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Second Chance Credit Cards - A Secured Second Chance Credit Card Has Many Advantages

Many people routinely receive approvals for secured second chance credit cards, despite bad credit due to a bankruptcy or other problems. Along with the advantage of having a credit card, this will help anyone re-establish their credit score.

A secured second chance credit card works by having the applicant make a secured deposit for the card. A typical beginning amount is $500 or less. This becomes the credit limit of the card. While the credit limit may sound low, it really works to your advantage in numerous ways.



The first thing to realize is that this is just a beginning. As you establish your credit score, and as the issuing bank has a longer working relationship with you, this limit can be raised. Also, as your credit standing increases, you could well graduate into getting approvals for unsecured credit cards that do not require a deposit at all.

One of the advantages of the security deposit is that the set-up makes it easy for an applicant to gain approval. Think about it, if you put down a deposit of $300 and you are only allowed to charge up to $300 in outstanding balance, the issuing bank has very little risk. Therefore, it makes it easier for them to issue the credit card to you.

Along with this, another advantage is that the interest rate on the card is also much less than an unsecured card. It will mostly likely be a very reasonable rate that you see extended to applicants with high credit scores.

Another advantage of having a secured second chance credit card is that the limit helps one to stay in focus on his or her spending. Sure it is convenient to have a card with a higher limit and charge it up. At the same time, it makes it more difficult for the cardholder to manage spending. With this card, even if certain purchases are very tempting, you may think twice because of the limit on the card. That helps a cardholder stay out of trouble for over-spending.

Building Up Your Credit Score

A key advantage of having this card is that it allows credit history to be built. That is a distinguishing feature between a secured credit card and a prepaid Visa or Mastercard. One important thing to keep in mind is that not ALL secured cards will have their activity reported to the consumer credit agencies like Equifax, Experian or Transunion. Only through second chance credit cards where activity is being reported will a cardholder be able to build up his or her credit history.

Reporting the activity of the card usage to credit agencies is a major thing to pay close attention before you apply. The application or website should state that this is a card where activity will be reported to all three main consumer credit monitoring agencies for building up your credit score. Otherwise, while you will end up with the convenience of having a credit card, but miss out on the chance of rebuilding your credit history.

To sum it up, secured second chance credit cards offer many advantages to cardholders. Applicants will find that it is much easier to receive approvals for these cards as compared with unsecured cards. The interest rates are also much more reasonable. The best part is that in most instances, they are still real credit cards that can help cardholders build up their credit score.

As an alternative to a conventional checking account, consider a prepaid Visa card account with no ChexSystems requirements. It works just like a checking account, allowing for direct deposit of paychecks and online billpay (one-time or recurring payments). You can deposit cash into the account from 135,000 retail locations nationwide. In addition, the card can be used anywhere Visa is accepted. Click to learn more: The Perfect Alternative to a Checking Account!


The perfect alternative to a checking account