Which is better, a secured credit card or an unsecured card with excessive fees?
by Author on Wednesday, June 16th, 2010 | 3 Comments
I am trying to repair credit. I have enough money to establish a secure credit card without impacting my budget too much. I can also qualify (barely) for an unsecured card with excessive fees (billed to my available credit upon issue). So, I guess my question is...is there any difference in credit reporting between the two options? This will help me decide which route to go. I plan to use the card incidentally, only to show usage and increase my credit score.
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I work in the credit card industry as a credit analyst manually reviewing applications for credit and credit line increases, and combined with my own personal experiences, I can tell you firsthand that the best option would be a secured card, hands down. The reason why is that with a secured card, you have a chance at getting the deposit back at some point in time, so really you don’t lose anything, as opposed to paying fees upfront that you’ll never see again. Plus, you can do a lot more with the deposit, such as adding to it to increase the limit, which helps your score, and start up an emergency fund once the card converts to a regular card and the deposit’s given back since it wouldn’t be needed anymore.
Also, major banks like Bank of America, USBank, Wells Fargo, HSBC, offer secured cards and they are more reputable than those unsecured fee-heavy cards.
I posted several links to some secured cards that I feel will help you the most
David A
I would go with the secured credit card because I see the advantage of saving the high fees and also the security deposits you make will likely earn you interest.
I don’t believe it makes a difference in the credit reporting between the two options. It’s how you handle the spending and payments of each that counts with the credit reporting.
I would go with an unsecured credit card. You can take the money you were going to use for a secured card and deposit it in a high interest savings account like HSBC to start building an emergency fund.
Not all bad credit credit cards have ridiculous fees. Check out http://www.unsecuredcreditcardforbadcredit.net. They have rankings of all the popular bad credit credit cards. Based on the information they provided, I applied and was accepted for the Orchard Bank Classic MasterCard.
Good luck