Use a Secured Card to Help Budget Your Cash

We’re only a little over six months into the New Year and already many people who made a resolution to stick to a budget have fallen off the wagon. Developing a budget and adhering to it require a lot of commitment and hard work. If you’re searching for a tool that will make managing your money easier, then using a secured credit card might be the solution.

These cards offer you the same benefits that a traditional credit card does, such as mobile banking and protection; however, they only let you spend the money that you actually have. Unlike normal credit cards, secured credit cards require a cash collateral deposit when the card is opened, the amount of which will set your credit limit. Secured cards can also have much lower fees and rates than credit cards for bad credit.

The cash collateral requirement of secured card leads many people to confuse it with a pre-paid card. However, secured cards offer a huge advantage when compared to pre-paid cards: with secured cards, your usage is reported to the three major credit bureaus. This means that if you stay on track and pay your bills regularly, it can help you rebuild or improve your credit score. Pre-paid cards are simply debit cards; they don’t help build your credit and they can have high monthly fees and service fees.

Secured credit cards are becoming progressively more popular, as people use them to avoid spending more than they should. Below are some ways that you can use a secured card to remain faithful to the financial plan you created at the beginning of the year.

• Carrying cash is too risky. Some Americans budget using an envelope system, in which they assign an envelope and cash to each category of their budget. As people need to make purchases, they use the cash in the related envelope to pay for them. Unfortunately, it isn’t safe for you or anyone else to be walking around with large amounts of cash in your wallet, so replacing the envelopes with credit cards is a great way to keep your money safe.
  
• Stop using checks. People who don’t stay on top of checks and when they’re cashed can sometimes run into issues with overdraft charges. When you stop using checks and replace them with a secured credit card, you never have to worry about the unnecessary and expensive charge of over drafting on your account. Once you make a charge, it is automatically debited from your credit card, so you won’t forget that you spent the money.
• Have an Exclusive Vacation Card – If you’re going on vacation in the future, you can start budgeting for it now. Set aside some money for the trip each time you get paid and get a secured credit card that you’ll use exclusively when you’re gone. This is a great way to avoid having to use your other credit cards while away, and having a big headache waiting for you when you return home.
• Monitor your spending. Secured credit cards make it simple to use online banking features to stay on top of purchases you’ve made. Further, you can pay your account online, which makes account management simple and easy.