Mosby Group

Many people go through life without ever taking up credit card offers. While it might be tempting to avoid credit card offers altogether, some people fervently believe that using a credit card is one of the best ways to earn credit.

Secured Credit Card Basics
People who have bad or no credit may have a hard time acquiring a standard credit card. In these cases, it can often help to have a secured credit card. Secured credit cards do come with some restrictions, but they can improve your credit standing.

Secured credit cards do come with some associated costs. You’ll need to pay annual fees, processing fees, and sometimes even application fees. Always be sure you know all of the fees before you apply for the card. Don’t go for cards that have prohibitively high fees.

You’re required to make a deposit into an account in order to use a secured credit card. The deposit essentially acts as your ‘security.’

How is My Deposit Handled?
Depending on your creditor’s policies, your deposit will either be used in cases of severe delinquency or in the case of late payments.

Many credit card companies place income and age restrictions on secured credit cards. Sometimes, secured credit card lenders require cardholders to deposit additional funds into a checking or savings account that is associated with the secured card’s bank.

Credit Limits, APR, and Unsecured Cards
Remember that you will have a credit limit, which will usually be equal to or slightly greater than your deposit.
Get a card with a low APR, because you don’t want to have to pay high interest rates if you carry balances past the grace period.

Also, if you manage to successfully manage your secured card for a long time, then you may have the option to turn it into an unsecured card, which will strongly help your credit score.

Here, we’re going to clarify several of the terms used in credit card offers. Much of the vocabulary used in credit card offers can be intimidating, but it doesn’t have to be. Here’s a handy guide to these words and what they mean.
APR – APR stands for Annual Percentage Rate, which represents the interest rate levied onto a balance that remains on a bill after a grace period.

Sometimes, credit card companies will set different APRs for different balances. For example, a cash advance will incur a higher APR than a standard purchase. If you’re late in making payments, your APR might increase. Fixed APRs stay at the same rate, and can only change if the creditor notifies the customer.

Variable APRs can fluctuate all the time.
Credit Limit – The amount you can charge on the card has a maximum, and this is the credit limit. Don’t go over this amount, or you might have to pay an over-the-limit fee.

Balance – This term represents the total expenses that you’ve accrued on the credit card. Add up all purchases, finance charges, and fees. Good credit cardholders will always keep this number lower than the credit limit.

Finance Charge – This charge represents the total cost of keeping a revolving balance. The balance and APR are used to calculate the finance charge.

Grace Period – The grace period is the time you are allotted to pay your balance without incurring a penalty. You should always strive to pay your bills during the grace period.

Familiarize yourself with these terms before your get a credit card. You’ll be an educated consumer, and you’ll be better equipped to establish a good line of credit.