Best Secured Credit Cards with Low Deposit Requirements – December 2017

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Secured credit cards are used as a tool to build credit history from scratch or put positive information on a credit report after negative incidents such as bankruptcy, missed debt payments or accounts in collections. By feeding positive information into a credit report, you can improve a credit score, which is essential for getting the best financial products on the market.

In order to be eligible for a secured credit card, you must provide a minimum deposit. This deposit typically serves as your line of available credit, but in same cases your line of credit may be higher. Plenty of secured cards require rather hefty minimum deposits of $300 or more, which may be prohibitive for many Americans living paycheck-to-paycheck.

Fortunately, alternatives to the high deposits exist. We’ve pulled together a list of the best secured cards that require a deposit and/or credit union membership fee of $200 or less.

$200 minimum deposit – Discover it® Secured Card - No Annual Fee

Discover it® Secured Card - No Annual Fee Discover offers a secured credit card with a minimum deposit of $200. This is our favorite secured credit card for a number of reasons. There is no annual fee. You can earn cash back. And our favorite feature is the automated monthly review that starts at month eight. Discover will start automatic monthly reviews at month 8. If you qualify, you could be transitioned to an account with no security deposit. Even better, you could potentially be eligible for a bigger credit limit. This feature really sets Discover apart from the competition – and your goal should be to get back your deposit as quickly as possible through responsible credit behavior.

No annual fee: There is no annual fee on this card.

Bankruptcy? No problem: If you have filed Chapter 7 bankruptcy in the past, you can still qualify for this card. It is a great way for people to rehabilitate their credit.

Earn cash back: Most secured credit cards do not offer any rewards. With the Discover it Secured Card, you have the opportunity to earn cash back while earning rewards. You can earn 2% at restaurants and gas stations (on up to $1,000 of spend each quarter). Plus, get 1% cash back on all your other purchases. Earning cash back is not the primary reason to select a secured credit card, but it is a nice option to have available.

Free FICO Credit Score: Discover will provide you with a copy of your official FICO credit score.

APPLY NOW Secured

on Discover’s secure website

$49, $99, or $200 – Capital One® Secured Mastercard®

Capital One® Secured Mastercard® CapitalOne offers a Secured MasterCard with a minimum deposit under $200. Our preferred credit card is from Discover. However, if you don’t have $200, you might want to consider this offer from Capital One.

  • $49 minimum deposit for a $200 line of credit, based on creditworthiness
  • No annual fee
  • 24.99% variable APR

Fine Print of the Capital One Secured MasterCard

The minimum required deposit can be as high as $200 based on your creditworthiness. So while this card could be only $49 for some, others might be asked to fork over $200.

Ensure that you don’t carry a balance as the secured card comes with a 24.99% variable APR, in the event Capital One raises its prime rate.

APPLY NOW Secured

on Capital One’s secure website

$100 minimum deposit – Visa Classic Secured by Justice FCU

Visa Classic Secured Card from Justice FCU You can join Justice FCU if you are an employee or retiree of the Department of Homeland Security, Department of Justice, or of another qualifying group, or an eligible family member. If that doesn’t apply, don’t fret. Anyone can join JFCU by first becoming a member of an eligible JFCU association like the National Sheriff’s Association, charges a $38 membership fee. It only costs $5 for eligible individuals to join JFCU, so that would raise the total cost of membership to $43.

  • Minimum deposit of $100
  • No annual fee
  • Credit limits range from $100 to 110% of pledged shares.
  • 16.90% non-variable APR.

APPLY NOW Secured

on Justice Federal’s secure website

$200 – Rate Advantage Secured Visa by Coastal FCU

Rate Advantage Secured Visa by Coastal FCU Anyone can join Coastal Federal Credit Union. You can either work for an eligible business partner, have a family connection to a current member or be a member of North Carolina Sustainable Energy Association or The North Carolina Consumers Council. Anyone can join NCSEA or NCCC with an $18 membership fee deducted from your initial deposit to a savings account opened with CFCU.

