In 1990, after my bankruptcy, I wanted to avoid the use of credit. For me credit was pain because I believed that without credit I would never have found myself bankrupt. Rational or not, that’s how I felt.
It wasn’t too long after that I realized that if I was going to be able to do the things I needed to for work and travel I would need to get a credit card to make reservations and use for routine expenses. It wasn’t until I discovered the concept of a secured card that I found what I was looking for.
A secured credit card allowed me to be able to use the Visa and MasterCard networks to do all the things I needed to do, but with a financial safety net. People that I handed the card to didn’t know I had been bankrupt or that I had lingering bad credit issues, they also didn’t know that almost no other creditor in the world would give me credit at that moment. I was a credit reject for sure.
The advantages of a secured card are that your credit limit equals the cash you have on deposit with the card issuer. And that’s what made me very comfortable in carrying a secured card, in case something happened and I was not able to pay the bill, all of the funds to pay off the balance were already on deposit with the bank! Using the secured card I would never be in debt if something unexpected happened, and that was an emotional relief.
What I discovered next, was an ever bigger relief for me. The bank I selected, which has been bought and bought again and again since those days, also reported my new card use to the credit bureaus and that helped to restore my credit. After the black eye of the bankruptcy I needed help to begin to replace the old bankruptcy negative information with a new positive credit history. And the secured card did just that for me.
It was a real bonus for me to learn that my deposit with the bank also earned interest so while it was protecting me from an uncertain financial emergency it was making some money at the same time.
I will always be grateful for the secured card after bankruptcy and can say that it honestly helped me to get back on my feet in the real transaction world, protected me in case of financial emergency and paid me money on my deposit in interest.
Some people say to me, “Steve, I can’t afford to put up a deposit to get a card”, and my reaction to that is that maybe they should not have any card if that’s the case. When it comes to using credit, remember “Safety First”.