You do have to deposit money into a savings account to carry a secured credit card, so why not just use the cash?
Because there are a few times in life when a credit card is better than cash.
The first reason is convenience.
Cash won’t help you make a purchase over the Internet. If you want to buy something you’ll have to get out of the house and travel to a store. And you may have to visit several stores to find an item you can find easily through an Internet search.
Then cash won’t help you put gasoline in your car if all that chasing around keeps you out late. You’ll have to wait until morning when the station is open. And of course, that search costs money because gasoline is high priced.
Cash also won’t let you call ahead to reserve a rental car or an airline ticket, and it won’t let you call the opera house and buy tickets for an upcoming concert.
Next is safety. When you carry a secured credit card you have the same safety features as any other credit card. If your card is lost or stolen you need only make a phone call to prevent someone else from using your money. Depending upon the card and the terms, you might be out $50 – but that’s a lot better than losing a few hundred.
And as you know, if you lose a wallet full of cash, it’s gone. There’s no one to call to get it back.
Of course, carrying a standard credit card is the best choice. But if you’ve had credit problems, that might not be possible – at least not for a cost that’s within reason.
And that brings us to the third reason to carry a secured credit card.
Careful use of a secured credit card will help you re-build your credit scores.
Even though you’ve deposited the cash in a savings account to secure your card, your use is reported to the credit bureaus, and has the same effect as a normal credit card when it comes to re-building your credit scores.
When you use no more than 30% of your available credit at any one time, and when you make your payment on time each and every month, your credit scores will begin inching up. Combined with on time payment of your other obligations, this wise use will speed your progress toward the day when you can carry an unsecured credit card at a reasonable interest rate.
CreditScoreQuick.com your resource for credit cards, credit reports and Credit News.
