Bank Secured Credit Cards
Although there are many credit card options available to customers, there are relatively few for those with poor credit. Individuals seeking to restore their credit have many options, one of which is a bank protected credit card. This credit card, which operates in conjunction with your savings or checking account, will assist you in repairing your credit.
Bank secured credit cards are similar to regular credit cards in appearance and functionality, but they use the bank account as collateral. If you are unable to pay your credit card bill on time, the bank will deduct the funds from your account. This way, the bank will still have money in case you are unable to make your payment.
Bank secured credit cards are also suitable for individuals who have filed for bankruptcy or who are unable to obtain a line of credit due to poor credit or a lack of credit history. These credit cards demonstrate to your bank that you are capable of paying your monthly bills and are taking the requisite steps toward restoring or establishing credit. If you continue to be responsible and pay your bills on time, your bank will grant you an unsecured line of credit - also known as a regular credit card without collateral - over time.
Since bank secured credit cards allow you to spend just what you have in your account, you won't incur debt. When you are unable to make a payment, the bank will automatically deduct the funds from your account. Although this is an excellent backup strategy, you can still pay your bills to avoid this situation.
As with most credit cards, bank protected credit cards have drawbacks that can strike you hard if you use the card irresponsibly. When you miss a payment on a bill, the bank will slap you with high interest and late fees. These charges and fees will continue to accrue if you do not begin paying your bill, which will gradually drain the account you set aside. However, if you pay your bill on time, you can avoid being hit with these kinds of charges.
For those with poor credit or those looking to establish credit, a bank secured credit card is an excellent place to start. These cards will eventually lead to an unsecured credit card if you keep up with your payments. Almost all banks sell these credit cards; you just need to inquire. Once you've maintained good credit on your credit card for an extended period of time, you'll have the satisfaction of knowing that you're taking the proper steps toward restoring your credit.