The minimum deposit required to join is $100 in a primary savings account.

  • $100 minimum deposit
  • No annual fee
  • 16.25% APR variable

Total Cost:

  • Non-member: $200
  • Member: $100

APPLY NOW Secured

on Coastal Federal Credit Union’s secure website

Best Strategy for Rebuilding Credit

The strategy for building a strong credit score with a secured card is simple. Make one small purchase each month ($10 or less), wait for your statement to come in, pay your bill on time and in full and then repeat the next month. By making just small purchases, you’ll be using a very low amount of your overall credit limit (also called utilization), which helps drive your credit score up faster because it shows you’re responsible.

Keep an Eye on Your Credit Score and Credit Report

Once you’re in the process of building or rebuilding your credit, it helps to have a benchmark. The easiest way will be to establish a profile with one of the free credit score websites: Credit Sesame, Quizzle, Credit Karma. Do a monthly check in with your credit score to see how it’s improving.

In addition, you should also keep tabs on your credit report by downloading the report from each of the three bureaus. By law, you’re entitled to one free report from each bureau per year. You can download them all at once or space them out throughout the year. Go to annualcreditreport.com to download your free reports. Monitoring your reports will ensure all the information there is accurate and alert you about anything that may be damaging to your score, like an item in collections or reported missed payments.

A Word to the Wise

Never carry a balance on your secured card. The point of a secured card is to be building (or rebuilding) your credit history. Make one small purchase a month and pay it off on time and in full. Follow those two steps and you’ll see your credit score start to raise quickly.

Find other secured card options on our secured card comparison table.

The post Best Secured Credit Cards with Low Deposit Requirements – December 2017 appeared first on MagnifyMoney.

The new Discover it Secured Card wins: No fee, Free FICO and up to 2% cash back

Discover it Secured Credit Card Review

Updated August 1, 2017

Discover has just launched a new product, the Discover it® Secured Card – No Annual Fee . Secured credit cards are an excellent way to build your credit with responsible use. With this product launch, Discover has created one of the best secured cards on the market. You do need to make a security deposit of $200 or more to establish your credit line (up to the amount that Discover can approve). If you are unable to afford the $200 deposit, you should consider the Capital One Secured MasterCard, which only requires a $49 deposit. But if you can afford the $200 deposit, this new card is clearly one of the best no fee secured credit cards available.

Learn More

Key Product Features

Here are the key product features:

No annual fee: There is no annual fee on this card. You do need to make a security deposit of at least $200. If you want a bigger limit, you will have to make a bigger deposit.

Automatic monthly reviews starting at 8 months: After just eight months, Discover will start monthly automatic reviews of your account to see if you can be transitioned to an account with no security deposit. With an 8-month review, Discover has one of the best upgrade policies in the market.

Earn cash back: Most secured credit cards do not offer any rewards. With Discover it, you have the opportunity to earn cash back while earning rewards. You can earn 2% at restaurants and gas stations (on up to $1,000 of combined purchases each quarter). Plus, get 1% cash back on all your other purchases. Earning cash back is not the primary reason to select a secured credit card, but it is a nice option to have available.

Free FICO Credit Score: Discover will provide you with a copy of your official FICO credit score. If you use a secured credit card properly, you should expect to see your score increase over time. And by providing your FICO score for free, you will be able to watch your improvement.

Monitor Your Social Security Number: Discover will monitor your Social Security Number and alert you if they find your Social Security Number on any of thousands of risky websites. Activate for FREE. This is a great feature that will help alert you of possible fraud.

