Those who do not have great credit scores often opt for getting credit cards that requires deposit in order to improve their rating. Since not everyone can afford to pay high deposit, there are companies offering low deposit card such as $50 deposit secured credit card. It can be a backup if you cannot obtain credit card in the conventional way. There is no need to exhaust your bank account to pay for security deposit (normally it can take more than $200!). Let’s learn more about this type of credit card.
The Bad and Good of $50 Deposit Secured Credit Card
There are good and bad things about everything, including $50 deposit secured credit card. Obtaining the credit card is more achievable if you pay security deposit first. The credit card issuer for this type of card usually reports your credit activity to credit bureaus too. This is important especially if your aim for getting the card is to boost credit rating.
Deposit paid by borrower is usually kept in saving account with interest. It means that you can get interest on that paid deposit. Another benefit of $50 deposit secured credit card will be gained in case debtor defaults from making payments. Usually, credit card debt is going to be transferred to collections when that happens. But if debtor has paid for security deposit, that deposit will be taken by the card company.
Paying for deposit to the card issuer is often considered as a disadvantage for this type of credit card because it can be as high as $400. But it is not, in the case of $50 deposit secured credit card. By putting in deposit of $50, you can obtain this card. Disadvantage comes in the form of additional fees. Other than a security deposit, there might be annual fee and application fee that you have to pay. The biggest disadvantage of this credit card is perhaps its high interest rates. It is recommended to fully pay all of your expenses every single month to avoid drawing out the debt.
In order to maximize the use of your $50 deposit secured credit card, it is recommended to use it as stepping stone. It should be a vehicle that helps borrower gaining better credit rating. In the future, borrower will be qualified again for conventional credit card. This is possible if the credit card is utilized responsibly.
You have to choose the best $50 deposit secured credit card. Each issuer has different policy and not all of them put your best interest first. First thing to pay attention to is extra fees that needs to be paid, such as application fee. Try to compare one issuer to another to get the best deal. Annual percentage rate is also an important deciding factor when choosing the best credit card.
Usually the limit of credit card is similar to deposit. So if you are getting a $50 deposit secured credit card, the limit can be $50 even if some issuers offer more. Use the credit card wisely and try to find one that has an option to be switched to conventional one.