Debt Articles Secured Card

3 Reasons You Should Have a Secured Card

Secured cards are often misunderstood. And while they are an awesome tool to use to rebuild credit, there are other advantageous uses for them as well.

For example, a secured card allows you to put a shine on your credit and raise your credit score WITHOUT going into debt. People are often credit shy after having lived through a debt problem but being afraid of debt or credit doesn’t help you to recover from a past financial pothole.

With a secured card your deposit will cover you balance in case you run into an unexpected financial situation. If the balance is there to protect you, there is no debt for whatever balance you may have but be unable to pay for an unexpected reason.

Secured cards rebuild credit by reporting to the credit reporting agencies each month.

The secured card can help control a budget since it limits what you can spend.


READ  How a Secured Credit Card Saved Me After Bankruptcy

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

2 Comments

  • Great resource on the reviews for the card companies!  It is a frequent question from clients who cannot qualify for an unsecured card. 

    We have also referred clients to check into a “credit builder CD” offered by a major bank in the area.  It is advertised to work as basically a secured installment loan which reports to the bureau(s).  I don’t know much about them beyond that, but do you have any experience/opinion on them?  I linked below as information only, just the first explanation I found that wasn’t a bank website.  

    http://www.gocreditmatters.com/Credit%20Library%20Promo/Improving%20Your%20Credit/Establishing%20Positive%20Credit/howestablishcredit.html

    Thomas Nitzsche
    ClearPoint Credit Counseling Solutions

    • It’s my understanding that such a loan would not carry as much “juice” or weight as a credit card. Even though it may be a secured card they don’t report to the bureaus as such.

      Bank loans and especially secured bank loans may not be as much evidence of credit use.

      The other issue is that banks do not as regularly report to any credit bureau, not to mention all three. I’ve seen a number of consumers that tried the CD route only to have nothing ever reported on a credit report about the loan.

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