You can learn more and apply by clicking on the link below:

LearnMore

How to Use a Secured Credit Card

A secured credit card is an excellent way to build or rebuild your credit history. In order to gain the most number of points in the shortest amount of time, you need to have a strategy. We recommend the following strategy (and describe how it helped someone build an excellent score in one year here):

  1. Avoid spending more than 10% – 15% of your available credit limit. Yes, that means if your credit limit is only $200, you should not spend more than $20 – $30 a month. Utilization is a very important part of your credit score. To calculate utilization, divide your statement balance by your available credit. People with the best credit scores have utilization well below 20%. Because you want to build an excellent credit score, you should keep your utilization low.
  2. Pay your statement balance on time and in full every month. To ensure your payments are made on time every month, you should consider automating the monthly payments. At the Discover website, you can sign up to have your monthly payment debited automatically from your checking account.
  3. Just continue to repeat Step #1 and Step #2. Your credit score should improve over time, which will help you qualify for a standard credit card.

If you have less than perfect credit and need to borrow money, you should consider shopping for a personal loan.

Who is Eligible to Apply?

According to disclosures on the Discover website, you are eligible to apply if:

  • You are at least 18 years old.
  • You have a Social Security Number.
  • You have an address in the United States.
  • You have a bank account in the United States. Note: You will need to provide your routing number and account number when you apply. If your account is overdrawn, it is highly unlikely that you will be approved.

Your credit history will be reviewed, and not all applications will be approved. The card is best for those with no credit, or scores of 670 or less.

The Application Process

You can apply online and Discover usually provides a decision instantly. You will need to make your security deposit as part of the application, which is why Discover asks for the routing number and account number of your bank.

Please remember that when you apply for the secured credit card, you will have an inquiry on your credit report just like an application for a normal credit card.

Alternate Secured Credit Cards

Discover it has one of the strongest offerings in the market. However, it might not be right for everyone. Here are some other good options.

If you cannot afford the $200 minimum deposit, you should consider the Capital One Secured MasterCard. There is no annual fee and a minimum deposit of $49. You will also be able to receive your FICO score for free. Capital One is known for accepting people with more adverse credit histories. So, if you are rejected by Discover, you might want to consider trying Capital One instead.

Capital One Secured MasterCard

Go to site

You should also consider a secured credit card from your local credit union. MagnifyMoney has a list of some of the best no fee secured credit cards offered by credit unions here.

Build Your Score, Not Your Balance

Secured credit cards are a great way to build your credit score. And, with this product launch, Discover has created an excellent tool. Just make sure you don’t use your credit card to build a balance and borrow money. Keep your balance well below 20% of your available credit, and pay your statement balance on time and in full every month. If you do that, you should start to see real improvement in your score.

The post The new Discover it Secured Card wins: No fee, Free FICO and up to 2% cash back appeared first on MagnifyMoney.

7 Credit Card Tips for Soon-to-Be College Grads

A credit card is one of the best ways to start building credit. Here's a plastic primer for soon-to-be college grads.

We get it, soon-to-be-grad, you’re busy. Finals need to be taken; dorm rooms need to be cleared out. Jobs need to be procured — as does your very first apartment. But amid all these big changes, you’ll also want to make time for some good old fashioned financial literacy. After all, money management is critical to your success in the so-called real world. And, believe it or not, having a credit card can help your overall financial health. Of course, that’s only if you use that little piece of plastic responsibly, so, to help you come out ahead, here are 7 credit card tips for soon-to-be college grads.

1. Get One

Sure, there are plenty of reasons to be wary of plastic. But a credit card is one of the best ways to start building credit — and you’ll need a solid credit score when it comes time to get an affordable auto loan, mortgage, insurance policy or more. If you don’t have a credit card already, you’ll probably need to look into secured credit cards, which require an upfront deposit that serves as your credit limit and are designed specifically for people with thin or bad credit. If you were using plastic while in school, you may be eligible for an unsecured card with better terms and conditions. Of course, that’ll come down to what your credit looks like already. (You can see where you stand by viewing two of your credit scores for free on Credit.com.)

