Usually, credit card with security deposit serves as an aid to build someone’s credit history. So understandably the credit line is not as high compared to other credit cards. But low credit line is not going to work well with people who perform various transactions. High limit secured credit card is proposed as an answer to this matter. What is it about this particular credit card that is so appealing? Is there any catch related to its utilization?
Secured Credit Card with High Credit Line
A credit card issuer is more likely to propose credit limit based on the amount of deposit that card holder has paid in the beginning. When someone makes the minimum deposit, they will get minimum credit line as well. When applying for high limit secured credit card, there is a high chance that applicant will be asked to make a huge security deposit although credit rating and income are also considered during the process. As an example, if you make a security deposit of $10,000 then the maximum amount you can borrow is likely to be $10,000.
Of course, there are not many people who are able to afford that. So, why does card issuer apply such policy? Security deposit that borrower paid in the beginning actually serves as a collateral damage in case borrower evades their card loan. In the case of high limit secured credit card, issuer faces greater challenge. Summed up loan of someone who has credit card with high limit tends to be much higher than the one with lower credit limit.
Is there any chance to turn your card into high limit secured credit card without paying for high deposit? Yes, there is. The process takes time but it is not impossible. If you are making regular payments to your account, the bank is more likely to increase credit limit over time. To do this, borrower is expected not to only meet minimum payment each month.
Wells Fargo is known for offering a good high limit secured credit card. The maximum deposit that can be made is $10,000 where borrower will get similar amount of credit limit. Annual percentage rate that is applied is 20.25% for purchase and transfer of balance. Every year, card holder will be charged $25. If this card is used responsibly, it can level up to an unsecured credit card.
There are some advantages of high limit secured credit card. If you often perform transactions, whether it is for daily needs or even paying bills, the card will give you more power. However, this potential can be harmful too. Another thing with this type of card is lower utilization ratio. Low utilization ratio will look good on your credit rating.
Nonetheless, this card also has its potential disasters. People tend to be tempted in spending more with their credit card when they have higher credit line. Instead of helping to build credit history, this card damages it. Before getting a high limit secured credit card, it is best to ponder over other alternatives.