Non-interest bearing savings account.

The money is deposited and then does nothing more but sit there, waiting for you. This is not the best secured credit card deal. You won’t earn anything, but then again, you won’t dip into it either. Capital One offers such a secured card.

The best secured credit card goes into an interest-bearing savings account.

More common is that the account does offer a little reward, and the deposit earns interest as it would in a typical savings or money market account. Republic Bank, for instance, is one of the many that offers this opportunity for its best secured credit card. Rates are low – less than one percent – and they fluctuate with the market, but it’s something.

Account tied to a Certificate of Deposit.

Some issuers, such as USAA, open a Certificate of Deposit (CD) when you get a secured card with them. It’s safe and the money is guaranteed to have some growth. The term is for two years, and rates are typically a smidgen over one percent. Still not much, but better than nothing.

• One, with bankruptcy credit cards that are secured qualification is fairly easy.

  Typically, all you need is a job and perhaps a couple of hundred dollars to put down as collateral. This way the issuer can feel safe that if you charge but don’t pay, they can just take the money owed out of the funds held in the deposit account. No revenue wasted on phone calls and letters, having to sue you for damages or selling the account for less than it’s worth to a collection agency. Sometimes, as little as $50 can get you bankruptcy credit cards that are secured!

• Two, once you have the card, you can use it to your advantage.

  Sure, you may have horrible credit now because of all that past activity, but with the secured credit card, you will be able to add fresh and wonderful information to your credit reports! All you have to do is charge a small amount every month and then pay it on time and in full. As long as the issuer is a subscriber to the three major credit bureaus (always check that they are before applying), your credit rating will improve. After twelve months, you’ll be surprised by how your credit score shoots up with that simple set of actions.

You do have to be dedicated to using the card right, though. Pay attention. Set up automatic bill pay with your bank and monitor your progress.

After that, add another secured card to your wallet so your scores will improve faster. “Types of credit in use”is a FICO scoring factor, and that gauges the number and variety of credit instruments you have. A few in use is helpful. More, your credit report won’t show that they are any different from unsecured accounts, so you’re not penalized for having to put down collateral.

A Few Tips to Improve Your Credit

If you have any recent but unpaid collection accounts, pay them off now. The newest version of FICO won’t factor them in, as long as they’re satisfied. Get back on track with payments on all other liabilities – such as car and student loans – if you have them, too.

Then wait. Most negative information drops off a credit report after seven years (Chapter 7 bankruptcy remains for ten years) but as the bad marks age and the good ones are constantly appearing, you’ll see incredible changes. Eventually all that will show up on your credit report and be factored into your scores will be what you’re doing with active accounts and closed ones in positive standing.

Use your secured credit card well and you will soon have the entire world of credit issuers at your doorstep.

Here are the warning signs of a scam secured card:

Bogus qualification claims

The promise that anyone, no matter how ruined their credit, how little they earn, or already owe, can qualify is a sure sign that something is amiss. The truth is that lenders that issue good secured credit card maintain a set of standards. At the very least you’ll need a job that provides you with sufficient income to repay what you may borrow.

Secured business credit card excessive fees

Read the terms of the agreement carefully, checking on just how much you’ll have to pay upfront for the secured business credit card. In addition to the (normal) annual fee, the creditor may tack on fees just to apply for the card or to process the paperwork. They may insist that you also buy an expensive insurance product, and some even charge monthly maintenance fees. With card like these, you could be deeply in debt before you ever make a purchase!

Sketchy, incomplete and misleading ads

These are the type of secured business credit card offers that may pop op online, appear in your spam folder, or be posted as paper flyers on telephone poles and laundromats, reading “Bad credit? No problem! Call today for instant qualification.”Never, ever pursue these cards. They could be nothing but fraudulent operations. If the phone number begins with 900, it may be not be toll-free, so when you call to ask about the account you could be charged over $50 just to talk to someone.

Banks of what??

With so many respected lenders offering a secured business credit card or personal card these days, you really don’t need to resort to a mystery bank. Institutions that are so new they don’t have a reputation and those without a website (or do but it looks odd) should be avoided at all costs. Complete the application with your personal and private information and you just may be opening yourself up to identity theft.