2. Pay Your Bills on Time …

The number one rule of credit cards? Pay your bills on-time each and every month. If you don’t, you’ll likely be hit with a late fee, face a penalty annual percentage rate (APR) and damage your credit — seriously. A first missed payment can cause a score to drop 100 points or more.

3. … & in Full Each Month

Or, at the very least, keep the total amount of debt you’re carrying on the card below at least 30% and ideally 10% of your total available credit limit. Any balance over that could hurt your credit utilization rate, which is the second most important factor among credit scores.

4. Monitor Your Statements

Do it even if you’ve signed up for auto-pay, because fraud, unfortunately, can occur at any time. Plus, you’ll want to be sure your balances aren’t burgeoning out of control. Check statements every day or at least once a week. Make small payments if those balances are starting to climb too high and be sure to report any suspicious activity your spot right away to your issuer.

5. Upgrade When You Can …

The better secured credit cards on the market (go here to check those out) usually provide cardholders with automatic reviews after 6 to 12 months of use that’ll determine whether they can get their deposit back and possibly receive a credit limit increase. Make a note of when you’ll be eligible for that type of upgrade and keep an eye on your credit as you use your card. You may be able to build a score solid enough to qualify for not just an unsecured credit card but a rewards or low-interest piece of plastic.

6.  … But Resist the Urge to Churn

Be prepared to encounter big signup bonuses as you shop around for new plastic. (Example: Earn $150 when you spend $3,000 or more in your first three months as an accountholder.) But refrain from applying for every offer you see. Yes, an extra $150 or a boatload of bonus miles are nice, but too many new credit inquiries (which are generated each time you fill out a credit card application) can damage your credit score and make it harder to qualify for important financing down the line.

7. Know When to Stop Charging

If your spending starts to get out of control, put your card on ice. Literally, if you have to. (That’s actually a better bet than formally closing the card, which can hurt your credit score, though you can do that, too, if absolutely necessary.) Next, come up with a plan to pay down those debts. Rework your budget to come up with some extra dollars you can put toward your balance and, if you’re carrying debt on multiple cards, prioritize payments. Make the minimum payment on all your cards but put the most money toward the balance with the highest APR (which can lower the total cost of your debt.) Alternately, you can pay off the smallest balance first, which could keep you motivated as you work to get back into the black. You can find more strategies for paying down credit card debt right here.

Looking to do some more financial planning pre-diploma? We’ve got 50 money moves you should make before graduation

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The post 7 Credit Card Tips for Soon-to-Be College Grads appeared first on Credit.com.

Got the Worst Credit? These Cards Can Help You Rebuild It

Sounds counterintuitive, we know, but a new credit card can help you re-establish your payment history. Just use it wisely.

Chances are, your credit isn’t actually the worst. According to data furnished to Credit.com by TransUnion, only a very tiny portion of the U.S.’s scoreable population has the lowest VantageScore possible. Of course, escaping the dreaded 300 won’t get your credit out of the woods. Any score below 600 is considered, well, bad, and even a score in the 650 to 699 range will cost you in interest.

Still, there’s no need to despair: Nothing lasts forever, including a terrible credit score. You’ve just got to take steps to rebuild it. Paying down high balances, shoring up delinquencies, paying collection accounts and disputing errors on your credit report are great places to start. (The further you get from 300, the better. You can track your progress using Credit.com’s free credit report summary.)

After that, consider getting a new credit card. It sounds counterintuitive, we know, but that plastic can be instrumental when it comes to reestablishing a solid payment history. Just be sure to pay all your bills on time and keep balances as low as possible.

Here are five cards designed to help people with bad credit rebuild their scores. (See card agreements for full terms and conditions.)

1. OpenSky Secured Visa Credit Card

Annual Fee: $35

Purchase Annual Percentage Rate (APR): Variable 18.14%

Why It’s a Good Option: Yes, secured credit cards are designed for people with bad credit, but most still require a credit check, and there’s no guarantee you’ll be approved. The OpenSky Secured Visa Credit Card foregoes pulling your credit and doesn’t require a checking account either, so if your finances are really damaged, you may want to take up their offer. OpenSky reports to all three credit bureaus, so you’re covered there. And there’s a wide range for a security deposit: You can put down as little as $200 and up to $3,000.

