Interest Rate Alone Doesn’t Make The Best Secured Credit Card

Ah, the beauty of the best secured credit card. Whether you’re new to credit or need to rebuild, these products are here for you. What’s more, if you use them well and get the right one, you can even make a little money from the deal.

All secured credit cards are guaranteed by a cash deposit that you provide to the lender. Where does that money go? Into a separate account. What kind that may be depends on the type of card.

Find out whether or not the money you leave with them for the duration of the account will earn anything, and if it does, what that may be. The rate alone should not influence you too much, since it will never be more than what you’d make on other investments, but why walk away from free money if you don’t have to? A secured credit card with few fees but no interest accumulation on the deposit is almost always the better choice against one that offers some earning potential but costs a lot to get and keep. So consider interest and fees when choosing the best secured credit card.

After you do get the card of your dreams, make sure it doesn’t turn into a nightmare. Keep the balance at zero or very low. Not only does owing more than 30 percent of your balance hurt your credit score, these accounts tend to have higher than average APRs. Large, revolving debt will balloon with expensive finance fees, thus eating into any profit you may enjoy, and fast. Pay on time, too. Many credit card issuers will hike up already high APRs even further if you’re late.

In short, when shopping for a secured credit card read over all the terms of the account, paying close attention to the interest you may earn as well as the fees you could owe. Then, manage it like you would all other types of credit accounts. Perfectly.