Are you having a problem getting a credit card or a loan?  Do you need some way to build or rebuild your credit?  If you have no other options, you can almost certainly get a secured credit card.

What is it?

This is a card which has been issued to you after you made a payment to the issuing bank for the value.  You will receive it with an available limit equal to that which you paid less any processing or issuing charges that were applied. 

How do I get one?

Almost anybody can get one of these, as there are very few requirements.  You may be required to have a source of income and be of minimum age.  It’s also possible that a bank account may be a requirement.  Whatever the requirements for your options on a secured card, you will be notified near the beginning of your application process.  Most online applications include a screening process to ensure eligibility. 

While you can go directly to the websites of banks that issue secured credit cards, it’s best to review a site that has a list of banks that offer them.  Why?  Because you will want to compare each offer to make sure you’re getting the best deal.  One of the most important things to look for is the APR (Annual Percentage Rate).  Some secured credit cards may offer as low as 11.9% or somewhere around there while others may charge as high as 25.9% (or higher).  Obviously, you want to one with a lower APR, but you’ll want to take a couple other items into consideration.

You will also want to compare annual fees and processing fees.  Not all banks charge annual fees for credit cards, but some do – so pay attention to that detail.  Many banks also charge a one-time processing or activation fee for both secured and unsecured credit cards.   If these fees are applied to your card, they will already be included by the time you get your card.  For example, if your card has a credit limit of $250, you will have been required to pay $250; but you won’t have $250 worth of credit on your card.  If the processing fees totaled $75, you will have a total available amount of $175, and the $75 charge will be on your first bill.  Some banks charge more than others, so take the time to compare multiple banks.  You should have at least 5-10 options from which to choose – if not more.

It’s important to realize that – even though you’ve secured the balance with a payment – card is used and reported to all major credit reporting bureaus, so it’s important to be responsible with your usage by keeping the average balance low (at least below 50%), making payments on time, and consistently paying more than the minimum balance.