Beyond that, the terms of the card are decent, especially given that there’s no credit check. (There are certainly secured credit cards out there touting higher APRs and annual fees.) One drawback worth mentioning: There’s no built-in way to upgrade to an unsecured credit card, so you’ll have to improve your scores and apply elsewhere.

2. Discover it Secured

Annual Fee: $0

Purchase APR: Variable 23.74%

Why It’s a Good Option: Back in Dec. 2016, Discover announced that Chapter 7 bankruptcy would no longer automatically disqualify Discover it Secured applicants, so someone with that big blemish on their credit report could conceivably get approved. That’s great news for people with bad credit, because this card is pretty tops, as far as secured credit cards go.

There’s no annual fee, account reviews begin at seven months to determine whether to refund your deposit (a minimum of $200 is required to open an account), and there’s even a rewards program. Cardholders earn 2% cash back at restaurants and gas stations on up to $1,000 in combined purchases each quarter, and 1% cash back on everything else. Plus, Discover is currently matching all the cash back you earn at the end of your first year.

Other Big Perks: Discover reports to all three credit bureaus, waives the late fee on your first missed payment and won’t impose a penalty APR if you miss a bill. Just be sure to pay your balances off in full: That APR is on the high side and will quickly negate any rewards you do earn.

3. First Progress Platinum Select MasterCard Secured Credit Card

Annual Fee: $39

Purchase APR: Variable 14.99%

Why it’s a Good Option: There’s no credit history or minimum credit score required for approval — so long as you don’t have a pending bankruptcy. First Progress reports to all three major credit bureaus, offers a flexible deposit range ($200 to $3,000) and features a reasonable annual fee and low APR. Again, the potential drawbacks are that you don’t have a built-in option to upgrade and the card isn’t currently available in Arkansas, Iowa, New York or Wisconsin.

4. primor Secured Visa Gold Card

Annual Fee: $49

Purchase APR: Fixed 9.99%

Why It’s a Good Option: This card touts guaranteed approval so long as your monthly income exceeds your monthly expenses by $100 or more. Plus, while that $49 annual fee can be bested, you’ll be hard-pressed to find a secured credit card with an APR lower than primor’s. There’s no penalty APR either, though you’ll still want to pay your bills on time and ideally in full. Your card use will be reported to all three credit bureaus, and you can put down a deposit of $200 to $5,000. There are no built-in upgrades with an unsecured credit card, however.

5. CreditOne Bank Visa

Annual Fee: $0 to $75, the first year; $0 to $99 thereafter, based on your credit

Purchase APR: Variable 15.90% to 24.40%

Why It’s a Good Option: OK, if you’ve got really bad credit, you’re probably going to pay a high annual fee and receive a high APR with the CreditOne Bank Visa. But it’s an unsecured credit card, meaning you won’t have to put down a deposit that serves as your credit limit. Plus, it’ll let you pre-qualify without incurring an inquiry (which would damage your already-hurt credit score), so it’s worth considering if you don’t want to go the secured-credit-card route. There are also rewards — 1% cash back on eligible purchases, including gas, groceries, mobile phone, internet, cable and satellite TV services. Just be extra careful about paying your balances off in full, and prepare for a fee when looking to get a higher credit limit, as one may apply.

At publishing time, the OpenSky Visa Secured, Discover it Secured, First Progress MasterCard Select Secured, primor Secured Visa Gold and CreditOne Bank Visa credit card are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for these cards. However, these relationships do not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s).