In short, when shopping for a secured credit card, always be on the lookout for of scams.

Forced savings

Everyone knows that having at least some cash tucked away that you can’t access easily is smart. It’s just not always easy to do. A secured card often requires deposits of a couple of hundred dollars on up to thousands. Since you can’t get at the money unless you close the account, those funds are protected against temptation. You may be able to open a card with less, but by depositing more you get a larger credit limit and more savings!

(Relatively) easy acceptance standards

Though to qualify for secured credit cards you do need to have an income that can support the credit line, your credit rating needn’t be stellar. Because the money acts as a guarantee, the issuer loosens their qualification requirements to include those with bad or thin credit files.

Credit building or rebuilding

The moment you get the secured credit card and start to use it the activity for that account shows up on your consumer credit reports (presuming they report, so check first). The account is factored into your credit scores, and since recent data on reports matter more than that which is old, you can change your past with fresh, perfect payments.

Forge a relationship with a good lender

If you get the secured credit card from a major credit issuer, you will begin to form a positive association with them. Treat this account well and you may be able to obtain a low rate mortgage, vehicle, personal, and business loans with them later.

Secured Credit Cards provide Independence.

One of the ways to get your foot in the charging door is to ask someone with good credit to cosign for you, or for you to jump on their existing account as an authorized user. That can be a fine arrangement, but its far better to stand on your own two financial feet. A secured credit card in just your name allows you to be the sole owner of the account. Autonomy is a beautiful thing.

Conversion to unsecured cards

After you prove your credit prowess with the secured credit card, the issuer may allow you to convert it to one that’s unsecured. For example, the Citi Secured MasterCard advertises that after 18 months of responsible use, you’ll be eligible for a trade up to an unsecured credit card and you’ll get your deposit back.

Clearly you’re not out of luck if you don’t already have fantastic credit. Money, as they say, talks.

Here are some facts about secured cards that you should know if you wonder about “my first credit card” and what to know when considering secure credit cards:

• Is this a good choice for my first credit card?
  Yes. Secured cards are easy to get even if you have no credit.
• The deposit is often held in a separate, interest bearing account.
  As long as you treat the account right, you can count on the money held safely by the issuer. It will be there for you as savings!
• The issuer can take what’s due if you don’t pay.
  So what happens if you run up a balance but don’t pay? After about three or four months, the lender will take action. They will dip into the funds held in reserve to claim what’s due.
• A high credit score isn’t necessary.
  Issuers do analyze credit reports and scores when deciding whether or not to grant the credit line, but qualification standards for secured cards are generally far looser than they are for most unsecured cards. Many of these cards are specifically for people with poor to very bad credit ratings.
• A wide variety of banks, credit unions, and credit card companies offer secured cards.
  Don’t limit your search to a single creditor or think you need to visit the sub-prime world. Many of the big companies, such as Citi, Capital One, and Discover, issue them.
• The credit lines may be less than, equal to, or larger than the deposit.
  When you read the terms on the application, you should see the amount of the deposit and the credit limit. Typical security deposits range from a $50 to $5,000 such as for the First National Bank Secured Visa.
• Most come with annual fees.
  For example the Capital One Secured MasterCard’s annual fee is $29, and the USAA Secured Platinum American Express Card is $35.
• Beware excess costs.
  An insurance product, application charge, or processing fee may be included in the cost of the card, which is then subtracted from the credit line. Avoid these types of secured cards as they’ll put you behind before ever making a purchase!
• APRs tend to be high.
  Because secured cards are designed for people with damaged or not yet established credit, banks take a risk even with the deposit. Therefore the interest rates will reflect that risk level. They also know that most people will accept the higher rate, just to have a card. Still, not all are in the 20s and above. Some, like the premiere Secured Visa Classic are a decent 13.99 percent.
• Most, but not all, report to the credit bureaus.
  To build credit, your positive activity should be reported. Before applying, check to see that the secured card you want will show up on your consumer credit reports.

They really are fascinating products especially if you want to know about my first credit card.