Bad Credit Does Not Mean Bad Life
If managed properly, using an unsecured credit card can still help you recover your credit score and improve your credit history. So what makes the secured credit card differ from the unsecured credit card ?
One of the quickest ways to get a credit card when you have bad credit is to opt for a secured credit card. With a secured credit card, you deposit money in a bank designated by the credit card company to serve as a 'security deposit' - an assurance that they'll get their money if you default on payments. Depending on the lender, that deposit might be equal to your desired credit limit, or slightly higher or lower. A security deposit of $300, for instance, might get you a $200 line of credit with one company or a $350 line of credit with another, and a $450.00 one with yet another. The interest rate is generally competitive, since the company has a guarantee of getting its money if you don't make payments Although an unsecured credit card requires no security deposit, it will often have either a high APR, high setup and associated fees, or both.
So how do the you compare methods of securing credit? How do you know which one is better for you ?
To look at a real life example of how much a secured credit card cost. For instance , if you want a credit limit of say $1,000 you will have to put up a collateral of $1,675 and each time you request for an increase of credit limit you will have to pay between $100 - $150 depending on the credit card company. The APR on this will usually be from 14.9% to 16.9 %.
On the other hand, an unsecured credit card will cost you $30.00 to set up, a $48 annual fee. Then you will have to pay a Participation Fee of $84 - this cost is usually spread over the year so you will pay $7 each month. You will also have to pay a one time fee of $95. If you augument your credit limit at any time, you will have to pay $27 for each $100.00 or at the discretion of the credit card provider. All these charges will show on your first credit card statement. It is important to note that after all these charges, the credit limit you actually applied for will not be what you will have available to you.
To conclude, although a bad credit unsecured credit card may cost you more, will not need an upfront deposit . Either of these cards, will help you on on your credit repair journey as long as you are prompt with your repayments, but the unsecured card has an APR that's almost 3 - 5% lower. It is important to weigh the options and see which on suits your situation.
In the end, it is best to avoid bad credit at all, as it seems the system is such that such a you will always pay more than people with better credit score.
Ian Iowek is a Credit Repair Consultant||http://www.cheap-credit-cards.org||http://www.cheap-credit-cards.org/4-credit-card-application-refused.php||http://www.cheap-credit-cards.org/5-improve-your-credit-score.php||
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