My Insurance Insider and Finance Blog

Image via WikipediaWhatever you heard about the negative aspects of owing a credit card, you perhaps never get rid of it.You may blame yourself for getting them when you are unable to pay back the accumulated debts and getting constant reminders from credit card companies or threatening calls for a legal action.In spite of this, you can’t deny the practical advantage of owing a credit card, specially at the time of online purchases.

But if you use it properly with some precautions, you’ll probably never regret of owning them.You should always be looking for a perfect credit card that could fulfill your needs.

There are many types of credit cards out there in the market for consumers such as cards with bad credit records, bank secured or unsecured credit cards.Today I’ll talk about the bank secured credit card as I found it perhaps more suitable and reliable one because it can stop up your unnecessary spending habits and you never spend more money than you have  in your savings or checking account.

Typically, some banks require that you must put 100%-200% money in your deposit account. Sometimes banks offer incentives on this type of secured cards and many a times the deposit money could be reduced even up to 10% of your credit limit.

Bank secured credit cards work just like other conventional credit cards, although they use your bank account deposits as collateral security. If you aren’t able to pay your credit card bill on the due date, the bank will take the money out of your account.  Off course you must have that money in your account, otherwise you may be charged for defaulting.

Secured credit cards are also suitable for those who have a past record of bankruptcy or simply don’t qualify for a line of credit due to bad or negative credit history.Thus the secured credit cards show that you are able to pay your monthly dues and taking all necessary steps in rebuilding your damaged credit scores.  Over the time, if you are consistent in paying your bills on time, your bank may consider giving you an unsecured line of credit or a standard credit card without  any collateral security,if like so.

With your bank secured credit cards,you don’t need to worry about spending or monthly dues because the bank simply takes the money out of your account, in case you miss any payment.  But if you want to build up your spoiled credit records, you should take the opportunity of this great back up plan, and eventually should always pay your bill and never let this happen.

Here is a cause concern for you too. Just like other credit cards, bank secured credit cards do have some disadvantages, if you use the card irresponsibly.  Anytime if you miss paying your monthly bills(debts) on time, the bank can deduct extra money from your account, being the high interest charges and late fee on your due money. And if you defult paying some more monthly bills, bank could even cancel your secured credit card and you would be nowhere repairing your credit scores or with any credit card at all.

To be frank, one of my credit cards is a secured type , knowing that a certain amount of money would be deducted (debited) from my savings account, if I somehow miss the bus. I’m always advocating a secured credit card for the first time holder.I also recommend some points to be considered that I find out from my own experiences:

1. Always consider getting a bank secured credit card, especially when your are on a budget.

2. Try to limit the uses of credit cards to a minimal. Instead use your debit card for maximum purposes. It’ll put a stop on your unnecessary spending.

3.If possible use the credit card for online purchases only.Check the security aspect of that site.Whether it is VerifSign or SSL protected(for secured web site, address starts with https:// instead of http://) In case you need to pay your hotel or shopping bills by credit card, be careful to hand it over an authorized person. I have one instance, where a clever waiter duplicated the credit card by using a certain device(I can’t remind the name of that gadget)

4 .Pay your monthly credit card bill on time. It’ll the best to clear the monthly dues on your last month’s purchases before time.