Friday, 27 July 2018

Can secured cards help in building your score?


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.

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