Using Secured Credit Cards to Recover From Bankruptcy
For most of us, the thought of using secured credit cards doesn’t seem that appealing. However, it is a great way to establish your credit rating after a bankruptcy. Like ii stated in the previous section, the round robin strategy is perfect for this method of rebuilding your credit. A secured credit card is basically just a term used to describe a credit card that you have prepaid. How it works is that you will get a credit card limit that is equal to the amount of money that you put in as a deposit. To the untrained eye, this is no more than paying cash + interest for goods and services. This doesn’t seem like a good idea at first, but I will tell you it is a great way to raise your credit score. Secured credit cards were invented for this very reason. As long as you maintain a 70% balance on your credit card and make all payments on time, you are good and this will entitle you to raise your credit limit and help you recover from bankruptcy in the long run. There are many different types of secured credit cards on the market right now and you have to be picky about which ones you should go for. So many banks and companies are offering them that they are competing with different incentives to get you to theirs. The most popular of them are: CHASE PREPAID MASTERCARDS AND VISA This prepaid credit card offers you 0% interest on your prepaid credit card which is great for helping you to keep those payments up. They require at least $500 dollars deposit, however you can pay more. I would recommend at least $1000. Chase cards are recognized and accepted everywhere that Visa and MasterCard are. Since they also offer unsecured cards, no one will know which version that you are using. This is good for the person that really doesn’t want it obvious that they are using a prepaid card. Chase also runs off of their own banking institution, so when you have established your good standing with them, they may upgrade you to an unsecured card by transferring your balance and raising your credit limit later on. They will usually make a reference to your account after 6 months. Some other secured credit cards with a similar offer are: · Orchard Bank MasterCards · First Bank Visa · Eufora prepaid MasterCard · Centennial · Premier Bank CAPITAL ONE The prepaid deal that you will get form Capital One is actually quite remarkable. You can make a deposit and get a higher credit limit than that of your deposit amount. This is rather excellent as they really give you a chance to work on your credit. Capital One does charge fees for cash up front as well as interest fees of up to 25%. That is the big drawback here. You are also only allowed to take out 25% of the total limit on cash withdrawal all together so it makes the round robin approach to rebuilding credit impossible. It is a great card to have as far as the security deposit though and is worth considering. You can also get rewards cards when you apply for some of these cards. These cards can request as little as $200 for a deposit. You can still earn your credit back when you go through any of these and thousands of other offers. I would suggest however, that if you can, try to go through banks and financial institutions for your secured credit cards as these offer better turnaround times for re-establishing your credit. |
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