How can secured credit cards build or rebuild your credit?



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This may be due in part to the fact that some features, such as the required cash deposit, make the cards difficult for some people to use. Consumers who are approved for cards can not concoct a deposit, reported the Consumer Protection Bureau.

In addition, the low spending limit can make it difficult to use cards to significantly improve their credit score. A major component of credit scores is the proportion of credit available that a person uses. Secure card users need to keep balances low – ideally 30% of the ceiling – to improve their scores, Levy said.

Secured cards typically charge annual fees and may have higher interest rates than traditional credit cards.

Still, "the potential market for secure credit cards is huge," the network said.

The Amazon card, issued through Synchrony Financial, has no annual fee and offers a wider range of credit limits than most secure cards, ranging from $ 100 to $ 1,000, depending on the site. Web of the company. Credit Builder users may be eligible to upgrade to an Amazon Store card after seven months of on-time payments.

The Credit Builder card can only be used on Amazon, which brings it closer to the storage of cards offered by physical retailers. Its interest rate is relatively high at 28.24%. (The average credit card rate for people with low credit was 25.33% as of June 5th, according to Creditcards.com.)

Amazon Prime members, who pay an annual membership fee, are eligible for a 5% cash back on purchases made with the secured card. But cash back features tend to encourage spending, which can lead to higher balances and slower credit rating improvements, Levy said.

Users need to pay special attention to special card financing promotions, said Odysseas Papadimitriou, general manager of the personal finance site WalletHub.com.

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