Image: mapodile

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Getting a Card With an Annual Fee? Here’s What You Need to Know

Rebuilding your credit requires good financial behavior. You’ll want to make sure you’re paying bills on time and, once you do that, building a great credit score is a dance between using credit and keeping debt at bay. To that end, is it ever worth it to pay an annual fee for a credit card?

It can be, but only under some circumstances.

If I Have Bad Credit Will I Pay an Annual Fee?

If you are starting from the bottom of the credit ladder, your only credit card options may be secured cards. (Not sure where your credit stands? You can take a look at two of your scores for free, updated every 14 days, on Credit.com.) Secured cards require holders put down a cash deposit that serves as their credit limit. These cards are generally meant for people who can’t secure credit otherwise, whether because they have a poor or thin credit profile. But these cards do have the potential to be upgraded to unsecured cards after a cardholder demonstrates responsible use for a given period of time.

Many secured cards are available for no annual fee. Having bad credit doesn’t mean you have to pay for the privilege of carrying a credit card.

Do I Have to Pay an Annual Fee to Get Points or Miles?

Many rewards credit cards charge annual fees, but quite a few are available without these fees. If you pay your full balance every month, you can essentially earn money using those cards, whether in the form of travel benefits or cash back. If you aren’t in the habit of paying your card balance in full each month, paying interest might wipe out the rewards you earn.

Do I Have to Pay an Annual Fee for Other Credit Card Benefits?

Many cards with no annual fee include valuable benefits. The Citi Secured credit card, for example, offers travel accident insurance, trip cancellation and interruption protection, car rental insurance, extended warranty, damage and theft purchase protection and roadside assistance dispatch service, all for free. Many major credit card issuers offer similar benefits as a standard. (Full Disclosure: Citibank advertises on Credit.com, but that results in no preferential editorial treatment.)

However, if you want premium benefits, like free checked bags or a free hotel room every year, you’ll probably pay an annual fee.

Is an Annual Fee Worth It?

Simple math can help determine whether the benefits outweigh the cost of owning a credit card that charges an annual fee.

For example, if you and your partner expect to take one trip together each year on United Airlines, you might save money by paying for the United MileagePlus Explorer credit card. The card costs $95 a year to own. United charges $25 for the first checked bag for each passenger, but if you purchase your tickets with the United MileagePlus Explorer credit card, you and one traveling companion can each take one checked bag for free each way. Two people traveling round-trip together just once will save $5. Those savings come in addition to the card’s other benefits, including the opportunity to earn miles in United’s frequent flyer program.

Southwest Airlines also has a rewards credit card. The Southwest Rapid Rewards Premier credit card costs $99 a year. Southwest offers two free checked bags flyers. The cash advantage to this card is the 6,000 bonus points you earn each year after you pay your annual fee. That number of points would cover a Wanna Get Away fare under $99. By paying the annual fee, you’re essentially pre-paying for $99 worth of travel. So if you redeem the points for a Southwest ticket, you get the card’s other benefits for free.

What About Big Annual Fees?

The internet was abuzz when Chase launched the Sapphire Reserve card with an annual price tag of $450. Other cards are similarly expensive, like the United MileagePlus Club card ($450) and the Platinum Card from American Express ($550).

What do you get for that cash? The Chase Sapphire Reserve card (read our review here) offers $300 in automatic travel credits. American Express offers a $200 credit toward airline fees like in-flight meals. United Club cardholders get a $100 statement credit after their first purchase.

The Sapphire Reserve and Platinum Card also offer credits toward Global Entry or TSA PreCheck application fees, but these come around only once every few years. It’s important you read the terms and conditions carefully so you know what these regulations entail.

Other top-tier benefits include more points earned per dollar spent, more value per point redeemed, more free checked bags, private lounge access, complimentary in-flight or in-airport Wi-Fi, complimentary breakfasts at certain hotels, hotel and car rental upgrades, high status in hotel loyalty programs and so on.

