Is Secured Credit Card Really Safe?
I was talking to two new friends whom I met during the World Internet Summit 2007. I was curious if their customers paid via PayPal or credit cards. The answer was a good mix but that’s not the story here. Over coffee, they enlightened me on the importance of “credit rating” and how a poor credit history would rob a man from holding a normal (that is, an unsecured) credit card if he resides in the USA.
Credit cards are a fact of life.Welike the convenience of use now and pay later whether in an online or offline environment. We need one to book hotel rooms, make plane reservation, or call Hertz to rent a car. Responsible use of a credit card builds a good credit rating. So if one default on payment, he loses his credibility and in turn made him less mortgage-worthy or loan-worthy.
People who had a poor credit history may not qualify for a regular credit card. The only way for them to establish or re-establish credit is via a secured credit card. A secured card requires a cash collateral deposit that becomes the credit line for that account. In another word, you can charge up to $500 if you placed $500 into your account. Naturally, you will need to pay for such service. There is an annual fee and the interest rates are much higher than regular, unsecured cards. I guess this is the reason why Howard Dvorkin, president of Consolidated Credit Counseling Services Inc. calls secured credit cards “a Clint Eastwood movie — the good, the bad and the ugly. Some are good. They have low fees and treat customers as customers instead of as cattle. The bad ones take advantage and extort the clients because of their situations. Then there’s the ugly, which are completely despicable. They’ll give you the card, but you have to buy this insurance policy for $55 a month.” This means shopping around for the good guy is essential.
Anyone considering a secured card should ensure the issuer reports to a credit bureau. Credit history is maintained by companies called credit bureaus. They collect information reported to them by banks, mortgage companies, department stores, and other creditors. If your issuer does not report to such a bureau, that card would not assist you restore your credit history. Such issuer will be the baddie. This verification would help you to differentiate scams from the legitimate issuers.
A google search found 2.48 million results on the subject and here is link to one which I found to have a wealth of useful articles and information on Secured Credit Cards. Take a look if you like to know more.
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[tags]secured credit cards, credit ratings[/tags]