Let us go back to time and relive
the moment when you first got your driver’s license. We bet, it
would be a proud moment for you and you would have a feeling of
accomplishment. But before you got your driver’s license, you must
have went through a process of obtaining a Learner’s License. You
must me thinking why are these people sighting this story to us? The
topic clearly is about secured credit cards.
A secured credit card is just like
your learner’s license where you are not at risk while using it.
So first of all, what is a secured
credit card exactly and how does it work?
A secured credit card is equivalent
to a traditional card, unlike a prepaid card or a debt card. Its sole
purpose is to help individuals who are in desperate need to improve
cibil score. Also help people who do not have a credit
history at all. Unlike other debit cards, a secured card has the same
terms and conditions as of a normal credit card and you can enjoy the
same privileges associated to a normal card.
As the name suggests, a secured card
can be availed by depositing a particular amount as security, unlike
normal cards which do not need deposits. With some banks, the bank
will provide you high limit on your card as compared to the deposit
you have made.
Now many people have a perception
that if we do not make our payments on time, the bank can deduct
money from our security deposit. This is absolutely not the case! As
mentioned earlier, a secured card has the same terms as a normal card
which compels you to make all your payments on time and avid keeping
balances on your card.
The Big question here is how can a
secured card help you build your credit score?
Now, if you have a bad
cibil score, you probably must be thinking of getting
a secured card but is it beneficial? How soon can you expect your
score to see inclines?
The Answer to this is there is no
quick mantra to improving your credit score in snap time. You will
have to work hard on rebuilding your credit score, which eventually
will take time. A secured credit card can help you achieve it as the
credit bureau will consider your card just like any other financial
product on your portfolio.
Tips to use your secured card wisely
Use it for small purchases
Owning a credit card does not mean
you can go mayhem on your purchases. You should always remember the
purpose to get a secured card on the first place. Make small
purchases every month and try to make your payments on time. Only
make purchases you can pay of easily without facing much of problem.
Do not go for minimum payment
Going for minimum payment can cause
you a lot of damage, as these types of cards is availed on the basis
of deposit money. You will have to pay additional penalties and other
interests associated to the card. Try making the due payment in full
to avoid such charges. You can feel pain interest and penalties for
money your money.
Set payment alerts
No one is perfect; there are high
possibilities on missing your payment due date. Set payment alerts to
stay up-to-date with your payment dates to avoid unnecessary
penalties and charges.
The best option is to opt for
auto pay option
This is the best option available
from every credit card lender these days. Be it a secured one or an
unsecured one, you should always opt for auto pay option so that you
do not face any problems of not remembering your payment date and the
payment is automatically made on time.
A secured card can have some
drawbacks of its own, but it can help you in the long run of building
your ruined reputation on your credit report. It can help be secure a
traditional credit card with an improved credit score.