Are these benefits worth the cost? Only if you use them. Free checked bags are worthless if you don’t fly. Free Wi-Fi doesn’t mean much unless you were already planning to buy Wi-Fi. The same goes for free lounge access or car or hotel room upgrades.

The Most Expensive Credit Card

The most expensive credit card is the one you don’t pay off. If you carry a balance, you will generally pay more in interest than you earn in rewards. You may still come out ahead if you carry a balance just one or two months out of the year, but this scenario is rare.

If you are working to pay down debt, consider sticking with cards that have no annual fee. If you find a credit card that you think will save you money in the long run despite having an annual fee, track your use of the card and its benefits to be sure you’re getting your money’s worth.

Image: Geber86

At publishing time, the Citi Secured MasterCard and Platinum Card from American Express are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s).

The post Getting a Card With an Annual Fee? Here’s What You Need to Know appeared first on Credit.com.

How to Apply for a Credit Card When You’re Unemployed

applying-for-credit-cards-while-unemployed

When you’re unemployed, applying for a new credit card is probably one of the last things on your mind. But even when you don’t have a job, you might still need a card for the security, convenience, rewards and benefits it offers. If you’re eyeing a new piece of plastic, read on to learn how to apply for a credit card, despite your situation.

Reporting Income

Not having a job doesn’t preclude you from being able to repay a loan. In fact, when asked to provide your income, you are permitted to include many sources besides a day job. Retirees can include income from Social Security or investments, while others can list disability payments. Alimony and child support payments may also be mentioned.

Married applicants can list any household income they have access to, even if they’re unemployed. Originally, the Credit CARD Act of 2009 prevented using household income on a credit card application, in order to prevent adult children from applying for a line of credit using their parent’s income. However, this rule had the effect of denying credit to non-working spouses, so it was later amended to permit applicants to use their spouse’s income, so long as they have access to it.

Other Ways to Apply

If you don’t have a lot of income or it’s not high enough, you still have some options. One is applying for a secured credit card, which works much like standard credit cards but requires a refundable security deposit in order to start the account. Nearly all secured card applicants are approved so long as they can verify their identity and have no pending bankruptcies.

Once a secured card account is open, cardholders receive monthly statements and are expected to at least make the minimum payment before it comes due. When they carry a balance, secured credit card users incur interest charges at the rate noted by their issuer. Secured cards typically offer the same security and convenience of standard credit cards; many also feature travel insurance and purchase protection benefits.

Another option is having someone co-sign your application. When you do that, both applicants become individually responsible for repayment of charges. If one doesn’t pay, the other becomes responsible.

Finally, some credit card users simply become authorized users on another person’s account. Just remember, the primary cardholder is always responsible for repayment.

Credit cards are an essential tool for many Americans, even those who are unemployed. By using all possible sources of income or taking a different route altogether, you’ll increase your chances of getting that new piece of plastic.

If you’re considering adding a new credit card to your wallet, be sure you know where your credit stands first, as this will determine the types of rates you may qualify for. You can view two of your credit scores, updated monthly, for free on Credit.com.

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I’m 27 & I’ve Never Had a Credit Card. Should I Get One?

credit_card_offer

Considering all the debt disasters young people witnessed and read about during the financial crisis, it’s unsurprising that credit cards aren’t a popular financial product among today’s 20- and 30-somethings. Several surveys of millennials have found that consumers that age are often debt-averse and favor other forms of payments over credit cards.

As someone who falls into that age group, I know a lot of people who meet that description. One of them recent sent me a text asking if he should change his approach:

“I’m 27 years old. I never had a credit card. Do I need one?”

Most people don’t need credit cards. You can function just fine in society without a credit card (some would argue you’re better off without one), and they’re not the only means to establishing a good credit score. But they can be incredibly helpful.

Whether or not someone in this situation should get a credit card depends on a lot more than their age. If you’re having similar thoughts and are wondering if you should apply for a credit card, here are some questions you need to ask yourself first.

