Top Reasons for Getting a Secured Credit Card with Rewards

If you have bad credit or you are starting to build your credit history, a secured card may be your best option for now. This type of credit card acts like a conventional card though it requires an initial deposit. There is also a low credit limit and they often come with high interest rates. Still, these cards work great especially if you are trying to reestablish your credit. Now there’s even more good news – you can earn rewards with a secured credit card.

Perhaps this may not be your first choice, but here are the top reasons why a secured credit card is a good selection if you can’t get approved for a traditional card:

A secured card helps build your credit.

One of the biggest problems of young adults and even adults today is that they cannot get an approval for their card application. This is because they have no history or at least a good rating to begin with. When you apply for a secured card, you do not need a high credit score since a credit background check is not required. Most applicants get approved quickly as soon as they apply for this card. As you can see, the process is smooth, fast, and easy.

You can get rewards.

Since this is a secured card with rewards, you naturally get incentives for signing up for the card and for using it. The rewards program may not be as stellar as the traditional cards, but since you cannot qualify for an unsecured rewards card, this is much better than not having one at all. Many major banks and card issuers have credit cards that let you earn miles or points during your first purchase and even bonuses when you renew your card after the first year.

You can’t spend more than you can afford.

As mentioned, this card requires that you make a deposit first before you can use the plastic. The deposit will determine how much your credit limit will be. Thus, you cannot go beyond the amount that serves as a bond. This saves you both cash and the headache since you can stay out of debt.

You can earn interest.

There are a number of secured cards today that place the deposit you have made into a savings account that holds interest. Instead of fearing the interest rate as you would when you have an unsecured card, you might actually like the interest here. Depending on the rate, you may earn extra money with your credit card.

Your good behavior is reported to credit bureaus.

Just like traditional cards, but not prepaid cards, your payment behavior will be reported to Experian, TransUnion, and Equifax.

Get rewarded for being a responsible cardholder.

If you pay on time and do not carry balances each month, you may become eligible for cards that reward dutiful customers like you. You may be able to receive bonus credits, cash, or gift items. If you maintain your good attitude, you can qualify for a credit limit increase. Soon enough, you will be allowed to switch from a secured credit card to an unsecured card.