Bad Credit? Rebuild it with a Secured Credit Card

If you’re looking to rebuild your credit after bankruptcy or credit card default, turning to a secured credit card might be the solution for you. This is a different type of card from the traditional credit card. Many large issuers offer a secured credit card as a means for people to improve their scores, establish a good credit history, or recover from a credit disaster. Read on to learn about these cards and how they can benefit you.







  • Secured vs. Unsecured Credit Cards – The main difference between a secured and unsecured credit card is that with a secured card, your limit is determined by the amount of money that is deposited onto the card. For example, if you are interested in having a card that has a $500 limit, then you would deposit $500 to the secured card. With an unsecured credit card, the credit card issuer determines your limit and you can spend until you reach it (even if you don’t have the money in your bank account to pay for the purchases).
  • Add good credit to your report. Just like unsecured credit cards, secure cards report to the 3 major credit reporting agencies, which can add good information to your credit report. This helps out anyone who doesn’t have a credit history or who is trying to repair a less-than-perfect one.
  • Stick to your budget. Since you are making a security deposit for the card, you are more or less developing a budget for yourself. There’s no way to “over-spend”, so a secured card gives you more control. Once you spend all of the money that you deposited for the secured credit card, you can’t spend any more without paying down your balance. Using this type of card is a great way to stick to a budget you set for yourself because it’s impossible to overspend.

Secured cards are not only great for people looking to repair their bad credit, but also for those who are new to the whole world of credit cards. As you may be are aware, it is very easy to get carried away with an unsecured credit card and spend much more money than you were intending. Prevent someone who is new to credit cards from falling into debt by suggesting they use a secured card. They will learn early that you should only spend what you have and not make purchases that you will not be able to pay for when the bill arrives in the mail.

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