Author Topic: "secured" credit card/s from the bank  (Read 3130 times)

Offline Jonathon January

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"secured" credit card/s from the bank
« on: January 30, 2012, 12:44:15 AM »
I know credit cards are bad, but what about secured credit. My g/f and I went to a bank to see if there was any chance of a home loan. Upon being told no, the loan manager suggested secured credit cards as possible ways to slowly build better credit.  Are they at all worth it since you can't spend more than what's one that card?



Sorry if this is a repeated question. I did search for secured credit via the search tool and i didnt see anything really answering my question and i don't ever recall this bring dicussed on the show

Offline Truik

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Re: "secured" credit card/s from the bank
« Reply #1 on: January 30, 2012, 05:01:43 AM »
Not sure how effective the credit building aspect of it but anything linked to your SSN that you make regular payments on or make transactions with does affect your credit. My wife uses one for some online bills and the occasional online purchase. She just puts on it what she needs to complete the transactions. It also sends a text message to her instantly with her new balance when any transaction is made so she would know immediately if anyone used it. I like that feature.

Much better than using an actual credit card and paying interest and such.

One warning: Many prepaid cards have varying temporary "holds" (I don't know the actual term for it, but...) lets say you go to the gas pump with a bank debit card: It just pulls the funds you need to pay for the gas. If you use a regular credit card: It may pull a temporary charge of a dollar or a couple dollars and then an additional charge for the amount of the gas, crediting the temporary charge when the merchant pushes that batch of transactions. Using a pre-paid credit card, sometimes, results in exorbitant "holds" just to make sure you have enough funds to make a purchase.  The worst one I have heard of from a friend of ours was a $75 fee at the pump which didn't come off for about three days. They were ticked.


Offline Jonathon January

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Re: "secured" credit card/s from the bank
« Reply #2 on: January 30, 2012, 06:29:23 AM »
How it improves my score is what confuses me. . . i have to look into it more. {couldnt do it too well when i posted this cause i was via my cellphone at work. . .

Whats ticking through my head is. . . Few things increase score like paying off old debts. So iff i take say five hundred out of my tax return and put it into one of these cards. Then whenever I would typically make a payment i used the card instead. THEN turned around and used the cash in hand to pay off the card. . . .

Offline Truik

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Re: "secured" credit card/s from the bank
« Reply #3 on: January 30, 2012, 04:34:53 PM »
How it improves my score is what confuses me. . .

Any time you have a open credit account of any type (regular monthly payments like a car payment or revolving credit like a credit card) registered with your SSN, it affects your credit. Use it or small purchases and pay it off within 30 days each time.

Every time you pay in time, its a positive ding to your credit.



Offline mrdan

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Re: "secured" credit card/s from the bank
« Reply #4 on: January 30, 2012, 05:52:06 PM »
Any time you have a open credit account of any type (regular monthly payments like a car payment or revolving credit like a credit card) registered with your SSN, it affects your credit. Use it or small purchases and pay it off within 30 days each time.

Every time you pay in time, its a positive ding to your credit.

+1 to that. Just to clarify, putting $500 on, then charging $500, then paying off $500 doesn't equal instant good credit. Time spent charging and paying off is the real kicker. So it's not a quick fix.

Oh, and the $500 you have on the card is the security. In order to keep using it, you need to hold $500 and pay $500 for the balance. The original $500 is held as security unless they lower that requirement over time. So in reality you'd take your $500, put $250 towards the security, and use the other $250 to pay off the balance.

Offline Jack Crabb

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Re: "secured" credit card/s from the bank
« Reply #5 on: January 31, 2012, 07:44:11 PM »
Banker: "Well sir, how it improves your credit is that you give us an interest free loan, we will decline any charge that approaches the full value of the balance you maintain as security, and you use the card we issue you so we can collect processing fees from the merchants, and . . . um . . . did you get your toaster?"

Offline Blackwolf

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Re: "secured" credit card/s from the bank
« Reply #6 on: March 04, 2012, 10:16:40 PM »
I used my tax return to take out a $3000 secured loan at our new credit union.  It pays itself back over the next year at a really low APR and I will only need to add about $60 for the interest fees.  Usually they hold the $3000 and you make payments on the loan and as you do they make more of the original money available for withdrawal.  I had them set everything up on the original deposit though just to make it automatic and simple.  Then I used the loaned money to pay off the house that I was going to just buy outright with the cash.  So now I have a good reporting loan that is already paid back technically so I don't have to worry about missing payments.

Its the best thing I could think of to help build my wife and I's credit.  Mine is bad from years of struggling with another bad mortgage and a foreclosure that the bank seems to have walked away from before it was final.  But now we own outright so I am really happy, even if it does need a lot of work.  Lots of room for food growing though so....

Offline Roundabouts

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Re: "secured" credit card/s from the bank
« Reply #7 on: March 05, 2012, 04:14:57 AM »
Proceed with caution.  Make sure you read and UNDERSTAND the fine print.  I have found that the fees sometimes are actually higher than a regular credit card interest rate.  My son was thinking about getting one.  Ended up not.