A secured credit card is one of the most valuable ways to help you rebuild credit, especially if you file for bankruptcy. This special type of card is available to anyone, no matter how bad their financial history may be. If your credit needs some work, it’s well worth your time to learn more about these score-building cards.

Your Guide to Secured Credit Cards

How Do They Work?

Unlike a traditional unsecured credit card, you must pay a refundable security deposit to open a secured credit card account. The deposit is typically about $200 and is held by the credit card company as security and used in the event that you repeatedly fail to make your monthly payments.

Your credit card limit will be equal to the amount that you deposited, so you can never spend more than you’ve put down, which is good news for those who have filed for bankruptcy and want to start over responsibly. Keep in mind that this deposit won’t be used to pay down your balance, so you’ll still need to make monthly payments. The deposit is usually returned when you close the account or when you build your credit high enough to graduate to an unsecured card.

What Are the Benefits?

Secured credit cards are popular for rebuilding credit amongst those who have filed for bankruptcy. They’re relatively low-risk accounts that can help you prove that you can handle the responsibility of making monthly payments on your debt. The best way to use your card is for small purchases followed by full payment of the balance on time every month.

Your payment history and card usage are reported to the three credit bureaus—TransUnion, Equifax, and Experian—which, in turn, can help you apply for larger loans and credit accounts in the future. After about a year of on-time payments, your account will typically be evaluated and you may be offered a transition to an unsecured card.

If you’re in need of a skilled attorney for bankruptcy or debt consolidation, contact Arnold Law Offices in Pell City, AL. This law firm, headed by Jared B. Arnold, helps clients throughout St. Clair County with bankruptcy law matters. Attorney Arnold believes in the right to representation and knows that the lawyer you hire can have a major impact on the outcome of your case. He also strives for transparency from the beginning by giving his clients accurate price estimates and rate updates throughout his service. Schedule your first consultation by calling (205) 338-6565 or learn more about the practice by visiting the website.