit, which is usually equal or smaller than the card’s limit.
But what are the actual pluses and minuses of secured cards?
Very low fees
On average, secured credit cards have a yearly cost of $26 during the first year, followed by $19 in subsequent years. On the other side, unsecured credit cards for users with low credit scores can cost up to $150 each year!
Refundable deposits
If you manage to pay off your balance completely, without making any late payments by the time you want to close the account associated with the secured card account, you can get your deposit back!
Easier approval
And finally, let’s not forget about one of the main advantages: since they’re backed by a cash deposit, an unsecured credit card is very easy to get, as the lender can keep the money if you fail to make the payments on your credit card bill.
Ok, let’s switch a bit to the minuses…
Very low credit limits
The biggest drawback of an unsecured credit card is that it’s limited between $300 and $500. It’s true, these values can increase with time, but you will always want to use less than $30 of your limit, in order to keep working on that credit score.
They require upfront deposits
Finally, let’s not forget about the fact the if you want to get a card like this, you need to pay some money upfront. To be more specific, we’re talking about a deposit, which you’ll have to part with temporarily. But don’t forget that you can always get is back, if you make your payments on time!
