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Navigating today\'s society without a credit card in your wallet can be treacherous. Need some gas after hours when the cash window is closed? Forget it. Want to make an airline or motel reservation? No can do. How about renting a car? Uh-uh. And you better forget about shopping online, because there is no paper money slot on your PC.
Many people who would like to use credit have difficulties qualifying. The primary reason is that they have damaged their credit score by defaulting on a credit agreement in the past, and therefore banks and other financial institutions consider them a bad risk, thus denying their application.
For those who would like to repair their bad credit with a new card, there are options available.
Secured Credit Cards
A secured credit account, like a secured loan, is backed up by collateral--something of value which you agree to surrender in case you do not make your payments. In the case of a secured card, your collateral must be cash.
Some banks will hold your cash in a "security" account for up to a year. Meanwhile, you will use your VISA, MasterCard, or other service to pay bills and make purchases, paying at least the minimum payment each month on your card balance. You will pay additional fees for your secured card, including:
Interest on unpaid balance each month Credit Card ranging from 9.9% to 19.9%
Account set-up fee ranging from $20 to $99
Annual fee ranging from $19 to $99
Program fee of up to $100
Late payment fee of approximately $30 each time
Cash advance fee of $5-$10 each time you get cash from your card
Over credit limit fee if you exceed your preset limit
Other miscellaneous fees
Meanwhile, if your bank is holding your initially paid cash in a "security" account, they may not be paying interest to you as they normally would for a conventional savings account. When the year is up, they may offer you an unsecured card, if you have made your payments faithfully, and return your security deposit.
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