Home Buddies – Home Ownership Coach – Houston, Texas

Can’t get approved for a credit card?

Every day life can be tough without a credit card. It seems that everywhere today, there is the need to have a credit card. You need one to reserve a hotel room. rent a car, or get a membership at the video rental store. Did you know that even some of the credit monitoring services require a credit card? Why? Because the monitoring service will continue on after the free trial period (unless you cancel), and so they require a valid credit card number before they can process your order. Geez, does it ever end?

For people with bad credit, it can often feel like you’re doomed. But there is help for those who cannot get approved for an unsecured credit card. The answer is the secured credit card. A secured credit card is used the same way as an unsecured card and as you make your payments on time, this activity can help improve your credit score.

To be able to get a secured credit card you need to deposit some money with the credit card issuer. This amount is usually $300 – $500. Your secured credit card limit is usually equal to the amount you deposited. You will not be allowed to spend more than the credit limit. If you do attempt to go over your limit (or deposit amount), the charge will not go through, and it will be a mark against you on your credit report.

Once you have established some good credit after a while with this secured credit card, you can increase the credit line by depositing more money into it. In some cases the credit card company might even offer to give you more credit without an additional deposit. It doesn’t hurt to ask.

Of course, there is always a list of things to pay attention to. Here’s the list:

An annual fee. Shop around for the best company/bank that will have the lowest fees. Fees vary from one company to another.

Some banks don’t offer secured credit cards but some credit unions do. You can usually open an account at a credit union for as little as $5 and then look into getting a secured credit card there.

Being required to pay the balance in full each month. You must send a payment in just as you would for a traditional credit card. They aren’t going to take your payment due from the money you have deposited.

Get the secured credit card with a higher balance. Find an bank/company that will allow you to deposit as much as you have available to start with so your limit will be higher.

Read all the fine print. Yes, that’s what I said. All of it. Some companies charge so many fees upfront that your small $300 deposit might be eaten up right away in fees before you can ever use the card. Some companies even make you purchase insurance, for $50 or more a month. Be careful and do your research and get the best deal for you.

Try to get the “traditional” unsecured credit card. This is a much better option if you can qualify.

Good Luck.

Barbara Partaka
Home Buddies