1. Do I Have Any Credit?

One of the biggest reasons to get a credit card is to help you build credit. Without credit, getting an auto loan can be extremely difficult, and getting a home loan is pretty much impossible. It’s very common for young people to start building a credit history when they take out student loans or get an auto loan with the help of a co-signer, but if you don’t have any credit history, you need to start somewhere.

People who need to start building credit or rehabilitate bad credit often choose to get a secured credit card as a way to establish good credit behavior, because secured cards, which require you to put down a deposit that serves as your credit line, are generally easy to get. Once you have the card, you’ll want to keep your card balance as low as possible and always make payments on time.

If you already have a credit history, you can still benefit from getting a credit card, because having a variety of credit can also improve your credit score. Using a revolving credit line can add depth to a credit file with a student loan in it, and if you pay off the credit card balance each billing cycle, you’ll be building credit without incurring debt.

2. Do I Have Any Savings?

Credit cards also serve as a good emergency tool. Ideally, you have an emergency fund to cover your expenses in the event of a sudden income change or major, unexpected car repair, but if you don’t, a credit card can help you make ends meet in a pinch. In that case, you’d want to use a credit card with a low interest rate and immediately make a plan to pay off the balance as soon as possible. Credit card debt can quickly get out of control and end up taking years to repay, if you’re not careful.

3. Can I Handle a Credit Card?

Having a credit card requires a lot of self-control and some organizational skills so you don’t spend beyond your means (and end up in debt) or miss payments (and end up with credit damage). If you decide to get a credit card, take the responsibility seriously. Keep track of your transactions, set bill-pay reminders or automatic payments to make sure you don’t miss your due date and keep an eye on your credit scores to see how your credit card use affects your credit standing. You can get two credit scores for free on Credit.com every month to track your progress as you build a good credit score.

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I Have Ridiculously Bad Credit. Can I Get a Credit Card?

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Is your credit so bad you get pre-declined credit card offers in the mail?

OK, that’s a joke — a bad joke — but bad credit is obviously no laughing matter. It can keep you from accomplishing your personal financial goals, and it can be expensive. People with bad credit typically pay higher interest rates, higher insurance rates, can be turned down for jobs and rental housing and, of course, can have a hard time getting a credit card.

In general, credit scores below 600 (on a scale of 300-850) are considered “bad.” Here’s a quick breakdown:

  • Excellent Credit: 750+
  • Good Credit: 700-749
  • Fair Credit: 650-699
  • Poor Credit: 600-649
  • Bad Credit: below 600

If you’re in the bottom category, don’t despair. Not only can you improve your credit score to get a credit card, a mortgage or other financial dreams down the road, chances are you can get a credit card right now to help you on your way toward that better credit score.

The first step is knowing what your credit score is and whether everything on your credit report is accurate. (If you don’t know where your credit score stands, you can pull your credit reports for free each year at AnnualCreditReport.com. You can also view your credit scores for free each month on Credit.com.)

If your bad score is valid, you can work to improve it by getting accounts out of default, paying down high credit card balances and limiting new credit inquiries.

Your Options

Once you know where your credit score stands and you’ve corrected any errors, you can look at applying for credit cards created specifically for folks whose credit scores need some improvement. Most likely, you’ll need to start with a secured credit card from a reputable bank that has a reasonable annual fee.

Secured credit cards can be helpful for people trying to fix their credit or establish a credit history for the first time. Issuers negate some of the risk of doing business with such consumers by requiring a deposit to open the account. That deposit serves as the cardholder’s credit line, and beyond that, the card works like most other credit cards: You make purchases, and every billing cycle, you make a payment. If you don’t make your payment, however, the issuer can take your deposit.

Remember, your bad credit doesn’t have to last forever. Most negative information stays on your credit report for seven years (bankruptcy may remain on your report for up to 10 years). And the sooner you start establishing and maintaining solid lines of credit, the sooner you can improve your credit score, and your ability to get a non-secured credit card.

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