Secured Cards

jlynn · 09-07-2006, 10:33 AM

Some are good, some are simply bad, some can be unsecured later, some can't. Let us know what you know!

centex · 09-07-2006, 11:11 AM

One of the things I found when I was trying to dig out from the ID-theft was that there are a lot of secured products out there. Some were offered by banks but not on their websites. Some were score-driven and others were simply an issue of you put your money down and you got a card.

Given that future issuers tend to look at limits, put the most into the secured card as you can manage. Let's face it...low-limit cards increase the number of tradelines, but they don't help as much with getting larger limits. There were secured offerings that would allow a limit of as much as $25K.

The key was to look at fees and APR. If you don't intend to revolve a balance, then APR is not a real significant issue. As a result, it made more sense for me to go with Fleet (which was in the merger process with BofA at the time) despite its higher APR (18% or something like that) than to go with National City. The difference, for me was that the Fleet card had no annual fee.

Also, find out in advance whether the card graduates to unsecured on its own or whether you have to reapply at some point in time. The re-application might not be a bad thing except that it kills the average age of the accounts...a factor in the FICO scoring. Remember...the whole point of this is to try and increase FICO, so age and credit limit are significant factors.

Other options to look at for secured cards are your local credit unions. They may or may not offer a traditional secured card, but they are usually going to have some options to work with. When you are credit-challenged, you will have a better chance when you can sit face to face with a decision maker...I would much rather do business with someone that I can see face to face and be more than a voice on the phone to go with a series of characters on a computer print-out. When the lender can see you face to face, they are more apt to use discretion in your favor. Who cares if the card says Podunk Credit Union as long as it has a Visa or MC logo on the card.

jlynn · 09-07-2006, 11:29 AM

There has always been some concern whether a card reports as "secured" on your credit report. I don't know if it is because other potential creditors look at it negatively, or if it truly has an effect on your FICO.

centex · 09-07-2006, 11:50 AM

I can confirm no impact on automated scoring. The only place the notation *might* be a factor is on a manual review. And if that comes into play, the secured card is easily explained...in which case, the larger the deposit, the more appealing it potentially becomes to the underwriter- after all, if you can plunk down a few grand on a secured card, you probably are in decent financial shape at present.

Hedwig · 09-07-2006, 05:41 PM

Another thing to look for is whether you can get credit for more than the deposit. Some cards will give you something like 150% of the amount of money you deposit.

My husband had a secured card with Cap One at one time. He got 1.5 or 2 times the money he put in. If you keep it paid and under credit limit, you'll get offers for like another $250 limit for $49 or something like that.

The only problem is that I believe Cap One won't unsecure, you have to close the card and apply for a new one.

Also, if you have a subprime card, you'll always be subprime until you get rid of that card. Close it and later open a new prime account--that seems to be the only way to get good deals with Cap One.

Samsam · 10-03-2006, 01:49 AM

BoA doesnt make you close and reopen. They have the secured then the 99/500 cards.

Unfortunately, theyre pretty picky even on their secureds.

Mark · 12-12-2006, 03:53 AM

My position on credit cards is: DON’T USE THEM. Credit cards are designed to make money for banks, not to be convenient for consumers. There’s a reason that credit card companies are making record profits. There’s a reason that banks are eager to offer consumers new credit cards. You have to question anything that a bank is eager to do for you; you can be sure it’s not in your best interest. But for some reason i had to apply for credit card so i choose secured credit card on

Quote:

[url]www.we have a link section for links. Please do not spam forums with links.

Now i use Orchard Bank Secured MasterCard with low APR low annual fee etc
But i don't know whether it is a best credit card offer.

*****************************************

Edited by Qtip

direred · 12-12-2006, 05:14 AM

National City: Max $2,500
Elan: Max $5,000
Bank of America: Max $10,000
Wells Fargo: Max $5,000

More on National City from my stickie:

National City Secured.

1) They're a prime bank.
2) Min deposit is $250; max is $2500. Takes about a month to get from time they cash your check and pull your credit.
3) Annual fee is $36 billed as $3/month.
4) Reports as unsecured to all three CRAs.
5) They do convert some people, however, you'd have to qualify for their regular card at time of conversion AND apparently they'll open this as a new tradeline. They are picky, though, so don't expect it unless your scores are above average (720) when you ask.
6) They won't approve someone actually in BK, but they do approve almost everyone else (I haven't heard of anyone being declined). This is in marked contrast to Wells Fargo and Bank of America, whose secured cards are fairly hard to get.

You have to call for an application. Phone # is 800-762-0974.