I have received several questions about secured credit cards, which can be a great way to build up credit if you don’t already have it.
Secured credit cards come in all flavors. There are legit ones and there are really crummy ones. I usually find that credit unions are among the best places to get a legitimate secured card.
The basic way it works is you put money on deposit with a credit union (or bank) and they use that as collateral for the card. You can only charge up as much as you have on deposit. This allows you to build a credit history where you previously had none.
Here are three things to look for in selecting a secured card:
● A reasonable annual fee
● No application fee
● After 12-18 months of paying on time, be sure the issuer will upgrade you to a traditional credit card.
Pay it off
There are several steps you should take to get out of credit card debt. Paying off several thousand dollars or more in credit card debt takes time, so you must discipline yourself. I usually find setting a goal of paying down debt in 60 months or less works best for people. Anything greater than 60 months and people tend to lose their focus.
If you have several cards, your first goal is to pay off the card with the highest interest rate. Pay more money toward that credit card and slightly less toward the other cards, until the card with highest-interest debt has a zero balance. Then you move to the next card, and so on. Resist the temptation to close the account when it’s at a zero balance. Doing so will only hurt your credit score.
For help during the process, contact the
or call
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Consumer expert Clark Howard's column appears here each Thursday in conjunction with Deal Spotter, a weekly print section in The Atlanta Journal-Constitution. Find more answers to your consumer questions at Clark's website. And get more savings tips from Clark's previous blog posts.
-- Clark Howard -- Save More, Spend Less, Avoid Rip-offs -- for the Atlanta Bargain Hunter blog
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