Second Chance Credit Cards With No Security Deposit
If you have had a bankruptcy or a foreclosure in the past, you may be able to apply for a second chance credit card with no security deposit. Some of the cards that offer these special offers do require a deposit, however. It is important to understand how the terms of the offers will work and what the requirements are before you apply. Keep reading to learn more about second chance cards and how they can help you rebuild your credit.
First, let’s look at how they work for secured cards. The terms of these types of cards are very specific. You cannot simply apply and get approved, you must have enough money in savings or in some other way to secure the credit line. Once you have enough money in the account, you will qualify for a second chance credit card, and if your credit report does not reflect any negative items on it, you may still be able to qualify even with the lowered approval rates.
With an unsecured credit line, on the other hand, there are many easy approval credit cards that require very little money deposit. This means that you don’t have to worry about providing collateral for the line of credit. You do, however, have to make timely payments. Failure to make your payments can result in significant late fee charges.
There are some issuers who still require a security deposit. Secured credit cards, however, typically provide a higher interest rate than unsecured ones. If you are unable to make a monthly payment or you have a very low credit limit, you will likely find that the interest rate on your secured cards is much higher than the interest rate on your unsecured card. The issuer may also subject you to higher finance charges and fees.
For this reason, many people choose to go with unsecured cards when they want to re-establish their credit. Even when you have a poor credit score, the fact that you don’t need to provide collateral will often help you qualify for an unsecured card. Once you are able to establish a good credit score again, you may find that you can no longer qualify for a secured card. The reason for this is that many issuers will raise your credit score requirements once you have established a good history of on-time payments.
Unsecured second chance credit cards, on the other hand, are a great option for those who have experienced financial problems in the past. The terms of these second chance cards tend to be a lot more lenient than secured credit cards. For one thing, there is no security deposit required. You do, however, have to make timely payments and keep the balance in good standing.
As mentioned above, these second chance credit cards come with a lower interest rate than secured cards and they do not require a security deposit. However, they do come with a limit. Each month you are allowed to only withdraw an amount equal to ten percent of your available balance. This may not seem like much, but it can quickly add up if you carry a large balance from month to month. Unsecured second chance credit cards come with high interest rates because of this policy, but they still have low limits which means you can end up paying quite a bit of money every month towards your balance.
Finally, there are high-interest rates. Again, this comes down to how much money you have in your checking or savings account and how risky it is to carry a large balance. High-interest cards are usually a bad choice for people who need cash flow. But if you have a stable job and a positive income, then these cards are for you.